Brief thoughts on boycotts

As with many things, my energy and interest are flagging on a post regarding boycotts, examining boycotts of franchises specifically. Might get to it later if enough people think it's worthwhile.

For now, here's what I've discovered/reasoned:

1. Boycotts can be morally tricky, and boycotts of franchised business are especially so. That's because it's harder to punish the parent company without inflicting collateral damage (the franchisees).

2. Franchises usually pay the parent company a fixed sum for franchise rights, and a variable amount based on gross sales (not profitability or other things). An incompetent or unlucky franchisee can have a ton of sales and lose money after paying the parent company.

3. There's a difference between a company where (1) a franchisee makes a political statement, and (2) a CEO makes a political statement.

4. There's also a practical difference between a food service company that does takeout/delivery and a dine-in restaurant. On a practical basis, we might feel more empathy and concern for servers at a dine-in restaurant we regularly patronize than at a fast food joint with changing staff, or a series of delivery people. I think it probably has to do with frequency, duration, and intimacy of interaction.

5. Given these things, I think the Chik-Fil-A boycott might make sense, as it dealt with statements made by the CEO, though most of those who would boycott it probably didn't eat there (sales numbers appear to remain robust). I think the Papa John's boycott might be defensible because it, again, involves a CEO wading into public policy. However, I'm willing to see how and if his classroom comments were misrepresented. The Denny's boycott is absolutely moronic, as it involved comments made by a franchisee in Florida, and not the CEO. However, I note that it did get results (CEO statements and scoldings) that might not have happened had sales not dipped nationwide. Ignorant outrage can still get results -- not condoning, just observing.

6. Target's getting off relatively lightly compared with Wal-Mart, as far as I can tell. There are probably a few books that look at how Target managed to brand itself in opposition to Wal-Mart, even if functionally it is quite similar.

7. If you're a well-paid CEO, it makes sense to assume that any comment you make in a classroom, on a company email, or anywhere outside of your meetings with trusted companions can and will get out. Don't pretend to be, or actually be, so ignorant that you think you're never "on the record". It's a price you pay as pitchman-in-chief. It's presumably a small price to pay for substantial compensation.

This is more, not less, true when you are a CEO of a company with franchisees. I would be incredibly pissed if I had paid an up-front sum of money, and handed over a portion of revenues (not profits) to a parent company, and was committed to a long-term venture, in which most of my personal assets are invested, only to have some asshole CEO say something that will affect my sales, regardless of either parent company or franchise policy.

This is mitigated to some extent in Chick-Fil-A's case, as its origins and history make it clear that franchisees know what they're getting themselves into. (Also, franchisees have comparatively little skin in the game -- the parent company retains ownership of the restaurant and collects a larger share of revenue in exchange for surprisingly little start-up investment (~$5000!) from the franchisee.)

John Schnatter is founder and CEO of Papa John's, so I guess he retains enough shares and legitimacy that he gets more of a pass to say controversial things. However, Papa John's franchisees, unlike their Chick-Fil-A counterparts, might not have foreseen the risk of having a founder CEO feel entitled to air his opinions -- especially when subsequent analysis found he overestimated the costs of the Affordable Care Act by about 400%.

8. If you're a well-paid CEO who can keep his or her mouth shut, take joy from the idiots who don't, because they provide the think-tanks and lobbying groups with enough ammo that you don't have to speak up. KEEP YOUR DAMN MOUTH SHUT.

Unless your brand--personal or corporate--explicitly internalizes externalities in the social welfare or environmental realms, it's implied you want lower taxes, less regulation, and no healthcare mandate. It's understood that the major shareholders don't give a damn whether a dollar is made from selling pizza or building munitions or making toilets, and so your flexibility in the politics of morality, one way or another, is limited. Don't feel compelled to make the case unless you absolutely need to, and if you do, do it in concert with your industry peers as a matter of policy, not as a personal opinion. I'm assuming they taught you in B-school about the advantages of a fast second over being first.

9. There's a broader lesson for franchisees -- check your contracts, and check the ownership. If the CEO is also a founder, or has been around for a long enough time, consider whether their track record and statements might give you trouble. Maybe they won't -- maybe they align with what you consider to be both good business practices and morality. But don't claim ignorance or innocence -- you are buying into a brand, and the brand is your shield and cloak.

10. I'd worry more about companies that tried to make their employees vote for Romney. But it's harder to boycott Murray energy coal than it is to boycott pizza. Boycotts have to get more specific and selective for them to become effective at changing policy.