Could the Franchise Model be what saves the Tim Hortons Brand?
If you’ve read anything about what has transpired at Tim Hortons since it was acquired you will know that the improved stock performance is accompanied by the commoditization of everything, a ruthless focus on cost cutting, and a debilitating culture of fear. We’ve seen similar acquisitions take place across different industries over the past couple of years, but the implications could be more dire with Tim Hortons when you take into account the influence that the customer experience has on long-term company performance.
Considering what we heard in the media this week, the franchise model could save one of Canada’s most valued brands. If the network of stores were all corporately owned and operated, the corporate culture that’s in place would not enable the store managers to feel as empowered as the franchise owners. As employees, they would not take the risk to stand up to leadership to fight for product and service quality and raise alarms about the impending risk to the brand. The endless changes and directives would just be accepted and executed and the slow spiral of quality would continue to harm the customer experience, erode brand loyalty, and eventually have a negative impact on corporate performance.
I see no hope for the future of our people if they are dependent on frivolous youth of today, for certainly all youth are reckless beyond words… When I was young, we were taught to be discreet and respectful of elders, but the present youth are exceedingly wise [disrespectful] and impatient of restraint.”
Hesiod, 8th century BC
(As quoted by Bradley Truman Nobel)
However, the large majority of Tim Hortons restaurants are owned and run by independent operators. These franchisees have a lot at stake and are using their collective voice as leverage for leadership to pay attention to their concerns. This week’s news reported that a letter submitted by the franchise owners expressed concern about declining product quality and product shortages and the pending impact on the customer experience.
The actions taken by new management have certainly improved stock performance (+40% since acquisition). However, in a market where all your competitors strive to differentiate on product quality, innovation, and customer experience, making decisions that are driven strictly by cost, and instilling a culture of dis-empowered and disengaged employees with middle managers that are too scared to stand up to leadership, is the pursuit of purely short-term results and creates significant risks for the long-term.
Following the acquisition, management had an excellent opportunity to engage the Tim Hortons workforce. New leadership, a partnership with one of the most globally recognized QSR brands, and plans for expansion into new international markets could inspire and excite employees about the change. Establishing a culture that is focused on delighting the customer, fosters product and process innovation, and encourages candid dialogue with leadership would ensure that employees are focused on the right priorities. Most importantly, it would empower employees to challenge leadership to ensure that the decisions made are towards an improved customer experience and increased loyalty to the brand.
Unfortunately, this corporate culture doesn’t appear to be one that will support employees who challenge leadership. However, with the persistence of the franchise owners and the recent media coverage surrounding their concerns, today’s news shows that the voices of the franchisees have been heard, but the decision to save the quality of the Tim Hortons product and customer experience is ultimately up to the company.