Buying a Franchise

Franchisees and the New Menu Rule

New national menu rules went into effect in December, so fast food and fast casual franchises have had a couple of months to figure out the new rules and how to apply them. That doesn’t mean everything is settled.

Congress now requires restaurants and places serving “restaurant type” food to disclose the calorie counts of all their dishes — if they have 20 or more locations. In other words, franchise restaurant chains. The idea is that consumers, seeing that a Cheeburger Cheeburger Classic contains 654 calories, will decide not to have french fries with it, but will instead opt for a 40 calorie Salad Lovers Salad.

There are some issues with this:

  • Consumers can already easily get this information on their cell phones or desktop computers if they want to know.
  • Restaurants which already post nutritional information have found that consumers ignore it.
  • Sharing calorie counts with consumers appears to have no effect on their purchase decisions, according to numerous studies from the days when grocery items got their nutrition labels until now.
  • Public calorie count information also doesn’t seem to have any effect on the public health issue of rising obesity, which is — in spite of nutritional labels in the grocery store — rising.

However, this is intended to be a step toward improvement of American health habits, and it is required. Restaurants which have not shown calories before must do so by December 1, 2015. Those that do show calories must change their current system to meet the requirements of the new law, using a 300-page rule book.

The cost and the time investment both are significant. And there are some issues for franchisees in particular. Franchisors typically set menus and preparation methods. They are usually the source of nutritional information, and franchisees must wait for the information to arrive from the franchise.

However, franchisees are responsible for the labeling. A year may be long enough for every franchise location to gather the required information from the franchisor and post it according to the rules from Congress. It may be long enough for every franchisor to produce signage that meets the rules and also works with their brand, and to send that signage to each of their franchisees.

If not, it will be the franchisee who is in hot water, and not the franchisor.

What does this mean for you as you’re making decisions about your franchise business investment? First, if you’re thinking about a restaurant, ask how they plan to meet the requirements. The answer will not only tell you whether you have potential problems looming in December — but it may also give you an idea of how this franchisor deals with issues of this kind.

If you’re not at that point in your franchise research, if you haven’t yet decided on a particular restaurant franchise or even on a particular industry, this is another data point for you on the question of franchise-franchisor relationships. Recent legal decisions have made it clear that the the question of responsibility, when it comes to franchises, is not as simple as it once seemed. This example reinforces that point. Make sure that whichever franchise you choose, you’re sure what is required of you.

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