RTM: You carried out a detailed study of how the oil giant Shell moved in Norway from a network of independent petrol resellers to a franchise network. Tell me about it.

AN: There is this extraordinary gulf in behaviour and attitude between the first generation of resellers and the franchisees who replaced them. The resellers, who bought product from Shell and then resold it, were independent business people. The typical petrol station of the fifties and sixties had very few restrictions – Shell did not govern the opening hours, levels of cleanliness, anything. All they told the franchisee was how big the Shell logo had to be!

RTM: And then we have the change?

AN: Yes, it was a huge cultural change. The resellers thought they knew best. But franchisees have to accept what the franchisor tells them if the concept is to work. So franchisees are more bureaucratic and system-oriented.  It was also a huge internal culture shift inside Shell.

RTM: How do you mean?

AN: Well, I remember at one end of the Shell building you had engineers planning the biggest oilfield in history, with structures 400 metres high. And, at the other, you had a new generation of Shell managers designing ‘driver dog’ sausages for the franchises. The sausage designers always complained that the people on the other side of the corridor were laughing at them. But sometimes Shell made a lot more money from the sausages than it did from the petrol!

RTM: Hmm, it is funny: you see that culture clash in every large company today. In IT and pharmaceuticals you have research and development people, even product managers, who see channels sales management as unimportant. So why does franchising work so well?

AN: Primarily because it frees up the franchisees to spend their time serving the customer, rather than worrying about back-office stuff, like accounts. And it also forces the supplier to think about the customer. Suppliers can no longer simply stuff the channel. They have to think about how best to service the ultimate customer.