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
BARB MORAN-GOODRICH
As Co-founder of Moran Family of Brands, Inc., Barb Moran-Goodrich 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.
Moderator
CASE STUDIES
Presented By:
Mitch Cohen Baskin Robbins/Dunkin Donuts Franchisee/Owner Tim Lightner Two Men And A Truck
Franchisee/Owner
Bob McDevitt, CFE Golden Corral Buffet & Grill Sr. VP
Barry E. Miller Sylvan Learning Center/NBM Management of OH & PA Franchisee/Owner Jack Pearce, CFE
Annex Brands, Inc. Executive Director Franchise Integration
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 STUDY TOPIC Presented By:
CHALLENGE
• Technology and the Internet created
new business opportunities not
addressed in the Franchise Agreement
ENGAGEMENT APPROACHES
STRATEGIC
FOUNDATIONAL
PROGRAMMATIC
& TACTICAL
FULL COMMUNITY
ENGAGEMENT
INDIVIDUAL
ENGAGEMENT
CEO Corner
Annual Conference
National Advertising Committee
Monthly Town Hall Calls
Monthly Regional Calls
ZeeTV
Lunch & Learn (w/ FOA)
Compliance/QAR
Bi-weekly Newsletter
FOA Board
FOA License Committee
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.
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.
CASE STUDY TOPIC Presented By:
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
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.
CASE STUDY TOPIC Presented By:
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.
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.
CASE STUDY TOPIC Presented By:
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.
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.
The Impact of Multi-Brand Acquisitions on a
Franchise Advisory Council
Presented By:
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
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.
EFFECTIVE FAC Presented By:
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 types of stakeholder relationships exist?
What roles do franchise councils and boards
play?
What practices can facilitate more effective
councils and boards?
SOURCES FOR INFO
Qualitative investigation
Franchisees & Franchisors 25 Interviews
FAC’s
FAB’s
Ad hoc franchisee groups
Board Types
Industries
Restaurants
Automotive
Beauty
Tax services
Marketing
Health care
BOARD ROLES
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
Description of board roles varied somewhat depending on interviewee status.
FINDINGS
Governance patterns shared amongst
board types:
• Councils and boards favor elections
• Meetings occur at least quarterly
• Communication from board to
constituents haphazard
• Role ambiguity leads to distrust
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
Political Model
Supporters
Club Model
Monitoring Model
Allies
Agents
Activists
Antagonists
THE DYNAMICS
DYNAMICS
Working Together
United Front
Tension
Power & Politics
“A board of directors” Beth w.
“Developing the brand” Connie G.
“Bad
publicity
leads to
mutual
annihilation” Franklin C.
“Danger of
mouthpieces for
the corporation” Sam P.
“Creating a list of
grievances” Dale C.
“Wanting to make things
work” Tom C.
“Ensuring test marketing of
new products” Toby R.
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.