In a world where being selfish is now the norm, due to being encouraged and actively promoted, it can seem as though it is the way to becoming successful. Sometimes that may be true, and many other times, it couldn’t be further from the truth. I once worked for a franchisee at Dairy Queen, a subsidiary of Berkshire Hathaway. I witnessed the demise of that location, with the owners eventually being forced to sell to another franchise owner.
Franchises seem very attractive on the outside. You are buying a known brand, demand for the product is already available, and at a location that already has sales. You also get to be your boss and no longer directly report to a manager. The reality though paints a different picture. The supplier is chosen and must bought from designated suppliers, various fees are skimming off the top, as a % of sales. As a % of net income, this could become quite a large number. Compound this with mandatory renovations that occur seemingly at random. All of a sudden there is very little control involved, and being a franchise owner seems more like paying loads of money upfront to become a different type of employee. Not to mention the low-profit margins involved, and this leads to trying to save everywhere in penny-pinching the way to a buck.
The Dairy Queen couple that owned the place where I worked part-time instituted many small details to try and save money, at the instruction of the woman. This included:
-putting just ½ the number of peanuts or pecans involved in the peanut butter and the banana split. How much does that save, a small finger full worth, maybe 5-10 cents?
-diluted ice cream machines so that the ice cream served didn’t even hold to the standard. If the blizzards were held upside down for even 10 seconds, unlike the commercials of the ice cream remaining intact, the ice cream ended up falling out!
-telling the employees to give out less supply of every serving, regardless of fries, onion rings, ice creams, etc. Even the cake sizes were slightly smaller than the actual size, but not enough for anyone to notice unless they took the time to measure.
-not giving condiments and fewer napkins. Even if requested, to only give the minimum amount necessary.
-refusing coupons that were not expired. This led to many customers complaining, and various employees having to delicately reject the coupons, knowing that an upset response would occur.
The female owner would walk downstairs from the office to argue with the customers pointing at the fine print indicating “at participating locations only”. Some potential customers would end up arguing for minutes, showing their true colors but understandably upset. Many said they would file complaints to Dairy Queen regarding this location, and mentioned that this was the first time they had ever had coupons rejected in their entire lives anywhere, not just Dairy Queen in particular. This was the one that did in the owners, and witnessing this firsthand was when I knew trouble would arise long term. No effort was made to even try and have a good attitude in response to the complaints in person, which only escalated the situation rather than de-escalated. The worst part was after the customers left in a rage not buying anything, the owner even viewed them in contempt and murmured words along the lines of “What an ungrateful customer. All I wanted was their money and they couldn’t even do that”. Wow. I thought in business having good people skills and valuing people was supposed to be an integral part of culture, not an option.
The result was a forced sale by the franchise due to far too many complaints. That location started hurting the optics of Dairy Queen overall, and thus, to avoid long-term reputation backlash, the franchise had to move in its interests and instigate a sale. Granted, it did take many years for the sale to occur, but eventually, it did. It seems that what goes around did end up coming around in this case.
Ironically the next owner fared no better. The sting of bad karma and misfortune appeared to stay attached to the location, as the new excited owner who acquired it ended up having the building burned down. Thankfully, it was a stand-alone building so no other properties were wrecked.
Ray Dalio, founder of Bridgewater Fund once said that if you try to give more than you get you will find that you will get more than you can imagine. Momentary short-term gains from being cheap here and there may have led to a few pennies being made, but in the grand scheme, losing the entire franchise.
Disclaimer
This is not Financial Advice. This article is meant only for educational and perhaps entertainment purposes.