If you are a ‘zee in Singapore, keep looking over your shoulder for the ‘zors

This post was written by Michael on July 22, 2009
Posted Under: Comments on Franchisors

burger_king_ion
Burger King is opening up their new “concept store” in Singapore today. It is going to be pretty snazzy, with a new look, new menus and some advanced features such as “personalised sound zones” which will allow diners to plug in their MP3 players and listen to music through individual speakers.
Burger King plans to open up another three to five concept stores in Singapore within the next six months.
The interesting part is that these stores are owned and operated by Burger King, not the franchisee who has been operating about forty stores in Singapore since 1982.
I wonder how it feels as a franchisee when your principal moves into town and starts directly competing with you?
Peter Tan, the Asian Pacific president of Burger King, said: “Customers have become just way too sophisticated that if we’re not keeping up with them and even more importantly leading them, we’re going to be behind the eight ball”. The inference being that the concept store is largely for testing new ideas, from menus to interior design and will ultimately benefit the present franchisor.
Well, that all sounds good and makes good business sense too. But three to five stores within the next six months? It looks like a takeover in the making.
In 1995 Anne Downer, the franchisee of the hugely successful Body Shop in Singapore was forced out by franchisor Body Shop International which occupied her Singapore stores and took away her Asian franchise rights, attempting to force her into bankruptcy. The Body Shop ended up paying $US6.2 million to settle the case. Anita Roddick may have been called the Mary Theresa of capitalism, but her company acted more like a pack of storm troopers in this case.
I am not sure that the goals of Burger King are much different from those of the Body Shop years ago.
The Burger King Singapore franchisee, Bonfoods has declined to comment on how the new concept store would affect its business.
I wonder if this might be the start of a new trend: As some of the hugely successful franchise concepts become more and more sophisticated, flush with cash and employing the best and brightest. Might they not look at some of their franchised outlets and decide that they could run them better, introduce changes quicker, embrace a broader vision and bring in more profits if the stores were managed by a company manager rather than a franchisee, who might occasionally hear a different drum?