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| By Chris Petersen | |
| Tuesday, 14 November 2006 | |
 As the first and largest KFC franchisee, Harman Management Co. wants its managers to take a hands-on approach. Jim Beglin, Harman’s vice president of operations, says Pete Harman was looking for a way to improve his restaurant business in 1951. He attended a four-day course in restaurant management at the University of Chicago and met the person who would change his life forever: Col. Harland Sanders, the originator of the famous KFC recipe. “They struck up a friendship,” Beglin says. “The colonel was kind of like a father figure to him.” Harman and Sanders remained close, and the following year Sanders stopped off in Harman’s hometown of Salt Lake City while traveling to Australia. Sanders treated Harman and his wife, Arlene, to a fried chicken dinner cooked at Harman’s restaurant. “The legend is Arlene Harman took one bite and winked at Pete like, ‘This is the special stuff, right here,’” Beglin says. The very next day, with Sanders resuming his trip, Harman called a sign painter to announce his new discovery to the world. He wanted the restaurant’s 10-foot-high windows to proudly bear the name of the colonel’s chicken, but quickly found that Sanders hadn’t given the recipe a name. “So Pete sat in the lobby with this sign painter and they named it Kentucky Fried Chicken,” Beglin says. Sanders’ original restaurant in Corbin, Ky., didn’t use the name. Within 24 hours, Harman had not only given the chicken its name, but he had also purchased radio advertising and begun operating as the world’s first KFC restaurant. Today, KFC has thousands of stores worldwide. Beglin says Harman Management takes pride in being the originator of the franchise. Two years ago, the original KFC franchise in Salt Lake City was torn down and replaced with a modern building that includes a museum of the restaurant’s history, as well as a display of one of Sanders’ trademark white suits. Personal Investment Beglin says Harman believed in being personally involved with his original locations, something the company makes a part of its philosophy even today. With his first four restaurants in Salt Lake City, Harman would typically make the rounds at each one in the morning, take a nap in the afternoon, and do go back to each store again in the evening. “His philosophy was [that] customers deserve to have an owner,” Beglin says. Harman went to each restaurant to keep an eye on them, as well as meet and greet customers. This gave customers the feeling that they knew exactly who to talk to if they had a problem with their service, and they knew exactly where to find him, Beglin says. The company’s fifth store was opened in Ogden, Utah, which is a long drive from Salt Lake City. To maintain the close personal connection between the company and its stores, Harman got a partner to split the Ogden store with him 50/50. This idea is still carried out today, as every manager of a Harman Management franchise owns 30 percent of the restaurants they operate, and each restaurant is a separate legal corporation. This gives each manager a direct connection to the success or failure of their stores. “How that restaurant performs directly impacts that manager-owner’s pay,” Beglin says. This system is highly unusual for the fast-food industry, Beglin says, and although many competitors have tried to emulate bits and pieces of the structure, none have been willing to give their managers that much control. “It takes guts to give up some of the ownership,” Beglin says. To recognize the efforts its managers put into their restaurants, Harman Management goes to great lengths to reward them for their success, Beglin says. “I don’t think anyone does recognition like Harman does,” he says. Recognition efforts include yearly incentive vacations for managers and their spouses and the company’s yearly awards banquet, where the top 10 percent of its managers are recognized in San Francisco at a black-tie gala. Business Outlook Harman Management is being affected, like most other companies, by rising costs. In particular, the high price of oil has meant higher costs almost across the board, Beglin says. “Fuel is terrible this year, and it’s amazing how oil impacts your company in so many different ways,” he says. “It may seem like nothing on your balance sheet, but it all adds up and you don’t get any extra bang for that buck you spent.” Harman Management’s focus in the future will be on maintaining the company’s success and continuing to represent the KFC brand as best it can. The company is in the midst of a massive upgrading project, remodeling all of its stores in accordance with an edict from KFC that all franchises be upgraded by June 2008. At an average cost of $500,000 per store for 335 stores, the project does not come cheap. However, Beglin says the company is meeting the challenge head-on, just as its founder would have. FAD |
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