A friend of mine, who owns an small independent retail business, posted this on Facebook today. This sort of thing really PISSES me off.
KFC is a franchise like so many of the “chain” places. What that means is, people buy into an already proven system with a product or service for sale. It is their own business, yet there are rules to follow: i.e., the store decor, the product, uniforms, drinking cups, etc all must be branded to the Franchise brand. Usually the only thing a franchise owner has control over is their pricing.
So when this franchisee put up a sign saying he was raising his price by .49 to help cover his costs, that is actually what he is doing. And every time he raises his prices, he has to give, in the form of a royalty, more money to the franchisor. The franchisee knew this going in that a percentage of his sales goes to the franchisor. If he is a smart franchisee, he incorporated that percentage into his price increase.
As a franchise owner myself, every year I get a 2-3% increase in my rent, my utilities, my vendors raise their prices every year, my franchise raises their costs to me every year, and my employees want to make more money every year. And….. as a business owner, you know, the one who has all of the money, time, talent and risk invested in: inventory, equipment, cost of goods, educating myself, insurance, training of employees and let's not forget taxes. It's my ass on the line for paying for all of this in my business. If I want to make more money that has to be factored in as well, into a price increase.
I wonder how my friend will handle the higher minimum wage when it finally gets to Illinois. Will he raise his prices to compensate for that? My guess is he will or he will struggle like so many small business owners that don't charge enough to cover their costs. But here is what he won't do, he won't post a sign telling people that is why he raised his prices. That is the only mistake the KFC franchisee made, but apparently the franchisee needed to make a point because he understands how a higher minimum wage affects all small business owners.
So tell me again when I am forced to pay high school kids more money, or a part-time mom who only wants to work “the hours she chooses,” and I need to charge a higher price for my product, how I'm paying a CEO more money?
The extra royalties I pay don't go to the CEO, it goes to the company to pay their employees, taxes, equipment, cost of goods, insurance, transportation, etc, etc, etc…..and yes, a portion goes for raises, for everyone. But like a small business owner, the CEO keeps everything running smoothly and legally, and they keep their employees working.
The CEO keeps the franchisees in business, so we can hire more people in our communities and provide a product or sale. It's a circle of life, and if you want to see that come to a fast end start boycotting your local small business and franchise owners.
When you call for a boycott of a franchise owner or any small business owner, you are putting your neighbor not only out of business, but you are likely throwing him into bankruptcy. This Facebook post is a sore spot to me because along with being a franchise owner, I'm a business consultant to franchise owners and small business owners, and I know that 19 out of 20 of them are not making enough money.