Interview with Darin Harris, CEO of Jack in the Box, on Franchise Leadership

In 2020, Darin Harris was appointed as CEO for Jack in the Box, one of the oldest and largest publicly traded franchise networks in the USA, with over 2000 locations. While the network had been embroiled in conflict, Darin systematically implemented best practice strategies to rebuild trust with franchisees, revitalise the Support Office culture, and generate record growth for the franchisor and its franchisees. Darin recently discussed his first 18 months as CEO with FRI’s Founder, Greg Nathan.

Greg Nathan: You have an interesting background as a successful multi-unit franchisee and franchisor CEO across several brands in the restaurant industry, as well as being COO of Primrose Schools, which is where we first met. You were then CEO of the Regus group before being headhunted to lead Jack in the Box. What else should we know about you?

Darin Harris: Firstly at a personal level, my family and my faith are at the heart of everything I do. And in terms of the Jack in the Box business, we are proud to announce we are in the process of acquiring a chain of Del Taco restaurants, which will generate another 600 units and a billion dollars in sales. We're excited to complete that acquisition in the next month to further grow the company.

Greg: I know that you're big on the importance of face to face contact with franchisees, and you made a point of meeting people when you first arrived at Jack in the Box. What did you typically say to a franchisee who's meeting you for the first time, and who may be a bit cynical?

Darin: That an interesting question as, before I joined Jack in the Box, our franchisees were suing us. So there were definitely some challenges in the relationship at the start. The first thing I did after I accepted the job was to reach out to 20 franchisees that I knew were influential. I basically said I want to get to know you. We've got plenty of years in front of us to talk about the business, but let’s first start with you telling me how you got started in this business. Tell me who you are. Tell me about your family. Then let me tell you about my situation, and let's get to know each other and start to build a relationship. Because that's going to be the solid foundation, that everything is going to build from. I wanted them to understand that we've got years to talk about the business. But right now, if we don't get the relationship right, and start with getting to know each other as people, when we do have the inevitable challenges, just like in a marriage, we need to have the right foundation in place so we can say “Look, I don't agree with your view, but I respect it.” We need to be able to have that kind of transparent, open dialogue.

Greg: Did you find most people were open to that conversation?

Darin: Absolutely. There was an immediate transition in the conversation to “Oh, my gosh, let me tell you. I was a cook at a Jack in the Box, and now I own 200 restaurants. And let me tell you my story.” So really getting a chance to hear their story and who they were as people is where it all started. This also helped us to start resetting the culture.

Greg: I find it amazing how passionate franchisees are about their business and their brand. This is something we regularly see across the brands we work with. And if we’re honest I’m sure we’ve all seen where franchisees are more passionate than the franchisor team. It sounds like you really tapped into that by asking them to tell you about their story and how they got involved. That was a powerful way to start the conversation.

Darin: Absolutely. And then just finding what can we connect about. Key questions I took to these conversation were, “What do we have that is similar, and what is unique to each one of us? And how can I explore and learn about that?” I took a lot of notes from those meetings that I still refer back to. And this has helped to remind me about each franchisee and their families. I would just continue to seek ways to build that connection, because I was genuinely interested in them. It starts with wanting to know about them as people, because this builds the foundation for a solid relationship.

Greg: You mentioned taking notes. So you physically have a pen and a pad and take notes when you're talking to someone for the first time?

Darin: Yes, especially when using video. To this day, occasionally before I take a call from a franchisee, I'll pull out my notes so I can remember, to make sure I've got this right.

Greg: This is something I've always recommended. When you check in and ask someone if they mind you taking some notes, it shows that you are genuinely listening and regard the conversation as important. Can I ask, given the difficulties the company was facing, including being sued by the franchisees, why did you decide to join the brand?

Darin: That was one of the things I liked. Some people might run from a job with a publicly traded company that is in dispute with its franchisees. But to me, that's the time to dive in, because I believe I can bring people together and that's part of what I enjoy. So this was an exciting opportunity. What I liked about Jack in the Box is, while we had a large publicly traded company with a well-known brand, there is still half of the US to penetrate, as well as the rest of the world. We had a large growth opportunity and a brand that has historically performed well, with a base of multi-unit franchisees that were well capitalized and that had been in the system for years, and with consumers who love the food. But the brand had lost its way from a positioning standpoint. So we had a brand positioning opportunity, a growth opportunity, and a relationship opportunity. And I was the first outside CEO in the history of the organization. I wanted to challenge people’s thinking. Just because we've done it this way for all these years doesn't mean that tomorrow we can’t improve just a small bit. So with all those opportunities, I saw plenty of upside in a business that was already performing.

