Jack’s franchisees optimistic about franchise relations despite corporate snub

“Franchisors that move toward a collaborative decision making system, a so-called partnership of equals, can be successful in the future,” says Selden, “while those older, vertical, hierarchical systems will fail or never reach their full potential.”

The Franchise Times
January 1, 2002

Jack’s franchisees optimistic about franchise relations despite corporate snub

Franchise relations are often at their best when the franchisor and its franchisees maintain a constant dialogue – in both good times and bad. Perhaps that is why so many Jack in the Box franchisees were miffed that their franchisor failed to participate in their association’s annual convention held last November in Maui.

Abe Alizadeh, a Jack in the Box franchisee and president of the National Association of Jack in the Box Franchisees, announced to the audience that Robert Nugent, Jack’s CEO, was invited to be the keynote speaker and that he had declined. According to corporate vice president of communications, Karen Bachman, Jack in the Box held it own franchise convention in July which was several days long “to offer comprehensive information to our franchisee partner.”

Bachman said that “we understand that only a small percentage of our franchise community was planning to attend the convention, in part due to travel concerns. Due to this factor, plus scheduling conflicts on the part of our executive management, we did not attend.”

Alizadeh, however, discounted their explanation, saying that 50 percent of the franchisees attended.

Minneapolis franchisor attorney Tom MacIntosh, who has been involved in a number of disputes between the franchisor and their franchisees, says that he sees two types of franchisee associations. He describes the first one as a combative association where the group uses legal means to accomplish their goals. Generally the lawyers do most of the communicating and these usually don’t work. Another type of franchisee association is the one which is built on the concept that if we work together we can accomplish more. MacIntosh finds that many franchisors are reluctant to deal with a franchisee association initially, but generally they find it can be a productive way to communicate with larger groups of franchisees.

Why would Jack in the Box pass on another opportunity to meet with its franchisees, even when they met a few months earlier? “Sometimes franchisors have a perception that they will be beaten up at such an association meeting,” said MacIntosh. “Furthermore, franchisors often are used to being in control and they avoid situations where they cannot control the outcome. They will avoid being there. That’s just the way it works.”

Andrew Selden, a franchise attorney who specializes in franchisee associations, says many companies find it difficult to recognize franchisee associations because of the control feature. “Franchisors that move toward a collaborative decision making system, a so-called partnership of equals, can be successful in the future,” says Selden, “while those older, vertical, hierarchical systems will fail or never reach their full potential.”

Alizadeh is confident that the relationship with Jack in the Box will improve and his invitation to Nugent to speak was the olive branch. “Our gathering was not complete because of their lack of participation,” said Alizadeh.

If MacIntosh had been advising Jack in the Box in this matter, would he have recommended that Nugent attend? “Of course,” said MacIntosh. “They wasted a valuable opportunity to build goodwill.”


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