Thursday, October 26, 2006

Succession planning of a different sort

Among the more intriguing informational tidbits served up at last week’s MUFSO conference was a revelation from Domino’s CEO David Brandon. He and other chain chiefs were asked what they view as their greatest industry challenge. Brandon noted that Domino’s, at age 46, is at a point in its lifecycle when a lot of franchisees would like to retire or otherwise kick back. How is the franchisor going to manage the transition to a new generation of operators?

It’s a question with profound implications for the brand. McDonald’s, with five more candles on its birthday cake, went through an adjustment of sorts in the 1980s and ‘90s when some of its long-time, smaller franchisees decided to focus on grandchildren instead of Big Macs. In many instances, the units were passed along to kids who’d grown up in the business, working in their folks’ franchises. But in others, the units were bought up by franchisees looking to expand their territory, leading to operations like Rick McCoy’s in Boston, with more than 100 stores.

Other systems have greeted that consolidation with concern, if not a counterattack. Pizza Hut didn’t like to see its franchisees become public companies. And most of the giant quick-service brands still don’t have publicly owned franchisees, with the notable exceptions of Burger King and Wendy’s.

Domino’s, founded in 1960, is entering a phase of maturation that other brands will hit sooner or later. Many have already made that changeover from early entrepreneurs to successive stages of franchisee ownership. For others, it’s a test yet to be undertaken.

Yet not a lot of eyes will likely be on the pizza giant, since that succession process is not a public display. Unfortunately, since it’s the franchisor is now a public company, many of those peepers will likely be investors’.

The MUFSO conference (for Multi-Unit Foodservice Operators, of course) is presented by Nation's Restaurant News. Look for full coverage in our Oct. 30 issue.

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