Franchise Relations in Action - International Franchise Association

FRANCHISE RELATIONS
IN ACTION
Moderators:
Barbara Moran-Goodrich
Moran Family of Brands
CEO/President
Barry E. Miller
Sylvan Learning Center/NBM
Management of OH & PA
Franchisee/Owner
Speakers:
Mitch Cohen
Baskin Robbins/Dunkin Donuts
Franchisee/Owner
Tim Lightner
Two Men And A Truck
Franchisee/Owner
Jack Pearce, CFE
Annex Brands, Inc.
Exec. Director Franchise Integration
Bob McDevitt, CFE
Golden Corral Buffet & Grill
Sr. VP
Denise M. Cumberland, Ph.D.
Spalding University
Assistant Professor & Director
Moderator
BARB MORAN-GOODRICH
As Co-founder of Moran Family of Brands, Inc., Barb MoranGoodrich has over 22 years experience within the
franchising and automotive industry. This includes owning
and operating a transmission repair franchise. Barbara
presides 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 Cars
and recently added Smartview Window Solutions, with
locations in 22 States.
Moderator
BARRY E. MILLER
As a 27 year multi-unit franchisee of Sylvan
Learning Centers. Barry is the owner-operator of
both Sylvan and ETS/Prometric sites in Ohio and
Pennsylvania. He is past president of Sylvan FOA
Inc. In addition Barry Served two years as IFA
Franchisee Forum chair, and is a member of the
IFA , and the IFA Educational Foundation Board of
Directors. His education includes both Bachelor of
Engineering and MBA Degrees.
CASE STUDIES
Presented By:
Mitch Cohen
Baskin Robbins/Dunkin Donuts
Franchisee/Owner
Barry E. Miller
Sylvan Learning Center/NBM
Management of OH & PA
Franchisee/Owner
Tim Lightner
Two Men And A Truck
Franchisee/Owner
Jack Pearce, CFE
Annex Brands, Inc.
Executive Director
Franchise Integration
Bob McDevitt, CFE
Golden Corral Buffet & Grill
Sr. VP
CASE STUDY TOPIC
Presented By:
BARRY E. MILLER
As a 27 year multi-unit franchisee of Sylvan
Learning Centers. Barry is the owner-operator of
both Sylvan and ETS/Prometric sites in Ohio and
Pennsylvania. He is past president of Sylvan FOA
Inc. In addition Barry Served two years as IFA
Franchisee Forum chair, and is a member of the
IFA , and the IFA Educational Foundation Board of
Directors. His education includes both Bachelor of
Engineering and MBA Degrees.
CHALLENGE
• Technology and the Internet created
new business opportunities not
addressed in the Franchise Agreement
ENGAGEMENT APPROACHES
FULL COMMUNITY
ENGAGEMENT
INDIVIDUAL
ENGAGEMENT
CEO Corner
Annual Conference
FOA Board
FOA License Committee
STRATEGIC
National Advertising Committee
Monthly Town Hall Calls
Monthly Regional Calls
ZeeTV
Lunch & Learn (w/ FOA)
Compliance/QAR
Bi-weekly Newsletter
PROGRAMMATIC
& TACTICAL
FOUNDATIONAL
1-800 Support Center
Advisory Councils
Regional Town Halls
Consulting Calls/Visits
Top Performer Visits
ROLE OF THE FAC
• The Sylvan Franchise Owners’
Association and Sylvan Management
worked together to take advantage of
new business opportunities.
• Solutions were jointly developed to
solve a complex set of issues.
WORKING TOGETHER
• Timing to the market was critical, so avoiding costly and
lengthy litigation was imperative for business success.
• Over several months the Sylvan FOA Board and Sylvan
Management met via conference call, and multiple in person
meetings on two separate issues:
1. Franchisee benefits from central electronic delivery of
Sylvan
services within the L.A. specified, territory
boundaries.
