New President for IFA

New president for IFA

WASHINGTON: Matthew Shay has been named president of the International Franchise Association (IFA). Since joining the IFA in 1993, Shay has served as executive vice president and chief operating officer, senior vice president and chief counsel, as well as vice president and director of government relations. He has represented the association at legislative and regulatory proceedings at both federal and state levels.

From 1988 until he joined the IFA staff, Shay served as assistant general counsel of the Ohio Council of Retail Merchants. He is a graduate of the Ohio State University College of Law, and received his undergraduate degree at Wittenberg University. Shay is also a graduate of the US Chamber of Commerce’s Institute for Organization Management and holds the designation of Certified Association Executive (CAE), conferred by the American Society of Association Executives.

Founded in 1960, the IFA represents nearly 1000 franchise companies, ranging from many of the world’s most popular brands to small businesses adopting the business format model of franchising for the first time.

More than 18 million Americans are employed in jobs created by franchised businesses, according to a 2004 study for the IFA Educational Foundation by PricewaterhouseCoopers. More than 760,000 franchised establishments account for a total US economic output of more than US$1.53 trillion, nearly 10 percent of the private sector economy.

With the 109th Congress underway, Shay says his first order of business will be to advance the sector’s top legislative priorities: affordable health care, litigation reform, robust small business administration lending programs, immigration reform and the collection of key franchising data by the US government (see story page 25 in this issue).

Loyalty outstrips privacy concerns

BOSTON: Grocery store loyalty cards are now more widespread in the US than the internet or home computers, according to a new study. Indeed, 86 percent of adults have at least one and most have more than one. However, according to the results of a study by a student research team at Boston University’s College of Communication, nearly half of the people who carry such cards are unaware of the sophisticated web of tracking and marketing that accompanies them.

In the online survey of adult supermarket shoppers the students found that even though privacy concerns are high, most cardholders agree that the benefits of using a loyalty card outweigh any infringement on personal privacy.

Grocery store loyalty cards are the credit or (increasingly) key-chain-sized cards with a barcode or magnetic stripe offered by most large supermarket chains. When scanned at the cash register, the card unlocks special discounts offered to ‘loyal’ members. In return for the savings, cardholders agree to allow the grocery store to track their purchases each time they shop. The chains use this information to decide which products to carry, what prices to charge, and in some cases, to target consumers with specific coupons and promotions on behalf of grocery manufacturers.

Actual grocery store uses vary by store — some find the data analysis so time-consuming they have chosen to abandon the cards altogether, as PW Supermarkets, a small chain in Northern California, recently did. Still others have sophisticated systems for matching publicly available information about consumer households with the data collected at the cash register, a practice that infuriates privacy advocacy groups.

Does this tracking influence the consumer’s choice to use a discount card? A clear majority in the study – 76 percent – of cardholders report that they use their grocery store loyalty card nearly every time they shop, despite the fact that 52 percent are concerned about how much of their personal information is collected by companies generally. Why do it, then? Sixty-nine percent of consumers report that the card benefits them in the form of lower prices and access to special promotions. Further, while seven in 10 shoppers now know that grocery stores keep track of what they spend, only 16 percent think about this each time they use it.

“The fact that consumers – even those generally concerned about privacy – are willing to use these cards is testament to the fact that personal information is a commodity people are willing to trade with the right company for the right price,” says Professor James McQuivey, who supervised the research project. “No doubt this will only embolden supermarkets as they try to squeeze ever more dollars from a thin-margin retailing environment.”

So, what is likely to be next?

“Expect radio frequency identification embedded in the loyalty card of the future – an electronic tag that will identify you when you walk through the door, when you’re standing in front of the Pampers, and when you arrive at the checkout. All with your permission, of course, and in exchange for a benefit grocery stores have yet to identify,” McQuivey says.

Austrade acts on AUSFTA

LOS ANGELES: Austrade has announced its commercial strategy to assist Australian businesses take advantage of export opportunities arising from the Australia-United States Free Trade Agreement (AUSFTA) that came into force on 1 January this year.

Austrade’s Los Angeles-based regional director Americas, Ian Wing, says Austrade has expanded its capacity to help Australian exporters identify opportunities and gain market access into the United States.

“We currently operate 10 offices across the US and are expanding our regional coverage with the engagement of 30 new export facilitators to provide specialist advice on the US market to Australian exporters. New advisers are already in place in major business hubs such as Denver, Miami and Houston, with more to come,” Wing says.

“It is important Australian businesses are aware that a wide range of sectors will gain with the introduction of AUSFTA. There is a decrease or elimination of tariffs on 5480 product items. In fact, Austrade has identified a large number of products, from automotive parts to cut flowers, where tariff reductions offer Australian companies an immediate impact.

“Food items, where Australian exporters already have strengths, are other areas to see benefits. Dairy offers an excellent opportunity with a 15-25 percent reduction in tariffs on most cheeses and a substantial rise in the quota for duty-free products. Seafood is another prime target, with 48 percent of tariffs eliminated from day one.”

