FRANCHISE RELATIONSIN ACTIONModerators:Barbara Moran-GoodrichMoran Family of BrandsCEO/PresidentBarry E. MillerSylvan Learning Center/NBMManagement of OH & PAFranchisee/OwnerSpeakers:Mitch CohenBaskin Robbins/Dunkin DonutsFranchisee/OwnerTim LightnerTwo Men And A TruckFranchisee/OwnerJack Pearce, CFEAnnex Brands, Inc.Exec. Director Franchise IntegrationBob McDevitt, CFEGolden Corral Buffet & GrillSr. VPDenise M. Cumberland, Ph.D.Spalding UniversityAssistant Professor & Director
ModeratorBARB MORAN-GOODRICHAs Co-founder of Moran Family of Brands, Inc., Barb MoranGoodrich has over 22 years experience within thefranchising and automotive industry. This includes owningand operating a transmission repair franchise. Barbarapresides as CEO/President of Moran Family of Brands,franchising automotive service brands include Mr.Transmission, Multistate Transmission, Dr. Nick’s Transmission,Milex Complete Auto Care, Alta Mere Toys for Your Carsand recently added Smartview Window Solutions, withlocations in 22 States.
ModeratorBARRY E. MILLERAs a 27 year multi-unit franchisee of SylvanLearning Centers. Barry is the owner-operator ofboth Sylvan and ETS/Prometric sites in Ohio andPennsylvania. He is past president of Sylvan FOAInc. In addition Barry Served two years as IFAFranchisee Forum chair, and is a member of theIFA , and the IFA Educational Foundation Board ofDirectors. His education includes both Bachelor ofEngineering and MBA Degrees.
CASE STUDIESPresented By:Mitch CohenBaskin Robbins/Dunkin DonutsFranchisee/OwnerBarry E. MillerSylvan Learning Center/NBMManagement of OH & PAFranchisee/OwnerTim LightnerTwo Men And A TruckFranchisee/OwnerJack Pearce, CFEAnnex Brands, Inc.Executive DirectorFranchise IntegrationBob McDevitt, CFEGolden Corral Buffet & GrillSr. VP
CASE STUDY TOPICPresented By:BARRY E. MILLERAs a 27 year multi-unit franchisee of SylvanLearning Centers. Barry is the owner-operator ofboth Sylvan and ETS/Prometric sites in Ohio andPennsylvania. He is past president of Sylvan FOAInc. In addition Barry Served two years as IFAFranchisee Forum chair, and is a member of theIFA , and the IFA Educational Foundation Board ofDirectors. His education includes both Bachelor ofEngineering and MBA Degrees.
CHALLENGE Technology and the Internet creatednew business opportunities notaddressed in the Franchise Agreement
ENGAGEMENT APPROACHESFULL COMMUNITYENGAGEMENTINDIVIDUALENGAGEMENTCEO CornerAnnual ConferenceFOA BoardFOA License CommitteeSTRATEGICNational Advertising CommitteeMonthly Town Hall CallsMonthly Regional CallsZeeTVLunch & Learn (w/ FOA)Compliance/QARBi-weekly NewsletterPROGRAMMATIC& TACTICALFOUNDATIONAL1-800 Support CenterAdvisory CouncilsRegional Town HallsConsulting Calls/VisitsTop Performer Visits
ROLE OF THE FAC The Sylvan Franchise Owners’Association and Sylvan Managementworked together to take advantage ofnew business opportunities. Solutions were jointly developed tosolve a complex set of issues.
WORKING TOGETHER Timing to the market was critical, so avoiding costly andlengthy litigation was imperative for business success. Over several months the Sylvan FOA Board and SylvanManagement met via conference call, and multiple in personmeetings on two separate issues:1. Franchisee benefits from central electronic delivery ofSylvanservices within the L.A. specified, territoryboundaries.2. In, and Out of Center delivery of Sylvan Services byFranchisees using the latest internet delivery technologyincluding Apple IPads and other currently availabletechnology.
