Adam Dean
March 3, 2016
Cautionary Tale: How to Save Millions on a Food Operator
Cautionary Tale:  How to Save Millions on a Food Operator

There’s no doubt that it’s an exciting and slightly stressful time when you are selecting an operator to manage your foodservices. “It’s going to be great! Isn’t it? Of course it is!” That’s the classic Operator Pre-Selection Mantra that plays in your head, reassuring yourself. Before you go crossing your T’s and dotting your I’s on your new agreement, be sure you have EVERYTHING covered.

Recently, Yosemite National Park experienced a nightmare scenario related to their management agreement. You may have heard about this in the news. If you haven’t, the gist is that The National Park Service has announced an overhaul of many of the iconic names associated with the park due to trademark infringement. “How could this happen?” you may ask. Well, it’s quite simple really. The concessionaire who managed the park’s guest experiences for food and beverage, lodging, and merchandise filed trademarks for the outlets they managed. Now that they are no longer the operator, they are in the process of leaving and taking their trademarks with them. That is, unless the new operator or The National Park Service would like to purchase the name rights at a hefty price.

The Importance of Covering Yourself

You have two opportunities to cover yourself when executing an operator selection process. The first is in the body of the request for proposal (RFP). The RFP helps to set the ground rules for what can and cannot be done. It’s the precursor to the contractual agreement and should clearly communicate the boundaries of the future relationship between the client and the future operator.

We use the RFP to introduce our client and outline our client’s needs for their operation, among other items. It’s through the introduction of our client that we focus on any imperative “do’s and don’ts,” such as, “The selected operator will be an entity of the client and they will be responsible to seamlessly represent the client. The operator will not have entitlement to ownership of the client’s property, either physically or intellectually.”

The second opportunity, and most important, is the management agreement. This is where we ensure that every “do and don’t” that we included in the RFP is also reflected in the contract. At this point, the new operator should be completely familiar with these policies, allowing for less push back when it’s included in the agreement.

Ultimately, the management agreement will be the only document that holds its weight in court. However, the RFP is still an important communicator and it should be used as such.

How Advisement Helps

You may be thinking to yourself, “This couldn’t happen to me. I’m not even responsible for an iconic national park.” Likely so, but then again, it’s also likely that The National Park Service wasn’t expecting to lose naming rights either.

To their credit, it’s really not their fault. If it hasn’t happened before why would you think of it? Often when you are so close to something like your organization, it can be hard to keep track of all the nuances. That’s where the value of professional advisement shines through.

Bringing in a professional with experience managing RFPs on a regular basis can help organize and protect you. They will manage all of the important pieces to your food operation needs and keep you on track. In my experience, clients of all sizes frequently tell me, “It’s a service we thought we could manage internally. In hindsight, we could not have done this without you.” That gives me solace knowing that if ever they recite the Operator Pre-Selection Mantra, they will rest easy knowing, It’s Covered!

By:  Adam Dean

Senior Associate, Management Advisory Services | Washington, DC

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