As well as reduced tariffs and increased quotas, Wing says AUSFTA delivers regulatory changes that provide increased access to US markets for Australian companies.

“The regulatory changes open up substantial export opportunities for Australian businesses in industries such as the $200 billion government and homeland security markets, as well as licensing and franchising, professional services, plus emerging sectors like energy, desalination and solar products,” Wing says.

Austrade offers practical advice, market intelligence and ongoing support (including financial) to Australian businesses looking at entering the US market. Businesses may qualify for assistance through Austrade’s New Exporter Development (NED) program and for funding through the Export Market Development Grants (EMDG) scheme.

The NED program provides free services to exporters such as advice and information about getting into export, coaching and advice on exporting and on-ground assistance in overseas markets. The EMDG scheme provides partial reimbursement of export promotional costs to eligible small and medium-sized businesses. Eligible expenditure includes trade fairs, overseas representatives, marketing visits, free samples, advertising, communications and overseas buyer visits.

Shay into the fray

WASHINGTON: With the 109th Congress underway, the International Franchise Association (IFA) has said it will renew its push for what it perceives as the sector’s top priorities in the US: affordable health care, litigation reform, robust small business administration lending programs, immigration reform and the collection of key franchising data by the US government.

“Franchising accounts for more than US$1.5 trillion of economic output in the US,” says IFA president Matthew Shay. “It is in the nation’s best interest that this sector continues to grow, create more entrepreneurial opportunities for future small business owners and generate jobs. In 2005 we plan to steadfastly urge Congress and the administration to remove obstacles to that vital engine of economic growth.”

As a prime example, Shay says the cost of providing health care continues to spiral upward for franchisees, franchisors and their employees. Association health plans, which would offer many small, franchised businesses a chance to enjoy the economies of scale that many of their competitors enjoy, is a logical place to start, he maintains.

“Frivolous litigation is another issue of great concern among franchised businesses. Whether it is being targeted in a ‘drive-by’ Americans with Disabilities Act lawsuit scam, getting caught up in a class action case before a trial lawyer-friendly state court judge, or being blamed in court for causing someone’s obesity, franchisees and franchisors are wasting too much time and resources on lawsuits that seem to benefit no one but the lawyers. Congress must step up to address this needless cost to business,” Shay says.

“Another priority of the association is aiding the continued growth of SBA loan programs, which are critical sources of funding for prospective franchisees. The two most important to franchising are the 7(a) program and the 504 loans, which together last year helped more than 80,000 small businesses.”

The IFA also co-chairs the Essential Worker Immigration Coalition, and he adds that the body will look to play a lead role in the immigration reform debate.

“A growing economy, long-term demographic trends, and a dysfunctional US immigration system have combined to make finding workers a serious challenge for many franchisees and franchisors,” Shay says. “In recent years businesses have discovered that employees they thought were authorised to work were, in fact, undocumented. Congress and the President must act to fix the broken immigration system to allow employers to bring in foreign workers when no American worker can be found, and to create a mechanism for many of the millions of undocumented workers in our industries to be able to earn legal status.”

Action ranked global leader

BRISBANE: An Australian company has been ranked number-one in the world in the category of business consulting services for the second year in a row by Entrepreneur.com’s Franchise 500.

The company, Brisbane-based Action International , was also ranked 98th overall in the world. The highly regarded listing began in 1980 and was the first ranking of franchises in the industry.

In compiling rankings, all companies, regardless of size, are judged by the same criteria. The rankings are determined by various quantifiable data with some weighted more heavily than others. Considered are financial strength and stability, growth rate and size of the system, number of years in business and length of time franchising, start-up costs, litigation and percentages of terminations.

“To be ranked number-one franchise in the world in our category for two years running is an enormous achievement and testament to the ability of Australian businesses to perform on the world stage,” says Action International general manager Asia Pacific, Irwin Stewart. “Obviously to be ranked within the top 100 franchises in the world is also something of which the entire team at Action International is very proud.”

Action International was started in Australia in 1993 and now boasts more than 550 franchises in countries all over the world, including Australia, US, UK, Malaysia, Hong Kong, Indonesia and New Zealand.

Stewart attributes the success of the franchise to the ever-growing number of small to medium-sized businesses requiring business coaching.

Study finds women key to higher ROI

MINNEAPOLIS: A newly released white paper titled Women Friendly = Global Friendly has addressed the female attributes that match new managerial skills required to stay competitive in a global economy.

According to the paper, not only does the global and wireless world aspect require a different skill level, but female consumers and B2B buyers now control trillions in spending, and learning how to balance both can directly affect ROI.

“Women managers could be a key product and service differentiator, besides coming pre-programmed to work effectively in the new environment, as they will naturally make decisions that are more in line with how the majority of women think and buy,” says Terri Whitesel, president of the company that compiled the white paper, Interpret-Her.