OUTCOME Extremely complex business issues wereresolved without litigation due to acommitment to negotiated solutionsby both the Franchisor and Franchisees
LESSONSConclusion: Good Franchisee Relations was thekey to managing changes to theSylvan business model, to the mutualbenefit of all involved.
CASE STUDY TOPICPresented By:MITCH COHENManages the production and distribution operations for hisnetwork of 10 franchise locations in Long Island, NY whichinclude Baskin-Robbins, Dunkin’ Donuts restaurants. He hasbeen an active franchisee for more than 28 yearsincluding his current roles as Baskin-Robbins AdvisoryCouncil Co-Chair, Co-Chair of Dunkin Donuts BaskinRobbins Community Foundation as well as on the IFABoard of Directors, IFA Presidents Council, FRANPAC andFranchisee Forum board member. In 2009, he washonored as Franchisee of the Year and received thePathfinder Leadership Award in 2007.Mitch attended St. John’s Military Academy, LincolnCollege and Eastern Illinois University; he has been a guestspeaker at NYU’s School of Business.
CHALLENGE Working with two Brands owned by thesame parent company. Making one of the brand’s productavailable in the other’s restaurants Ad fund Contribution Proximity Marketing to our guest
ROLE OF THE FAC Working together with both Brandsadvisory council Insure profit and store sales were notaffected negatively Keep the guest in mind at all times Make sure it’s a WIN, WIN, WIN
WORKING TOGETHER In this case we had 2 FACs and theBrand Created a plan to insure all partiesbenefited
OUTCOME There are now over 400 Baskin Robbinsin California selling DD Kcups There are over 25 Dunkin Donuts sellingBaskin Robbins take home quarts Both Ad funds are increasing The Brand has increased sales andmore Brand awareness in marketswhere they were not.
LESSONS Early inclusion with the FAC helps takethe tension out of the relationship Increase the trust between the Brandand Franchisees Always think of the Franchisee,Franchisor, and the guest
CASE STUDY TOPICPresented By:TIM LIGHTNERTim is a 20 year franchisee of TWO MEN AND ATRUCK . serving 5 counties in South Central andSouth Eastern Wisconsin. Tim recently completedhis 8th year as member of TEAM, the FAC, andserves on several local boards. Tim is an IFAmember, member of the Franchise Congress,serves on the Franchisee Forum and the specialtask force on franchise relations. Tim lives inMadison, WI with Sheri Rice and daughterAlexandra.
CHALLENGE Technology Implementation– Home Office had researched anddecided to implement IP phonetechnology based on its potential benefitsand promise.– Implementation timeline was presentedand options provided for rollout.– Vendor issues, excessive expense, andother issues became quickly apparent.
ROLE OF THE FAC TEAM (FAC) fielded calls fromfranchisees. Brought Issues to Home Office. Detailed individual issues were sharedto determine common issues. FAC acted as conduit betweenfranchisees and Home Office.
WORKING TOGETHER Respectful, honest, opencommunication. Conference Calls, field visits andvendor meetings. Kept a customer focus and brandfocus through process.
OUTCOME Initiative was dropped. Vendor (large telecom) could not liveup to quality of service promised incontract. Working together Home Office andfranchisees pulled out ofcommitments. Refocused on other more profitableendeavors and initiatives.
LESSONS Open and honest dialogue are critical. Keeping the brand and the customerin focus keeps stakeholders pointedtoward common goal. No room for grudges. These issues don’t always have to gothrough the FAC. Communication must be cultivatedand maintained.
CASE STUDY TOPICPresented By:BOB MCDEVITTBob McDevitt has been in the restaurant business over 30years. He joined Golden Corral in 1994 as Vice-Presidentof Marketing, responsible for Marketing, Food andBeverage and Purchasing and Distribution. In 2002, Mr.McDevitt was promoted to his current position as ChiefFranchise Officer responsible for Franchise Operations,Franchise Sales and Franchise Development. Mr. McDevittalso manages the Quality Assurance Departmentresponsible for execution of restaurant assessment, foodsafety and customer feedback systems for all GoldenCorral restaurants. In January of 2012, Mr. McDevittassumed responsibility for the Purchasing and DistributionDepartment responsible for purchasing and distribution forall of the restaurants.
