Opinions expressed by BIZ Experiences contributors are their own.
Certainly such recent events as the landmark case Vylene vs.Naugles, which sided with franchisees on encroachment issues,and the new streamlined Uniform Franchise Offering Circularrequirements have had obvious effects on the state of franchising.But there's another force subtly reshaping the industry--fromthe way BIZ Experiencess investigate franchises to how existingfranchisees operate and grow their businesses. That force? TheInternet.
Some may be surprised to discover leak detection andhousecleaning franchisors setting up shop on the World Wide Webalongside the likes of Microsoft and Coca-Cola, but franchisors ofall kinds are flocking to the Web today. For some, establishing aWeb site has created an easy, affordable way to disseminateinformation and market products and services. Many franchisors areusing e-mail to communicate with their franchisees. Still othersare reaching potential franchise buyers around the world throughthe Internet.
With such obvious potential, it's no wonder there are some350 franchise Web sites and counting. "From thefranchisor's perspective, you simply have to have a presence onthe Web," asserts Calvin Haskell, president of FranchiseSolutions Information Services, a franchise consulting firm inPortsmouth, New Hampshire.
Information, Please
On a basic level, franchise Web sites exist to inform consumersabout industry trends and educate them about a franchisor'sproducts and services. The Tinderbox site (http://www.tinderbox.com), forexample, was established primarily to provide information aboutpremium cigars. At Molly Maid's site (http://www.mollymaid.com),you'll find a map to guide you to the nearest Molly Maidlocation, and Ms. Molly answers all your cleaning questions viae-mail. Many franchise sites are also quite entertaining. To wit:You can tour various McDonald's locations around the world atthe McDonald's site (http://www.mcdonalds.com), or visitthe "Flavor Graveyard" at the Ben and Jerry's site(http://www.benjerry.com).
From an BIZ Experiencesial perspective, however, the real value inbrowsing these Web sites is the ability to research businessopportunities--and get answers fast. Most franchise sites containdescriptions of franchise programs, company fact sheets, newsreleases, franchisee testimonials and details on franchiseopportunities. Others, such as the Franchise Solutions InformationServices site (http://www.bluefin.net/~fransale),aid BIZ Experiencess in the purchase and sale of franchise andbusiness opportunities.
What it comes down to is literally hundreds of Web pages thatcan make for more informed choices by BIZ Experiencess."There's an absolute wealth of more extensive, qualityinformation on the Internet than people have traditionally beenable to find about franchises," Haskell says.
Since launching its Web site in October 1995, Molly Maid hassold 12 franchises to prospects fielded over the Internet.Likewise, last July, King of Prussia, Pennsylvania-based MaacoEnterprises Inc. sold its first franchise to someone who checkedout the Maaco site (http://www.maaco.com) and then inquiredabout purchasing a franchise. Linda Kemp, Maaco's franchisedevelopment manager, says, "The franchisee was able to readthrough the [information on the] site and determine right away thathe could qualify."
Support Network
In many respects, the Internet has also helped franchisors buildstronger relationships with their franchisees and provide a higherlevel of support. Molly Maid franchisees have the option to e-mailMolly Maid their operating information; the franchisor will thenanalyze it and e-mail it back with recommendations on how toimprove daily operations.
"We've had a phenomenal response from thisprogram," says David McKinnon, president and CEO of Molly Maidin Ann Arbor, Michigan. "It saves on paperwork and time. Manyfranchisees say they simply can't live without it."
Similarly, industry insiders see e-mail as an extremelyeffective way to heighten the frequency and quality ofcommunication between franchisees and franchisors. "It'salways going to be a benefit when you can have open lines ofcommunication," says Haskell. "Because the Internet openschannels and allows franchisors to speak with franchisees and viceversa more often, the Internet is turning out to be a benefit toeveryone."
McKinnon, who says he receives an average of 10 e-mail messagesdaily from franchise owners, sees the Internet as a speedy way tocommunicate with franchisees.
