Support weaker Food Chains: Help yourself by Helping Others (buy franchise-free food)

July 27, 2009

BreaikingChain

What can one person do to help?

All franchisees should support autonomy in supply when they shop for their family’s needs.

And they should encourage all their staff, relatives and customers to do the same.

Ontario has 40,000 franchisees in over 500 different tradename systems spanning fast food, petroleum, coffee, pizza: almost every vertical market. They all seem so different but they’re almost 100% the same in one aspect: the head office (franchisor) forces the local businessperson (franchisee) to buy products only through them. Sometimes the margins charged to the franchisees are extremely high, and act as a hidden franchise fee or brand tax.

Canada’s grocery industry is heavily franchised and these “tied buying” types of  provisions are usually ruthlessly enforced.

  • Grocery franchises have been some of the most active franchisees in pushing for protective legislation. And they’ve been trying to do this (protect themselves AND all Ontario franchisees) for decades and decades.
  • They are unquestionably leaders in franchisee advocacy.

This post follows up on a July 20th posting called Rumblings in Canada’s grocery elite: Sobeys franchisees go independent. Nine banner food stores have decided to go independent  and purchase their goods via a buying group called the Hometown Grocers Co-op.

Thanks to Sarah B. Hood at Toronto Tasting Notes for providing the specific locations of these leading former forced-supply retailers (Local Ontario Grocers Break Away From Sobey’s to Sell More Local Food).

Why not take a beautiful drive into southwestern Ontario, say hello to some true leaders and stock up on food with the following community retailers:

  1. Arthur (L & M Markets),
  2. Chesley (Chesley Grocery Store),
  3. Drayton (Drayton Food Market),
  4. Durham, (L & M Markets),
  5. Elora (L & M Markets),
  6. Grand Valley (Hind’s Foods),
  7. Harriston (L & M Markets),
  8. Lucknow (Knechtel Food Market), and
  9. Palmerston (L & M Markets).

If fellow franchisees fail to support each other, we deserve to continue to pay these high hidden franchise fees that come from the monopoly franchisors force via franchise contract provisions.

Nine freer grocery franchisees should be very good news to all Canadian franchisees BUT should be supported very aggressively.


Rumblings in Canada’s grocery elite: Sobeys franchisees go independent

July 20, 2009

CFIGPeterKnipfelCFIGlogoWikidFranchise.org often adds depth and perspective to a current media franchise industry article.

Let’s take a look at the decades-old, but next to invisible, war of wills within Ontario’s grocery industry.

Last week, the Canadian Broadcasting Corporation reported that Buy-local push prompts Ontario grocers to go independent.

The Toronto Star ran a story last Saturday called Meat cleaves grocer’s tie to Sobeys: Ex-franchisee goes independent to gain right to sell beef, pork, poultry produced locally about 5 Sobeys franchisees taking themselves independent in southwestern Ontario.

That doesn’t seem to be much of a story unless you start looking into the background of the franchisees involved. The current press spin (a desire for more local suppliers) is certainly not the whole story.

In the CBC story a Mr. Peter Knipfel is quoted as saying:

“We actually put it [franchisor non-authorized products] on our shelves because we felt it very necessary for it to be in our community, and that prompted that we get away from the franchise system, because it was not making them [Sobeys] happy,” Knipfel says. “I didn’t want to ruffle any more feathers, so we just decided to part company.”

Grocery franchisors in Canada ruthlessly control what products can and cannot be purchased in their franchisees’ stores. Vendor programs (rebates, kickbacks, allowances) are a very important source of income for Big Grocery in Canada.

WikidFranchiseWhen you search WikidFranchise.org for “Peter Knipfel” you get the following article: CFIG Public Hearing Testimony. It appears that Knipfel was the Chairman of the Board of the Canadian Federation of Independent Grocers in 2000.

He is quoted as their Chairman in 2000 as saying:

…With the consolidation today in the grocery industry and the control that the franchisor has over the franchisee as far as pricing and our profitability is concerned, we need some protection for some fair dealing with our franchisor…

Sure enough, when you hop over to the CFIG’s website Knipfel’s photograph (see above) is prominently displayed as the Feature Story scroll.

That a former Chairman of the CFIG is one of the defecting franchisees is an indication that this story has much more to it than the simple formation a group called the Independent Hometown Grocers Co-Op.

I created WikidFranchise to help non-insiders understand the hidden meanings within franchising.


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