2. In, and Out of Center delivery of Sylvan Services by
Franchisees using the latest internet delivery technology
including Apple IPads and other currently available
technology.
OUTCOME
• Extremely complex business issues were
resolved without litigation due to a
commitment to negotiated solutions
by both the Franchisor and Franchisees
LESSONS
Conclusion:
• Good Franchisee Relations was the
key to managing changes to the
Sylvan business model, to the mutual
benefit of all involved.
CASE STUDY TOPIC
Presented By:
MITCH COHEN
Manages the production and distribution operations for his
network of 10 franchise locations in Long Island, NY which
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 IFA
Board of Directors, IFA Presidents Council, FRANPAC and
Franchisee Forum board member. In 2009, he was
honored as Franchisee of the Year and received the
Pathfinder Leadership Award in 2007.
Mitch attended St. John’s Military Academy, Lincoln
College and Eastern Illinois University; he has been a guest
speaker at NYU’s School of Business.
CHALLENGE
• Working with two Brands owned by the
same parent company.
• Making one of the brand’s product
available in the other’s restaurants
• Ad fund Contribution
• Proximity
• Marketing to our guest
ROLE OF THE FAC
• Working together with both Brands
advisory council
• Insure profit and store sales were not
affected 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 the
Brand
• Created a plan to insure all parties
benefited
OUTCOME
• There are now over 400 Baskin Robbins
in California selling DD Kcups
• There are over 25 Dunkin Donuts selling
Baskin Robbins take home quarts
• Both Ad funds are increasing
• The Brand has increased sales and
more Brand awareness in markets
where they were not.
LESSONS
• Early inclusion with the FAC helps take
the tension out of the relationship
• Increase the trust between the Brand
and Franchisees
• Always think of the Franchisee,
Franchisor, and the guest
CASE STUDY TOPIC
Presented By:
TIM LIGHTNER
Tim is a 20 year franchisee of TWO MEN AND A
TRUCK®. serving 5 counties in South Central and
South Eastern Wisconsin. Tim recently completed
his 8th year as member of TEAM, the FAC, and
serves on several local boards. Tim is an IFA
member, member of the Franchise Congress,
serves on the Franchisee Forum and the special
task force on franchise relations. Tim lives in
Madison, WI with Sheri Rice and daughter
Alexandra.
CHALLENGE
• Technology Implementation
– Home Office had researched and
decided to implement IP phone
technology based on its potential benefits
and promise.
– Implementation timeline was presented
and options provided for rollout.
– Vendor issues, excessive expense, and
other issues became quickly apparent.
ROLE OF THE FAC
• TEAM (FAC) fielded calls from
franchisees.
• Brought Issues to Home Office.
• Detailed individual issues were shared
to determine common issues.
• FAC acted as conduit between
franchisees and Home Office.
WORKING TOGETHER
• Respectful, honest, open
communication.
• Conference Calls, field visits and
vendor meetings.
• Kept a customer focus and brand
focus through process.
OUTCOME
• Initiative was dropped.
• Vendor (large telecom) could not live
up to quality of service promised in
contract.
• Working together Home Office and
franchisees pulled out of
commitments.
• Refocused on other more profitable
endeavors and initiatives.
LESSONS
• Open and honest dialogue are critical.
• Keeping the brand and the customer
in focus keeps stakeholders pointed
toward common goal.
• No room for grudges.
• These issues don’t always have to go
through the FAC.
• Communication must be cultivated
and maintained.
CASE STUDY TOPIC
Presented By:
BOB MCDEVITT
Bob McDevitt has been in the restaurant business over 30
years. He joined Golden Corral in 1994 as Vice-President
of Marketing, responsible for Marketing, Food and
Beverage and Purchasing and Distribution. In 2002, Mr.
