When Is A Franchisee’s IT Obsolete?
Written by Frank HayesJanuary 19th, 2011
It just got a lot tougher for franchise restaurant chains to crack the whip when it comes to IT mandates. A Florida judge has said Burger King can't immediately shut down several franchisee stores for missing a deadline to purchase new POS systems. The $2.5 billion chain will now have to go though more legal proceedings and possibly a trial. Or it can settle what has become the most visible case in a set of messy disputes over IT upgrades that should have been installed by the end of 2009.
Burger King hoped to get quick legal leverage by canceling its franchise agreement with Al Cabrera, one of several franchisees who Burger King sued last year over the tardy IT upgrades. But Burger King's franchise agreement wasn't really written with IT in mind. The contract requirements for replacing obsolete equipment were written for broilers and refrigerators, not POS units. That leaves open the question of whether Cabrera's old POS units even qualify as "obsolete" under the franchise agreement—and whether Burger King can shut down the franchisee.
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3 Comments | Read When Is A Franchisee’s IT Obsolete?
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-Christine
January 21st, 2011 at 3:04 pm
Frank, I think that you have pointed out a good contrast. It is easier to convince a franchisee that the broiler is obsolete that than the POS system. However, our POS systems now do much more than they did 5 years ago, so how does the franchisor convince the franchisee that the upgrade is more than a fee scoop?
(I posted this article on some LinkdedIn groups of ours, hopefully you will see a little bit of traffic from interested franchisors, etc.)
January 26th, 2011 at 8:16 pm
As a POS software developer, I cannot agree more that POS Systems have evolved over the last 5-10 years. Also, hardware, O/S, and security have changed for the better. It’s hard for ISVs and franchisors to continue to support older systems when technology changes so quickly. There are a lot of opportunities in these new technologies for the franchisor & franchisee to leverage.
January 27th, 2011 at 11:36 am
So am I hearing that technology advances are above PCI requirements and cost?
How can an owner, franciisees are owners, look at an ROI when the POS System is in compliance. What makes technology advancements become more important than profit. The average cost of a POS System is $5000 and better does not constitute requirement.
As a software developer I can determine the life cycle and these days changes are made at a minimum annually. However, changes are those to keep the merchant in compliance. If and when they want to upgrade to other Hardware and applications then they can do so at their discretion, no pressure with this technology is better.