How franchises like fast food chains can help fight climate change

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KFC Singapore recently announced that it has partnered with local food company Tria to introduce what they claim is the world’s first closed-loop recycling for single-use packaging. Over the next six months, catering wrappers and food waste from its Northpoint City store will be turned into compost.

It comes days after McDonald’s Philippines said two more stores in its Philippines operations would switch to solar power. Their conversion to solar energy, like the showcases of the hamburger chain Quezon City and Pangasinan, prevents around 17,000 kg of CO2 emissions.

Both of these progressive moves toward sustainability have received some attention, but they also represent the untapped – and overlooked – potential of commercial franchises to drive a greener future. This major business sector has the potential to play a leading role in reducing emissions, but seems to be a bit of a blind spot for government support and action on climate change.

Today, there are over 4,300 franchise systems across Southeast Asia. These chains effectively control more than 150,000 franchise businesses licensed to sell merchandise on behalf of master franchise brands. Together, they provide ample opportunity to quickly and effectively change business practices across much of the retail, service, and hospitality industries, where many franchises are now proliferating.

While most other emissions reduction programs require voluntary company participation, franchising is different. The franchisor largely dictates the terms under which goods and services are produced and delivered by its franchisees.

Since many chains are big consumers of raw materials and goods – the Philippines-based Jollibee alone has more than 1,000 outlets in Southeast Asia – they can also set the rules for how their own supply chains and the environmental standards with which they must comply.

In other words, greening a franchise system can lead to significant improvements in the upstream and downstream supply chains it oversees. This appears to be a quick and effective way to promote emission reductions across many businesses simultaneously.

Yet there seems to be little action taken by governments in the region to support the greening of franchising. A look at the business support programs of various agencies reveals an abundance of assistance programs working in conjunction with industry associations and chambers of commerce, and many programs targeted at particular industries.

These are all important and useful measures, but they are aimed at working with the private sector, one company at a time. Significant and widespread change via this route will take a very long time.

While most other emissions reduction programs require voluntary company participation, franchising is different. The franchisor largely dictates the terms under which goods and services are produced and delivered by its franchisees.

Few, if any, agencies seem to engage in the franchise business per se, despite its enormous ability to effect large-scale change for the better and in a much shorter time frame.

Franchising now deserves special attention from climate bodies and a better understanding of how it works, especially since it operates in a different way compared to stand-alone, independent businesses.

For example, in countries such as Malaysia, Thailand and Indonesia, franchise activities are dictated by sectoral regulations. Various challenges stand in the way of a greener shift.

Some international franchisors, such as the many US-based fast food chains now popular in Southeast Asia, still source their original products from distant suppliers. The franchise system may also struggle to monitor its franchisees’ compliance with the new rules.

For all of these reasons, there are good reasons for governments to provide expert support to franchise systems to facilitate their transition to a net zero world.

It should be relatively easy to get into this industry, as franchise chains tend to be more organized into representative bodies than most other parts of the business world.

Across Southeast Asia, a major regional franchise business forum is held annually, and national franchising associations are active in at least 8 of the 10 ASEAN countries. These in turn meet regularly as part of the Asia-Pacific Franchise Confederation.

Finally, the World Franchise Council offers a global perspective on the sector. These facilitating organizations generally make it easier to work with mass franchise systems rather than dealing with independent businesses.

Although national governments certainly have a role to play, a region-wide approach could also be helpful. It makes sense for ASEAN as a whole to work with the sector. Many of the region’s best-known and largest franchise systems operate across much of Southeast Asia, often in line with a pan-Asian or pan-Asian business strategy.

ASEAN could potentially play an important role in providing cross-border support programs and capacity building, improving public sector knowledge of the franchise community and gathering reliable statistics on the size and nature of the sector.

Regional cooperation can help ensure that franchise systems are included when the government consults with businesses on the issue of climate change.

ASEAN could also help Asia-wide franchise chains to “relocate” and bring their supply chains closer to home.

Amid the current convergence of trade uncertainty and the race for net zero, the regional bloc can foster a potentially win-win situation by helping member states navigate the disruptions caused by the pursuit of the zero-Covid strategy. of China and the Russian blockade of Black Sea trade, while reducing the distance traveled and further encouraging sourcing within the region.

This is not yet the case, but ASEAN should start thinking about it.

In the meantime, however, some players are making their decisions unilaterally instead of waiting for government support. For example, many food brands continue to review their packaging (in part due to the impending ban on single-use plastics), add more plant-based items to their menus, and seek to reduce their footprint. carbon when opening new stores.

That’s a good start, but imagine how much more effective it could be if a holistic, region-wide perspective were taken.

Would I like a combo meal with fries and a drink? I’d rather have fewer shows, thank you.

ABOUT THE AUTHOR:

Dr. Michael Schaper is a Visiting Principal Investigator at ISEAS – Yusof Ishak Institute. This piece first appeared on the Pivot website that analyzes developments and trends in Southeast Asia.

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