McDevitt was promoted to his current position as Chief
Franchise Officer responsible for Franchise Operations,
Franchise Sales and Franchise Development. Mr. McDevitt
also manages the Quality Assurance Department
responsible for execution of restaurant assessment, food
safety and customer feedback systems for all Golden
Corral restaurants. In January of 2012, Mr. McDevitt
assumed responsibility for the Purchasing and Distribution
Department responsible for purchasing and distribution for
all of the restaurants.
CHALLENGE
Convince the franchisees that
a change to National TV from
the current system of spot TV
through co-ops can be
effective and equitable and is
in their best interest as a system
and as individuals.
CHALLENGE
• Give up local control /
autonomy.
• Create an equitable formula so
no one loses.
• Results worth the risk (not
testable).
• Franchise Agreement
ROLE OF THE FAC
The FAC was used for its
intended purpose: as a sounding
board for input and ideas on the
idea itself; and, importantly, a
process to best educate and
involve the total community.
ROLE OF THE FAC
• It is an achievable goal and
how.
• Review of “equity” formula.
• Review of evidence suggesting
potential success.
• Develop a plan to educate
franchisees and garner
support.
WORKING TOGETHER
The FAC supported the idea, but
recommended spending the
time and effort to do a road
show series of meetings, inviting
every franchisee to hear a
description of the program, the
equity formula and the likelihood
of success.
WORKING TOGETHER
• 30-day traveling media plan
road show.
• Market specific discussions.
• Franchisee specific impact.
• One-on-one questions and
support building.
OUTCOME
• Over 90% of system expressing
support.
• FAC confidence in supporting
the program.
• Program rolled out in January
2009.
• Franchisees supported an
increase in spending in 2010.
LESSONS
• Sometimes the FAC isn’t
enough.
• On major issues, give the FAC
some political cover.
• The better you communicate,
the stronger your support.
The Impact of Multi-Brand Acquisitions on a
Franchise Advisory Council
Presented By:
JACK PEARCE
Jack Pearce is a Certified Franchise
Executive currently employed as Executive
Director of Franchise Integration at Annex
Brands, Inc., a 430+ unit franchise
organization comprised of five unique
brands within the mail and parcel, custom
packaging and shipping industries. He was
formerly the Chief Operations Officer and
Chief Financial Officer at Navis Logistics
Network and serves on two national IFA
committees, Franchise Relations and
Information Technology.
CHALLENGE
Annex Brands Case Study
• Current market conditions demanded unique and
creative growth strategies.
• Multi-brand acquisitions were an alternative to
organic growth, but with them came franchise
relations challenges.
• Difficult to maintain a system-wide “win-win” culture
among multiple brand constituents.
• Need to develop an advisory structure to equally
serve each brand’s needs while still operating
effectively and efficiently.
CHALLENGE
• Acquired and combined five unique brands within
the mail and parcel, home office services and
residential custom packaging and shipping
industries in order to achieve a franchise vision:
“Building a franchise network to provide more
service to more people in more places”
• Each brand included an FAC group
– Pro: Each FAC contributed valuable input
– Con: Duplicate structures added redundant
costs and operating inefficiencies
• Challenge: maintain the advisory and involvement
components of each FAC while eliminating costly
duplication
ROLE OF THE FAC
• Typical Franchise Advisory Councils are intended to
embrace and harness the front-line experience and
knowledge of current franchisees for the mutual
benefit of the entire franchise organization.