CHALLENGEConvince the franchisees thata change to National TV fromthe current system of spot TVthrough co-ops can beeffective and equitable and isin their best interest as a systemand as individuals.
CHALLENGE Give up local control /autonomy. Create an equitable formula sono one loses. Results worth the risk (nottestable). Franchise Agreement
ROLE OF THE FACThe FAC was used for itsintended purpose: as a soundingboard for input and ideas on theidea itself; and, importantly, aprocess to best educate andinvolve the total community.
ROLE OF THE FAC It is an achievable goal andhow. Review of “equity” formula. Review of evidence suggestingpotential success. Develop a plan to educatefranchisees and garnersupport.
WORKING TOGETHERThe FAC supported the idea, butrecommended spending thetime and effort to do a roadshow series of meetings, invitingevery franchisee to hear adescription of the program, theequity formula and the likelihoodof success.
WORKING TOGETHER 30-day traveling media planroad show. Market specific discussions. Franchisee specific impact. One-on-one questions andsupport building.
OUTCOME Over 90% of system expressingsupport. FAC confidence in supportingthe program. Program rolled out in January2009. Franchisees supported anincrease in spending in 2010.
LESSONS Sometimes the FAC isn’tenough. On major issues, give the FACsome political cover. The better you communicate,the stronger your support.
The Impact of Multi-Brand Acquisitions on aFranchise Advisory CouncilPresented By:JACK PEARCEJack Pearce is a Certified FranchiseExecutive currently employed as ExecutiveDirector of Franchise Integration at AnnexBrands, Inc., a 430 unit franchiseorganization comprised of five uniquebrands within the mail and parcel, custompackaging and shipping industries. He wasformerly the Chief Operations Officer andChief Financial Officer at Navis LogisticsNetwork and serves on two national IFAcommittees, Franchise Relations andInformation Technology.
CHALLENGEAnnex Brands Case Study Current market conditions demanded unique andcreative growth strategies. Multi-brand acquisitions were an alternative toorganic growth, but with them came franchiserelations challenges. Difficult to maintain a system-wide “win-win” cultureamong multiple brand constituents. Need to develop an advisory structure to equallyserve each brand’s needs while still operatingeffectively and efficiently.
CHALLENGE Acquired and combined five unique brands withinthe mail and parcel, home office services andresidential custom packaging and shippingindustries in order to achieve a franchise vision:“Building a franchise network to provide moreservice to more people in more places” Each brand included an FAC group– Pro: Each FAC contributed valuable input– Con: Duplicate structures added redundantcosts and operating inefficiencies Challenge: maintain the advisory and involvementcomponents of each FAC while eliminating costlyduplication
ROLE OF THE FAC Typical Franchise Advisory Councils are intended toembrace and harness the front-line experience andknowledge of current franchisees for the mutualbenefit of the entire franchise organization. The FAC concept contributes to the key principlesfor success in franchising, that is– Establishing a positive company culture– Improving or supporting strong franchise relations– Assist with complex organizational development– Support a common set of operating techniques
WORKING TOGETHER Preliminary idea was to select FAC reps from eachbrand, a “cross pollination” type of structure Collaborative discussions between franchisees andfranchisor revealed the five brands all fell within twomutually exclusive groups:– “Retail” locations selling over-the-counter– “Commercial” locations selling via outside salesrepresentatives and client relationships These two “business model” groups clearly definedsupport, operations and marketing needs With assistance and “buy-in” from the multiple FACgroups all agreed changing to a business modelstructure would best serve all the brand’s needs
OUTCOME Legacy FAC groups were actively involved in theprocess of completing the organizational change The entire process took a fair amount of time,building of trust, alignment of goals, effectivefranchise relations and strong communications Franchisee satisfaction improved as the benefits of“concept-based” support and structure wererealized by all parties FAC efficiency improved as problem solving,strategic development and operational issuesbecame more concept-centric
LESSONS Effective franchise relations lead to avariety of enterprise benefits, including:– Even in a multi-brand acquisition growthenvironment each brand has been able to retaintheir unique market identity– The resulting concept-centric FAC groups havebecome strong advocates and communicationforums for all brands– Franchisee satisfaction and approval havegrown with the success of the FAC collaborationefforts
LESSONS Increasing franchisee satisfaction andtrust directly translates into:– New benefits realized from intra-brand synergiesand referrals– All parties realized alternative advantages fromthe strength and benefits of a multi-brand marketpenetration strategy– Created stronger buying power in combinedmarketing and supplier programs– New strength in franchise development basedon a wider range of business model opportunities
EFFECTIVE FACPresented By:DENISE CUMBERLAND, PH.D.Denise has over 20 years of experience infranchising. As Director of Insights & Innovation forYum! Brands she forecasted trends based onrestaurant data and consumer research.She is now a professor in the business school atSpalding University and she conducts research andassessments for franchise boards and advisorycouncils.
