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Franchise Insight

Industry Group Seeks to Court Franchisees
August 12, 2004
URL: http://www.entrepreneur.com/article/70602

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Few attendees at this year's International Franchise Association convention were franchisees. Here's a look at what they missed and why networking with other owners can help them.

Maureen Grimaud, a Precision Tune franchisee from Chapin, S.C., spent the first two days of this year's International Franchise Association Convention in March looking for other franchisees. It wasn't until she walked into the meeting's franchisees-only luncheon that she realized what the problem was.

Of the 1,958 people attending "Partners in Prosperity," the IFA's 44th annual convention, in the MGM Grand Hotel in Las Vegas, only 126, or a scant 6%, were franchisees. When grouped together, they filled fewer than a dozen tables in the small room. "No wonder I couldn't find anybody," Mrs. Grimaud says.

The number was an improvement over past conventions. The Washington, D.C.-based trade group calls itself "The Voice of Franchising," but the sound coming from the nation's 500,000-plus franchisees is barely a whisper. Officially, IFA membership includes 917 franchisers, 378 suppliers, 117 franchisees that joined on their own, and 6,200 other franchisees who have been signed up by their franchisers.

The Big Picture

Those missing Prosperity Partners could have learned a lot, says Bruce Cherry, a Big O Tires franchisee from Dublin, Calif., who attended his first convention this year. "I now realize that pretty much all franchisees have the same problems," he says in a phone interview from one of his six tire stores. "I picked up some marketing tips that I'll definitely use. But most of all, the convention gave me a good perspective. I've been with Big O since 1981 and, like most franchisees, I've complained about this and that. Talking to franchisees from other systems really opened my eyes. A lot of the things we have at Big O are actually good. I always thought the grass was greener somewhere else."

David Meltzer, who was chief executive officer of a wireless company in San Diego before buying an Interior Door Replacement franchise last year, says his first IFA convention was so beneficial that he'll return every year.

"It was exciting to see how many successful franchises there are besides the big conglomerates," he says. "The workshops geared to franchisees gave me different cost-saving and marketing measures. And I felt franchisees were recognized as the entity that drives the whole program. I'd been afraid the whole convention would be franchiser-centric."

Opposing Sides

Until recently it was. The IFA was started 45 years ago by a group of franchisers led by William Rosenberg, founder of the Dunkin' Donuts chain. In his autobiography, "A Time to Make the Donuts" (Lebhar-Friedman Books, 2001), the late Mr. Rosenberg said that early franchising was being hurt by "fast-buck artists" and "fly-by-nighters." To bring standards to their new industry, Mr. Rosenberg gathered a group of franchise executives at a breakfast in Chicago, threw a $100 bill on the table, and asked everyone who agreed they needed an association to do the same. The IFA was born with a treasury of $1,900.

And a storehouse of ill feelings. When he initially proposed that membership include franchisers, franchisees and suppliers, to his surprise, some franchisers didn't want to include franchisees. They felt that franchisers and franchisees work on opposing sides of each legal contract and that no organization can serve two such different masters. "I thought they were wrong," Mr. Rosenberg wrote, but to get things moving, he let the issue go.

As franchising grew, so did hard feelings between franchisers and their franchisees. Jerry Wilkerson, now president of Franchise Recruiters, an executive-search firm in Crete, Ill., says that in the late 1970s groups of franchisees were so disgruntled that they took their case to the U.S. Congress. In 1977, 125 legislators co-sponsored a bill that would have removed a franchiser's right to terminate franchisees, even those who did not follow the rules or keep up their businesses. The IFA hired Mr. Wilkerson as its first lobbyist, and after he succeeded in stopping the bill, kept him on as president.

Reaching Out

The trade group remained a franchiser-only organization until the 1990s when groups of unhappy franchisees, now organized under the American Franchisee Association (AFA) in Chicago, again approached Congress. This time the IFA needed more than a lobbyist. At the 1993 IFA convention, Mr. Wilkerson recalls, that year's chairman, Stephen Lynn, CEO of Sonic Restaurants, "made an impassioned speech saying that the only way to stop the legislation was to offer an olive branch to franchisees and invite them to join the IFA. I was sitting with franchisers of four national brands, and they all said, 'Over my dead body.'"

The invitation was issued, but only a few franchisees made that step, and most of them came from systems whose franchisers were already IFA leaders. Steve Siegel, a Dunkin' Donuts franchisee from Massachusetts, became the first chairman of the fledgling Franchisee Forum. In 2000, franchisee membership was so low that the IFA board voted to let its franchiser members sign up their franchisees for free Internet-only memberships. For $100 a year, these franchisees can upgrade to print versions of all materials, including "Franchising World," the IFA's magazine. At last count, only about 35 were doing so.

Many franchisees don't even know the trade group exists, says Mr. Cherry, who first heard of it when his franchiser asked him to serve on the Franchisee Forum. To boost attendance, the IFA now offers a discounted franchisee pass to its annual convention and asks franchisers to nominate top performers for Franchisee of the Year Awards, then pay their way so they can accept the trophies in person. Of the 126 franchisees in Las Vegas in March, 45 were award winners and 25 more were members of the Franchisee Forum committee.

Some longtime franchisees who know about the IFA don't attend its events because they weren't welcome before. Many others, says Mrs. Grimaud, probably can't afford the registration fee, airfare and hotel and the time away from their own businesses. Link Staffing Services of Houston paid for franchisees Chris Waldschmitt and Richard Bannister of Sacramento to fly to Vegas to attend the three-day event and to pick up their award, but the partners could leave their four-person office only for a day and left the franchisees-only luncheon before dessert. "We have to be available 24/7 for our clients," Mr. Waldschmitt says.

Next Year's Confab

Franchisees interviewed say the convention was worthwhile and, like Mr. Meltzer, say they'll return on their own. Eighteen months ago, Chris Black, for instance, left her job as a travel agent to open an Aussie Pet Mobile franchise in San Diego with her husband Charles, a former retail-store manager. They've done so well that Aussie sponsored them for a Franchisee of the Year award. "When you start a business like this," says Mrs. Black, "you forget about the outside world. Now that we've been to the convention, we know what's offered there and what information we can bring back to run our franchise better."

Sid Feltenstein, the 2004 IFA chairman, who started his franchise career at Dunkin' Donuts and recently owned the A&W and Long John Silver's chains, says the IFA must do a better job of connecting with franchisees. "One of my goals for the year," he says, "is to find an incentive, like a health plan, to pull them into the organization. When you have children, you put a pencil mark on the wall and are amazed at how they grow. We may not see progress every day, but next year at the convention we'll see where that pencil mark is."

Thomas Thompson, an A&W franchisee from Dubuque, Iowa, and a member of the Franchisee Forum, doesn't expect the mark to be very high. "We've got a heck of a hill to climb to convince the population at large that this is more than a franchiser association. But there's an opportunity here to shape an industry, and the IFA would be more effective with franchisee input."

Next year's IFA convention will be held March 5-8, in Hollywood, Fla. More information is available on www.franchise.org. If you go, keep an eye open for Mrs. Grimaud. She'll be looking for you.

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