• The FAC concept contributes to the key principles
for 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 each
brand, a “cross pollination” type of structure
• Collaborative discussions between franchisees and
franchisor revealed the five brands all fell within two
mutually exclusive groups:
– “Retail” locations selling over-the-counter
– “Commercial” locations selling via outside sales
representatives and client relationships
• These two “business model” groups clearly defined
support, operations and marketing needs
• With assistance and “buy-in” from the multiple FAC
groups all agreed changing to a business model
structure would best serve all the brand’s needs
OUTCOME
• Legacy FAC groups were actively involved in the
process of completing the organizational change
• The entire process took a fair amount of time,
building of trust, alignment of goals, effective
franchise relations and strong communications
• Franchisee satisfaction improved as the benefits of
“concept-based” support and structure were
realized by all parties
• FAC efficiency improved as problem solving,
strategic development and operational issues
became more concept-centric
LESSONS
• Effective franchise relations lead to a
variety of enterprise benefits, including:
– Even in a multi-brand acquisition growth
environment each brand has been able to retain
their unique market identity
– The resulting concept-centric FAC groups have
become strong advocates and communication
forums for all brands
– Franchisee satisfaction and approval have
grown with the success of the FAC collaboration
efforts
LESSONS
• Increasing franchisee satisfaction and
trust directly translates into:
– New benefits realized from intra-brand synergies
and referrals
– All parties realized alternative advantages from
the strength and benefits of a multi-brand market
penetration strategy
– Created stronger buying power in combined
marketing and supplier programs
– New strength in franchise development based
on a wider range of business model opportunities
EFFECTIVE FAC
Presented By:
DENISE CUMBERLAND, PH.D.
Denise has over 20 years of experience in
franchising. As Director of Insights & Innovation for
Yum! Brands she forecasted trends based on
restaurant data and consumer research.
She is now a professor in the business school at
Spalding University and she conducts research and
assessments for franchise boards and advisory
councils.
A FRANCHISEE LAMENT
The issue with franchise boards is mistrust.
We spend a lot of time and money going
nowhere.
We ultimately get somewhere, but it takes
too long.
We should grow franchisees who sit on these
boards and not just let them be puppets of
some type of anarchy scheme.
We are all human, but we have to do a
better job of building trust.
SEEKING ANSWERS
 What are the reasons that franchise councils and
board form?
 What roles do franchise councils and boards
play?
 What types of stakeholder relationships exist?
 What practices can facilitate more effective
councils and boards?
SOURCES FOR INFO
Franchisees & Franchisors
25 Interviews
 Qualitative investigation
Board Types
 FAC’s
 FAB’s
 Ad hoc franchisee groups
Industries
 Restaurants  Tax services
 Automotive  Marketing
 Health care
 Beauty
BOARD ROLES
Description of board roles varied
somewhat depending on interviewee
status.
Role #1: Spreading the News
 Strong alignment between zees and zors
Role #2: Promoting Power Plays
 Zors focus on representation and legitimizing
 Zees focus on monitoring and decision-making
Role #3:
Bridges & Bonds
FINDINGS
Governance patterns shared amongst
board types:
• Councils and boards favor elections
• Meetings occur at least quarterly
• Role ambiguity leads to distrust
• Communication from board to
constituents haphazard
MORE SOURCES
 8 Months spent inside three franchise organizations.
Portini’s
Restaurant
- 150 Units
- Original Owner
-
FAC
- Elected
- 7 Members
20 to 25 years old
Zen Masters
Health Services
- 70 Units
- Original Owner
FAC
- Elected
- 6 Members
- < one year old
Euro Salon
Personal Service
- 1300 Units
- Equity Firm
FAB
- Elected
- 7 Members
- 30+ years old
FOUR RELATIONSHIPS
Partnership Model
Activists
Allies
Monitoring
Model
Supporters
Club Model
Antagonists
Agents
Political Model
THE DYNAMICS
“Developing the brand”
“Wanting to make things
work” Tom C.
Connie G.
Working
Together
“A board of directors” Beth w.
“Ensuring test marketing of
new products” Toby R.
Power &
Politics
DYNAMICS
United
Front
“Bad
publicity
leads to
mutual
annihilation”
Franklin C.
“Creating a list of
grievances” Dale C.
Tension
“Danger of
mouthpieces for
the 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 PLEA
What I would like to learn is whether
there is a better way to hardwire a
franchise board so that we
work together.
Is there something plumbed into the
system to help create transparency.
Now that would be nirvana.