In a 2014 article, Karsten Strauss of Forbes Magazine wrote an article titled "How Franchisors Squeeze Money From Their Franchisees". In this article, Strauss speaks at length on how franchisors make more than just royalties off of their franchisees. Franchisors also take a rebate or markup on pretty much everything the franchisees purchase in order to run their business. Their franchise agreement forces them to purchase all of their materials and supplies from designated vendors who then give a kickback to the franchisor, thanking them for the secured business deal. The vendor isn't necessarily the one best equipped to supply the franchisees, they might just be the one with the best kickback deal for the franchisor.
Strauss continues on in the article to refer to a case in 2009 when Quiznos made a controversial decision to force their franchisees to give away free food in the course of a company-wide promotion. The franchisees revolted, angry that they were being forced to buy food from Quiznos, who made money and then employed people, who made money, to give it away to people, who made off with a free lunch. In the next few years, thousands of Quiznos would close down. A once promising franchise meeting it's demise due to not loving their franchisees.
According to a recent article by Josh Kosman of the New York Post titled "Struggling Subway is now facing a franchisee revolt", Subway franchisees are expressing similar concerns with their franchisor. Subway isn't asking them to give away food per se, but they are considering a return to a $4.99 footlong special that many franchisees say makes profit nearly impossible. Kosman states that over 400 franchisees have signed a petition requesting a change in direction for Subway. In light of the progress of other companies, and public disgust for Subway's former spokesman, Subway has had to admit that customer traffic is down an incredible 25% over the past five years.
The You've Got Maids Difference
Not only do we have some of the lowest franchise royalties at 5.9%, we also don't require our franchisees to purchase their products from certain vendors. Sure, we have great vendors that we have relationships with, and we've used our scale to negotiate the best rates and deals possible. We just don't take any markup on it. Not a penny, and we never have. We have purposefully put ourselves in a position so that we're always on the same side of the table as our franchisees. We only succeed when our franchisees succeed.
Need to hear that again? Sound too good to be true? Check out the link below to a video of Founder & CEO Frank Berger discussing our relationship with vendors and our franchisees. Do the math, You've Got Maids is on the right path to being the best franchise. It's not rocket science, we just love our franchisees.