True Conversion

Seven years after founding his Gaithersburg, Maryland-based travel agency, Travel Discounters, Neal Dembo decided to convert his business into a Carlson-Wagonlitfranchise in March 1999.

Franchise Zone spoke with Dembo about how and why he came to this decision, and got his advice for other business owners considering conversion.

Franchise Zone:Why did you decide to convert your business to a franchise?

Neal Dembo: Basically, we needed to increase our profits due to the decreasing commissions from the airlines. We were losing the leisure clients, as they were going to the Internet or the airlines directly, so I sought to join a franchise.

I contacted Carlson; they had the right program for what I was looking for. They had a small sign-up fee compared to other franchises, low monthly rates, and high cruise and vacation package commissions-that's what I needed to expand my market.

We're an airline consolidator; we primarily do just airline tickets. We have discounts set up for domestic and international, and we were looking to add to our business mix of cruises and vacation packages, but I wasn't doing enough volume. By joining the Carlson program, the higher commissions gave me the extra edge I needed to increase that business.

Why didn't you become a franchise in the first place, or did it never occur to you?

It never occurred to me. Actually, it was kind of ironic-about two years before I converted, the person who signed me up with Carlson was working for [another travel franchise] and came in here out of the blue and asked if I wanted to join. At the time, I wasn't interested. I was on my own, my name was established in the Washington, DC, area, and I was doing quite well. But over the next few years, the industry changed considerably, and I needed to change from leisure clients to corporate business. That's where the profits are.

How did your employees and customers react to this change?

The employees knew we needed some type of change. I have bimonthly meetings with them to keep them informed as far as what's going on with the agency, in the industry and with clients. I told them of my plans two months prior to doing it, and they thought it was in the best interests of the company and for securing their futures as well.

As far as our corporate clients go, they were kind of surprised. Not understanding the [conversion] relationship, they thought we had been bought out by Carlson, even though we sent out a letter to the corporate heads, which may or may not have trickled down to the administrative assistants. When we changed our greeting, they heard the Carlson name and thought we had been bought out. We had to explain it to them, but we did so in a positive manner-we told them we were getting new discount hotel programs they would benefit [from], as well as car rental discounts, which a lot of them use. Carlson has a national car rental program that helped them get better discounts. We didn't lose any business because of it.

Have you gained business because of it?

Carlson receives RFPs (requests for proposals) from corporations; if they're under a certain amount, they pass them out to the local Carlson agencies that can handle them. Not all referrals are fit for my business structure, but over the two years we've been associated with Carlson, we've increased our sales by 59 percent, either by Carlson referral or by using the Carlson name.