No Boundaries
Perhaps the greatest advantage of the Internet is it connectspeople from virtually all corners of the world. Experts agree themost significant impact of the Internet on franchising to datecould be the tremendous power it's given franchisors to expandglobally. By establishing Web sites, franchise companies can easilymarket and sell their products and services abroad and tap into aninternational pool of potential franchisees.
When The Tinderbox launched its Web site last August, itreceived dozens of inquiries from interested BIZ Experiencess inWestern Europe and surrounding countries.
"On the Internet, we've become global overnight,"says Fred Haas, director of franchise development at The Tinderboxin Bala Cynwyd, Pennsylvania.
Likewise, franchisees can reach national and even internationalcustomers by establishing their own Web sites. Industry watchers,however, see this as a potential for conflict.
"In addition to the territory in which they operate theirstores, franchisees can now become global," explains Haskell."While that means more revenues, more royalties and moreproducts distributed, a lot of franchisors limit your territory.Right now, there's no language in the franchise agreement thatsays you can't market globally through the Internet. [Thetechnology is] too new. So if a lot of orders come out of [anotherfranchisee's] backyard, well, that could present a lot ofproblems."
Even so, many franchisors still allow franchisees to establishtheir own Web sites. For a small fee, for example, Molly Maid willcreate home pages for its franchisees. And more than 60 Tinderboxfranchisees have Web sites (although all content must first becleared through the franchisor). Neither franchisor says they haveexperienced any territory disputes between franchisees.
"So far, there really haven't been any problems,"says Haas. "Each franchisee understands that territoryboundaries are lifted [through the Internet], and they'remarketing abroad to various foreign countries."
Down The Line
Just how much will the Internet change franchising? Only thefuture will tell, but some experts predict the number and qualityof franchisor Web sites will surely increase. On the other hand,there are some franchisors who are dissatisfied with their Websites. And some franchise companies have even resorted to postingthe warning "serious inquiries only" to decrease theamount of "looky-loo" e-mail messages sent to theirsites.
Still, many franchisors on the Web see great promise in theInternet. McKinnon, for one, wants to use the Internet to provideremote training. New franchisees could learn to use thefranchisor's software by attending an online training course.In the next five years, McKinnon envisions using desktopvideoconferencing over the Internet to keep in touch withinternational franchisees, discuss franchise contracts and conductmeetings.
In addition, other franchisors say they plan to enhance theirInternet offerings by e-mailing franchisees periodically withcompany news and sending prospective franchisees electronicversions of company materials.
"If you polled all the franchise companies on the Internet,overall they'd probably say that the jury is still out,"concedes Haskell. "We really haven't seen how much theInternet is going to change [franchising] at this point."
Stay tuned.
What's New
LEARNING EXPRESS INC.
76 Farmers Row
Groton, MA 01450
(508) 448-2333
DESCRIPTION: Educational toy stores
BUSINESS STARTED: 1987
NATIONAL FRANCHISE EXPANSION STARTED: 1995
NUMBER OF FRANCHISES: 59
TOTAL START-UP: $200K-255K (includes $30K franchise fee)
ROYALTY: 5%
SEEKING: Nationwide
You won't find Power Rangers poised for action or Disneydalmatians on the shelves at Learning Express. Instead, you'llsee educational toys such as arts-and-crafts sets, role-playinggames, construction kits and puzzles.
Sharon DiMinico, 51, started the company 10 years ago when shecouldn't find interesting toys for her children. She beganfranchising in the Northeast in 1989; in 1995 the company took thestores national.
Learning Express is already making its mark in the toy industry.DiMinico credits the company's 1996 sales of $30 million toexciting merchandise, a strong franchisee support system and theactive participation of each store owner. Says DiMinico, "Thebusiness will be only as good as the owner wants it tobe."
--Lourdes Aguila
Contact Sources
Franchise Solutions Information Services, (800) 898-4455,(http://www.bluefin.net/~franfol);
Maaco Enterprises Inc., (800) 296-2226,franchise@maaco.com;
Molly Maid, 1340 Eisenhower Pl., Ann Arbor, MI 48108,(800) MOLLY-MAID;
The Tinderbox, 3 Bala Plaza E., #102, Bala Cynwyd, PA19004, (800) 846-3372.
