Franchise Suppliers: Economics 101

So, you want to be a franchise supplier? 

Start with learning about franchise suppliers from Ray Kroc.

But Kroc's vision about suppliers is largely overwhelmed with talk of franchisor's standards, sometimes wrongly referred to as uniformity instead of consistency.  

"McDonald's manages to mix conformity with creativity."

Kroc understood that the supplier and consultant community was not a source of rebates, but rather an active partner with the franchise system in bringing about rationalization and change to the supply chain for the betterment of the brand.

The best example of this is the "simple" french fry and Simplot Foods.

For those of a certain age, the magic of McDonald's was its french fry.  But in the early 60's, McDonald's had consistency problems, in part because the supply chain consisted of several hundred local suppliers, some who shipped potatoes of lower quality than the specified Russets.

Simplot convinced Kroc that moving to frozen fries would allow better consistency and control over their potato supply.

But, in 1960, the usual method of creating frozen french fries, blanching, freezing, and finish frying, produced fries that were not crisp or flavorful.

Simplot invested $3.5 million for an experimental process to produce frozen french fries - all on a Ray Kroc handshake with no guarantee of success.

Simplot took the risk, and was richly rewarded for the success.

If you want to be a franchise supplier or consultant, you have to have the ability find solutions to the problems that the franchise system faces and implement them.