JEC Project Profile: Westinghouse

Is franchise conflict management and art or a science?

Sadly, franchisor/franchisee conflicts can be inherited. At the time Muzak was acquired by Westinghouse -- as part of a portfolio that included a number of other much larger businesses -- Muzak had several hundred franchisees, virtually all in the broadcasting business.
     Frustrated by a string of franchisor ownership changes and under attack by more nimble competitors with new technology, the well-heeled Muzak franchisees were at the verge of legal action. As an inadvertent franchisor, Westinghouse was now faced with a potential "deep pockets" lawsuit resulting from a situation it had inherited, not created. Our charge as Westinghouse's consultants, was to assess the situation and determine how to resolve it. If possible.
     After meeting with individual franchisees, a familiar picture emerged: the franchisees felt that no one was "minding the store" at the franchisor end, a problem that had been exacerbated by the frequent ownership changes. Equally irksome, no one was listening to their concerns. The future they envisioned under Westinghouse could be only more of the same: why would an industrial giant with no previous franchising experience, and for whom Muzak's revenues would barely constitute a rounding error in the corporate annual report, pay any attention to their concerns? Emotions were running high.
     In our role as franchise-savvy "shuttle diplomats" we persuaded the franchisees to put their legal initiatives on hold temporarily, providing Westinghouse Broadcasting with breathing room to sort out the matter and decide to make a commitment to revitalizing the business.
     As part of our resolution strategy, we recommended that a business/social meeting be organized to communicate this new commitment, bringing both sides together face-to-face in a carefully orchestrated setting that allowed real franchisee/franchisor communication to take place for the first time in years. Lawsuit plans were dropped and Muzak was given the shot in the arm it needed to again be a competitive force in its field. Some time later Muzak was spun off to private investors as a much healthier, happier franchise system.