Greg: About six months in, you engaged the Franchise Relationships Institute team to survey your franchisees so you could get some objective data on the culture. The results on three important dimensions - Leadership, Partnership and Support - placed you at the 10th percentile compared to other networks in our database. So franchisees were clearly dissatisfied. Then after you had been working with the group for 12 months, we surveyed them again, and the results now placed them at the 85th percentile in these dimensions. This was despite the group facing the typical COVID related pressures shared by other networks, such as staff shortages and supply chain problems. And we saw similar changes in franchisee satisfaction when you took over as CEO of CiCi’s Pizza and we did the surveys for you. What are some things you did at Jack in the Box and CiCi’s that helped to create this huge shift in franchisee sentiment?

Darin: As I said, it starts with building relationships, and supporting this with tactical strategies such as engaging FRI to do the survey. I did this both at Jack in the Box and at CiCi’s. I wanted to understand the situation and learn, and go out and connect with every franchisee in the system. This included meetings on Zoom or Teams, or flying around the country and meeting face to face and absorbing all the challenges the system had. It also means being really present, and listening and caring, and showing that I understand, and acknowledging what they had been through. So I toured the country and met with franchisees within the first three months to listen, connect, get to know them, have dinner together, break bread, and get to understand the challenges they faced. I did this prior to going in and saying, here's the vision and the strategy.

Now do you have to do that as a CEO? No. But I think it sets the tone and starts to lead the organization by example. So if I'm going to ask my team to do the same thing, or the frontline employees to do the same things and show that same kind of willingness to care, then I need to be able to reflect that in the organization by starting with myself.

Greg: Did you take any of your team with you into those discussions?

Darin: I did have a couple members of my team with me on every one of those conversations, just to be there to hear it. Sometimes those conversations were about them, so there was discomfort. But we expected that, and I said to the franchisees “Look, I understand you're going to be frustrated with some people even on this call. And it's okay. They're prepared for you to share openly and transparently how you feel. And it’s my job to manage that. But I want to hear the reality of where your head is at and what the challenges are.”

In one brand I had a CMO in the room and three franchisees said, “You need to fire them.” It was that blunt and that direct. I said, “Well, my job as a CEO is to determine that, and understand who are the players that will stay on the team. But you've been heard. And I understand why you're frustrated.” Being able to acknowledge that and have that kind of openness in the communication started to change the tone. It didn't mean I agreed with it. But it definitely provided the opportunity for them to express openly their true frustration and realize that they'd been heard.

Greg: Did you do any preparation or coaching work with your team on the attitude you wanted them to take?

Darin: Yes, we absolutely had to go in with the mindset that we recognized we're at this place for a reason. I'll give you an example. When I joined the company the leadership team were in a place where they had basically chosen to fight and engage in an ‘us versus them’ battle. I initially went to the leadership team and said, “You know, I spoke with 20 to 25 franchisees prior to joining”, and the first reaction of my team was “You did what? You haven't even spoken to us yet.” I said, “Well, you realize I'm here because we have a problem. And I want to hear both sides of where the challenges have been. So we can start to sort through how we bring this back together as one.”

So there was a lot of coaching. The approach I took was to explain to them, “We're going to go talk to the franchisees, and you're going to hear things that you're not comfortable with. And it's okay. It doesn't mean you need to be defensive, and it doesn't mean we need to debate that we're right or wrong. We need to let it all out and get it all out on the table, and just let them express their challenges and not be defensive. We have plenty of time for us to prove the direction we're taking once we've engaged them and understood their challenges. We're past the point of trying to defend why we're doing what we're doing. I'm not assessing you as a person or as a leader. We just need to get this out on the table. If we don't let them express where their head is at, then we can never move forward.”

Greg: So you started to get communication flowing backwards and forwards in a non-defensive way. And you're going from “you and them” to more of an “us and we”. In addition to this, what are some of the business strategies that you think helped?

Darin: We collected a lot of data from guest segmentation work, from our franchisees, and from employee surveys which enabled us to look at our business and peel back the layers to see the good, the bad and the ugly. And then to ask “What do we have to change? What is coming at us from the industry? Where do we need to compete? And how can we differentiate? We definitely didn't try to do this in a silo. We communicated frequently that franchisees are partners in strategy. And I can't just write a strategy without having good data points. So we used the Franchise Relationship Institute, and we used our Leadership Advisory Council that we put in place.

