What If It Was Ronald Rather Than Mark Who Was Running Stupid-6?

McDonald's, or maybe KFC or Burger King, perhaps Costa or Starbucks; when you think of successful franchise operations, you think of these American corporations, rather than British franchises such as the big railway companies.

 

This guy could teach The Fat Controller how to set-up franchises

So, as Scottish Rugby prepares to go down the franchise road, what are Ayr, Boroughmuir, Heriot's, Melrose, Stirling County and Watsonians liable to be – examples of trans-Athlantic “can-do” business expertise working, or of unnecessary British tinkering with an established system failing to satisfy the customers?

A franchise, any kind of franchise, is a business deal, between franchisee – in this case the six clubs, and franchisor – the SRU. Let's ignore the deeply-flawed SRU model, and see what say McDonald's looks for when it decides to award a franchise.

New franchises are offered for sale, when the core corporation sets out to grow its business in a new area. McDonald's for instance, will not offer a new franchise 600-yards along the road from an existing one – unless that existing franchise was already doing record-breaking business, with queues out of the door all day, every day, or, where there is – such as in large city centres – massive passing “foot fall” of potential trade.

They will, instead, try to grow the brand by taking it to new locations.

[I should say here, MLB, MLS, NBA, NFL and NHL franchises in North America are only offered as “expansion” franchises, into new cities. These are perhaps, although much higher finances are involved, the closest equaivalent I can find to a major sports governing body, such as the SRU, offering franchises]

No way would any of the major North American sports offer franchises just along the road from existing teams, and, the idea of offering three new franchises within one city could never come up.

So, what is involved in taking-on say our McDonald's franchise? A look at the corporation's corporate web site gives some insight, starting with a list of myths about McDonalds.

This tells us:

1. You don't have to be a millionaire to buy a McDonald's franchise, but, you do need £110,000 in “unencumbered funds.”
   
   
2. You don't need restaurant experience
   
   
3. You will receive nine months' of unpaid training from McDonald's
   
   
4. You will have to divest yourself of other business interests
   
   
5. Potentially, you might have to re-locate, as the McDonald's corporate site makes clear: “We have UK-wide opportunities and will always strive to place you in the right community for you and your business”
    
6. You have to pay ongoing fees to McDonald's: “monthly percentage fee based on the sales and profitability (usually between 10% and 18%), plus 5% service fees for the use of the McDonald’s system.”
   
   
7. You will be required to spend 4.5% of your net sales on advertising.

 

How might these seven pointers operate in the SRU franchises?

I just wonder, did the six clubs all have £110,000 in “unencumbered funds” to invest in their new franchise. Or, perhaps more to the point – did they all have the minimum £65,000 funding the SRU was looking for, and was that seed cash “unencumbered?”

I think we can take the rugby experience as read. But, what, if any training in running a semi-professional team are these officials from “amateur” clubs going to receive?

How might the “divesting of other rugby interests” work when it comes to “amateur core clubs?”

Relocation, now that is interesting. We already know, Ayr are looking to leave Alloway for “Ayrton Senna”; Melrose are reported to be at least training in Edinburgh, with some people thinking as a precursor to moving the franchise there, while Heriot's are reportedly re-locating their franchise to the other end of Goldenacre.

Ongoing fees to the SRU – that would be interesting.

Having to spend 4.5% of net sales on advertising. Wonder how that might work.

McDonald's say in their franchising advertising, taking on a McDonald's franchise is a 20-year commitment. Well, the SRU are not asking for as long a buy-in, they are only offering a five-year franchise, which, on the downside, offers less opportunity to get over the loss-making early days of growing brand recognition, prior to, hopefully eventually turning a profit.

The explanation as to how McDonald's pick their successful new franchisees is also interesting. It is a ten-stage process, much-more rigourously undertaken by McDonald's, the franchisor, than ever appears to have been the case with the SRU's franchise scheme.

I also don't see McDonald's moving the goal posts half-way through the recruitment process - “no more than two franchises in one region” anyone.

Then you look at your average McDonald's restaurant. In out of town locations, one branch looks the same as any other. They have a basic design which works. Some might be larger than others, but, the basic template is there.

Might we then see identikit stadia being built to host our six franchises? Will they all have 3G pitches? Will there be minimum standards set-out for grandstands, floodlights, press boxes, etc?

The reality, of course is, you cannot totally compare a sporting franchise with a business one. It would never do to have exactly the same menu at all six venues, that would be boring in the extreme.

McDonald's aim for consistency across their supply chain. Their farmers only grow certain types of potatoes for the fries, they tend to use the same breed of cattle for the meat, the same breed of chicken for the chicken, and only cod goes into the fillet o' fish. The SRU franchises will not be restricted to using players who are perhaps cloned from the SRU's notion of the ideal, while the coaches will not be required to use the same tactics and calls.

In short, these are not franchises as such – so, why use the term. To me, they are a means of the SRU exercising control over a greater share of the game – without having to spend too-much money on getting that control.

They could have accepted reality – and been honest with Scottish Rugby. They could have said:

• "The Premiership is supposed to prepare players for a professional career"
  
  
• They didn't
  
  
•   “The Premiership is failing in this duty to provide players for a professional career because...”
  
  
• Then shown proven evidence of this failing
  
  
• "We are therefore taking control of the Premiership away from Domestic Rugby and placing that league under the control of the Performance Department"
  
  
• But they didn't
  
  
• "We will follow the example of our Irish and Welsh friends and establish A teams, linked to the two professional teams, these squads will be a mix of fringe professionals, Academy players and the best of the Premiership players. They will be full-time and part of the Edinburgh and Glasgow set-up"
  
  
• But they didn't
  
  
• They could have – as many people suggested they should have – gone down the District route, taking the most-impressive potential professionals temporarily out of the club scene and “hot-housing” them in a short, sharp tournament, to decide which reacted best under pressure and might therefore be worth taking a chance on with the full-time professionals.

In short, the SRU have not gone into franchising in a business-like manner. They have not even looked at best-practise for sports franchises.

More and more the conclusion must be – they don't know what they are doing and, by their actions, they could be leading six good, long-established clubs into trouble.

McDonald's would never be as dim.