A FRANCHISEE LAMENTThe issue with franchise boards is mistrust.We spend a lot of time and money goingnowhere.We ultimately get somewhere, but it takestoo long.We should grow franchisees who sit on theseboards and not just let them be puppets ofsome type of anarchy scheme.We are all human, but we have to do abetter job of building trust.
SEEKING ANSWERS What are the reasons that franchise councils andboard form? What roles do franchise councils and boardsplay? What types of stakeholder relationships exist? What practices can facilitate more effectivecouncils and boards?
SOURCES FOR INFOFranchisees & Franchisors25 Interviews Qualitative investigationBoard Types FAC’s FAB’s Ad hoc franchisee groupsIndustries Restaurants Tax services Automotive Marketing Health care Beauty
BOARD ROLESDescription of board roles variedsomewhat depending on intervieweestatus.Role #1: Spreading the News Strong alignment between zees and zorsRole #2: Promoting Power Plays Zors focus on representation and legitimizing Zees focus on monitoring and decision-makingRole #3:Bridges & Bonds
FINDINGSGovernance patterns shared amongstboard types: Councils and boards favor elections Meetings occur at least quarterly Role ambiguity leads to distrust Communication from board toconstituents haphazard
MORE SOURCES 8 Months spent inside three franchise organizations.Portini’sRestaurant- 150 Units- Original Owner-FAC- Elected- 7 Members20 to 25 years oldZen MastersHealth Services- 70 Units- Original OwnerFAC- Elected- 6 Members- one year oldEuro SalonPersonal Service- 1300 Units- Equity FirmFAB- Elected- 7 Members- 30 years old
FOUR RELATIONSHIPSPartnership ModelActivistsAlliesMonitoringModelSupportersClub ModelAntagonistsAgentsPolitical Model
THE DYNAMICS“Wanting to make thingswork” Tom C.“Developing the brand”Connie G.WorkingTogether“A board of directors” Beth w.“Ensuring test marketing ofnew products” Toby R.Power &Politics“Creating a list ofgrievances” Dale C.DYNAMICSUnitedFront“Badpublicityleads tomutualannihilation”Franklin C.Tension“Danger ofmouthpieces forthe corporation”Sam P.
BEST PRACTICES Initiate early in life cycle of system Clarify purpose of council regularly Bylaws created jointly Decision-making span of board clarified Training for chair and new members Accountability for communication to constituents Social capital processes built-in Annual board evaluations Benchmarking conducted Built in mechanism for council survival
A FRANCHISOR’S PLEAWhat I would like to learn is whetherthere is a better way to hardwire afranchise board so that wework together.Is there something plumbed into thesystem to help create transparency.Now that would be nirvana.
include Baskin-Robbins, Dunkin’ Donuts restaurants. He has been an active franchisee for more than 28 years including his current roles as Baskin- Robbins Advisory Council Co -Chair, Co-Chair of Dunkin Donuts Baskin Robbins Community Foundation as well as on the IF
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4 1.12. FCC shall mean the Federal Communications Commission, its designee, or any successor governmental entity thereto. 1.13. Franchise Agreement shall mean this document and any amendments, exhibits or appendices hereto. 1.14. Franchise Fee shall mean the fee defined in Section 7 of this Franchise Agreement. 1.15. Franchise Area shall mean the area within the corporate limits of Franchisors.
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