I communicated to the public market that Jack in the Box had been a company model for many years and had treated the franchise relationship as if it was a relay race by saying, “You're the fourth person in the relay race. We're going to hand you the baton, don't look back, don't ask questions, just run to the finish line and do what you are told to do.”

We changed from that mindset to a mindset of us being in a three-legged race where we are tied together. So we're at the starting line together, we have both got a leg in this, and we're going to fall down a few times, and we're going to get back up, and we're going to finish to win. This started through the Leadership Advisory Council, and with data that enabled us to create a strategy together. I used a balanced scorecard approach and communicated to franchisees over and over to engage them. We asked, “Is there anything in the strategy that you disagree with, that are not the right priorities?” This doesn't mean I'm going to agree with you, but I definitely want the ability for you to have feedback and input into where you think the business needs to go.

Greg: So you've got a strategy that you want to roll out, and you're then taking it to a group of franchisees. You obviously can't get everyone to have detailed input. So you largely used the Leadership Advisory Council and said, give us your feedback on what you like or don’t like about it, before finalizing it. Did you always do this?

Darin: Sometimes we would already be down the road on a strategy and would take it to the Leadership Advisory Council and say, we want your feedback, when in reality the brand didn't want the feedback. We just wanted to move forward. And every time we did that, and didn't bring franchisees in from the start, we ended up spending an extra year getting them on board. As an example, we changed our territory impact policy without taking the time to take franchisees through the process of why we wanted to change it, and how we're going to change it. We basically just went to them and said, “Here's the new Impact Policy we wrote, what do you think?” And they were like, “What do you mean, you're changing the Impact Policy? We worked for years to get this right.” And so it took us another six months to unwind things by not bringing them sooner into the process. It took us another six months, but eventually we got there and they agreed and said “Okay, now we see it.” But their immediate reaction was “How dare you change this without consulting us!”? This is affecting our business.

Greg: It's almost taken as a sign of disrespect, isn't it, when you change an important policy that impacts on their business without any prior consultation.

Darin: Yes, even though this wasn't done with any ill intent. But we had missed that step in the process because we were trying to aggressively get things done. So we called time out and said, “You know what, we made a mistake, we didn't bring you into this soon enough. We were busy, we were working to getting to a place because we thought it was good for the system. We'll now put this on pause and work through this together.” And we spent another six months working through it together, communicated it to the system, took our time, and admitted we made a mistake and should have handled it differently.

Greg: Something I have noticed about you Darin is you're a very strong person with strong, clear views. Yet there's a certain humility in your approach to facing up and admitting that you made a mistake. A lot of leaders have trouble with that. Can you share a few thoughts on this, and whether some of your team had trouble with that?

Darin: While this is more of my natural approach, there's definitely times when I am charging hard to get stuff done, and I realize after getting the feedback that I need to stop, reflect, step back and say, “You're right, let me think about this.” I am fortunate to also have a leadership team around me that can do this with me - they will come in and open that door and challenge me. This is an area where I've grown as a leader with the help of mentors. I don't think our entire leadership team had that ability, and so we did make changes to the leadership team. This was one of the key cultural elements we instigated.

Greg: So you lost a few people along the way, some of them long standing people. What was your criteria to move someone out and bring in a new person?

Darin: There's a lot of things you need to check. Do they have the experience? Are they competent, capable and willing? And are they willing to look at a cultural change? Can they move faster, farther? Can they think differently? Can they approach the franchisees with a relationship mindset? Do they have that attitude that we're here to serve and support you? That mindset wasn't shared across the leadership team. And probably the biggest thing was, do they have that ability to be authentic? Do they have that ability to be humble? We’re not always here to agree, but we're definitely here to make you successful.

Greg: And were there any other significant business initiatives that you instigated that you think were game changers?

Darin: As far as game changing strategies, we've been fortunate during COVID to have industry leading performance in the US. I attribute a lot of that to our ability to collaborate, and not have to spend most of our time fighting, but instead aligning around what are the right places to spend our time and energy. The brand had not aggressively grown for 10 years, just 15 to 20 units a year. But we've already signed almost 300 development agreements in less than 12 months for future growth. That's just with our existing owners. So launching a growth strategy with franchise development capabilities was something we have been focused on.

Greg: Something we surveyed was your internal Net Promoter Score, and we found 73% of your franchisees would strongly recommend the business, which I imagine would be extremely useful if you want to grow.

