Evan Schuman's StorefrontBacktalk

Michaud added that a chain needs to treat all of its franchisees fairly, which sometimes means punishing those who fall out of line.

“I think that BK is doing the right thing. It wanted a brand standard, had the contractual right to do so, gave [franchisees] plenty of notice and then held them accountable for doing it,” Michaud said. “If they don’t sue these franchisees, then all of the others that spent the $25k on a new POS get really pissed at BK. ‘Well, I should have held out just like them.’ Then the next time, there are more franchisees who hold out, and then more, and then more. The brand has to have a backbone and stand up and support its standards. If it doesn’t, franchisees start to exploit that fact.”

In a recent Business Management profile of Burger King CIO Taj Rawal, the CIO painted the POS standardization project as one of his earliest and most critical mandates. “In many ways, the register in the restaurant is the key piece of equipment for us and yet, until January 2006, we had no companywide standard as to what register or system should be used,” Rawal said. “We’ve now established the very first standard POS across the company and the franchise restaurants and we are in the process of migrating to that standard. As a brand, we’re more than 40 percent moved over to the new POS and have set Jan. 1, 2014, as the date by which all restaurants must be on that new system.”

The lawsuit, filed in federal court in Florida, said that “in April of 2008, (Burger King) issued and communicated to defendants its 2009 POS Technology Policy, which required defendants to purchase and install certain POS systems by Dec. 31, 2009. The POS systems are a critical component in the operation of Burger King restaurants and the Burger King system. For example, the POS systems will provide a consistent base of information allowing for better product sales analysis and more effective product and promotion activities.”

The lawsuit added that Burger King had been rebuffed in “repeated demands for compliance with this deadline.”

Is this an instance of IT not sufficiently making a case to the franchisees of the new system’s benefits? Most purchases like this one only deliver return on the investment over an extended period and across a huge number of stores. Given the specific franchisee situation with Burger King, it might indeed be the case that these particular POS systems might have been an expense that the stores couldn’t justify.

The contract language is presumably clear that franchisees must abide by corporate equipment edicts, but is there a limit? What if the chain declared that all counters must now be made of gold? What if it required every store to put in place a T3 connection? Or what about a sweetheart deal that required the purchase of a server from one vendor that was massively overcharging? The franchisees will likely argue that this particular mandate was unreasonable and that the current economy makes it unrealistic. Of all the IT challenges with franchisees, unfunded mandates in a down economy are among the least popular.