Darin: Yes, absolutely. We want outside potential partners to be able to contact our existing franchisees and talk about their experience. And so that Net Promoter Score is tremendous for us. And the fact that 83% of our existing franchisees want to now build a new restaurant has enabled us to unlock that growth potential. So growth is key.

Secondly we needed greater consistency around our brand execution. We needed to create the systems and processes that could hold us all to the same standard. Because we had people that have been with the network for 10 to 20 years and were not good at supporting consistency. So we needed to go back to basics about restating our standards and refreshing these basic things. We rewrote our operational procedures and standards, put loaded them into a modern technology platform that also enabled training in these important practices.

We also changed the approach of our field consultants to be more collaborative and more focused on building a business plan together. So the consultants were trained in more of a respectful coaching mindset. This involved setting up a time to talk about their business and what they want to talk about, rather than just coming in with a checklist and going through some sort of an audit. And one thing we've made clear is that we all need to see things through the eyes of the customer. So we may not look at the P&L the same, or the business the same, but if we both step on the same side of the fence and look at it through the eyes of the customer experiences, then we can align.

Greg: How did you best communicate your strategies?

Darin: One of the things we instituted is what I call seven times seven ways. This is realization that we need to communicate something seven times in seven ways before it's really integrated. This can involve snail mail, email, text, Leadership Advisory Council and franchise business consultants. We also have regular monthly communication through what we call hot topic webinars. So messages are cascaded into the organization in seven ways.

Greg: How did you select your Leadership Advisory Council? Were they voted in by the franchisees or chosen by corporate? And how do you use the LAC when you're rolling out changes to the entire organization.

Darin: We created a nine member Council. Six were voted in by the franchisees, one from each region and three were corporate chosen. We have found the LAC to be effective if we bring them in sooner than later. Before we leave a meeting we ask if they will endorse moving forward with a change. If they don't, we can choose to move forward anyway, or we will say that we have some more work to do. We want them to be as much of an ally as possible, so our approach is to bring them along. Now, there are some things that we know the franchisees may not agree with, but we believe are right for the system. That's where you need a little bit of what I call marbles in our marble bank. We may have to give up a few marbles from our marble bank, because we're deciding this is the right thing for the business, even though it may be painful for the franchisees. That’s where we come back to trust, transparency, openness, and communication to build up some reserves in the marble bank. At times we've had to rely on that, but if we do business only that way, we won't get much done.

Greg: One of the areas that often gets rated down in our franchisee surveys is the clarity of the future direction. And you seem to have been extremely competent in that. Do you have any tips on how do you get that clarity of direction?

Darin: Our entire organization is aligned around a set of seven objectives. And whatever your role in the company, you will have goals tied to our overall strategy. Everyone’s compensation is tied to a component of the strategy. So everyone can very clearly see how they're linked to the business, even though they may function in a very specific role. As an example, when talk about wanting to change the way that we serve our franchisees in the relationship, 20% of everyone’s bonus compensation is tied to that. We also utilized the FRI team to train our organization in how to best engage franchisees.

Greg: Yes we put everyone through the Culture of Franchising workshops. And we got some really great feedback on that. Now because most of the people in the network have been with Jack in the Box a long time, have you had any pushback by not been a Jack in the Box person yourself?

Darin: I never had concerns about me not having Jack in the Box experience, because I had people around me that had that. However the best thing about my background is that I have been a franchisee. So, although I was never a Jack in the Box franchisee, I had experience in the industry. I'd been on their side of the table and I could relate my own stories, talk openly about their challenges and say, I've been in your shoes, I get it. So that's been helpful.

Greg: Yes credibility comes from having been a franchisee. One final question. What's the most important lesson you've learned in building your Franchise Advisory Council?

Darin: One of the things I shared from the start of our Advisory Council is that we have to believe in positive intent. At the start of every meeting, I have a statement around positive intent. I say, “Remember, we're all here for the benefit of the brand and our business. It doesn't mean everything we're doing is right. But let’s approach this meeting with positive intent.”

Greg: That reminder of coming back to the things we share with positive intent is powerful. This is so important because from a neuroscience perspective, the brain naturally defaults to a simplistic “friend or foe” position. And it's so easy for people to come to a meeting in that default position that you are a foe. So reminding everyone at the start of a meeting that we're on the same team is a smart thing to do. Our mission at FRI is to foster the creation of profitable partnerships in the global franchising sector, so thank you Darin for helping us to live our mission with your openness and generosity in sharing your approach to managing the franchise relationship.

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