“Besides working in a wireless world, for the first time in economic history women are being recognised for their position as the key buyers or influencers in markets as diverse as electronics to financial services. That economic force is causing a major market shift in all forward thinking companies, in how they design, package, promote and support their products and services. By tapping the minds and emotions of their own female employees, they will align themselves more quickly to the new environment and customer. Women excel in these areas doing professionally what they have always done personally – fostering relationships and staying connected.”

Sales study unlocks the door to success

SYDNEY: Wilson Learning Worldwide, a global provider of human performance improvement solutions, has released a new research study, Versatility: The Key to Sales Performance, which shows the importance of interpersonal versatility in the context of sales.

The study, conducted in the highly competitive pharmaceutical industry, clearly demonstrates that interpersonal versatility is critical to building long-term customer relationships. Market share data was collected for a full year, beginning three months prior to instruction of the sales force and concluding nine months following instruction.

“What we discovered is that organisations can realise as much as a 53 percent increase in market share by preparing their salespeople to apply interpersonal versatility when interacting with customers,” says Michael Leimbach, vice president research and design, Wilson Learning Worldwide.

Those salespeople in the study who only received conventional sales skills training actually lost market share, down26 percent, in part due to the

introduction of a new product by a competitor. However, those who also received sales versatility skills training managed to increase market share by 11 percent, despite the new competitive product on the market.

“People buy from people they are comfortable with,” says Wilson Learning Australia managing director, Stuart Bruce. “Imagine the impact interpersonal versatility could have if every salesperson had the skills necessary to temporarily adjust their social style to open up the lines of communication with internal and external customers. Salespeople who can quickly build rapport have a distinct competitive advantage in that this skill allows the salesperson to understand and then respond to the customer’s needs, priorities and interests better than the competition.”

Fast food chains cash in with backlash burgers

LOS ANGELES: An interesting counter-trend has emerged in the burger business, with the parent of US-based Carl’s Jr. and Hardee’s burger chains aiming to cash in on what it sees as a consumer backlash against healthier fast food fare.

While the likes of McDonald’s Big Mac are now playing second fiddle on the menu and in advertising to new lower-fat offerings from the chains, Carl’s Jr. has just rolled out a Breakfast Burger which, weighing in at 830 calories and with 46 grams of fat, makes a Big Mac, with just 560 calories and 30 grams of fat, look like rabbit food.

Not to be outdone, Hardee’s has rolled out the Monster Thickburger, with two one-third pound beef patties, four strips of bacon, and three slices of cheese. The burger contains 1,417 calories and a whopping 107 grams of fat.

With a business philosophy of “we don’t make what we want to sell, we make what people want to buy”, Hardee’s claims its Monster Thickburger has already hit a nerve with consumers weary of so-called “food police”.

Be this as it may, the new burgers have sparked an outcry from US consumer groups such as the Centre for Science in the Public Interest, which has slammed them as the “height of corporate irresponsibility”.

96-year-old Dove’s newest model

LONDON: In an interesting move, soap brand Dove is breaking advertising convention by recruiting a 96-year-old woman to star in its latest advertising campaign.

Great-grandmother Irene Sinclair poses in billboards that ask if she is ‘wrinkled’ or ‘wonderful’ in an advert that Dove says is part of its mission to “widen the definition of beauty”.

Other women in the campaign include a grey-haired Merlin Glozier, 45, whose poster asks if she is grey or gorgeous, and Leah Seehan, 22, whose ad ponders if her freckled face is flawed or flawless.

According to Dove marketer Lever Faberge, the advertising endeavours to spark a debate by challenging people’s perceptions about what constitutes beauty.

The campaign follows the famous ‘real women’ campaign last March for Dove firming cream, which featured women with ‘real curves’ instead of conventional stick-thin models. That campaign generated acres of publicity and increased sales of Dove products by an incredible 700 per cent.

Diet soda sales soarING

NEW YORK: Still think the cola wars are about Coke vs. Pepsi? These days, the carbonated beverage battleground is diet vs. regular, and it’s looking increasingly as though the lightweight could soon flatten its full-calorie cousin.

Though the highly competitive US$64 billion soft drink industry is still dominated by regular soda, sales of diet soda are surging and some industry analysts say low-cal will eventually take the lead. This is because while regular soda sales have sagged, diet’s share of the market has grown steadily since the mid-1990s. Bottled water, tea, sports and fruits drink sales also are up, further siphoning regular soda sales.

Of course, in obese western nations obsessed with calories and carbs, it probably shouldn’t come as a surprise that people are switching to diet, and beverage companies are rushing to give them more choices.

Soft drink consumption was down nearly three percent last year, and if not for the growth in diet soda, that would have been closer to 10 percent.

Self-heating coffee can set to corner market

LOS ANGELES: Convenience is about to take on new meaning and the ever-growing number of coffee franchises have a new rival in the form of a single-serving coffee in a can that heats itself.

US consumers can now buy a 300ml container of Wolfgang Puck Gourmet Latte and heat it by simply pressing a button. No electricity. No batteries. No appliances. The can will heat the coffee to 145 degrees in six minutes and the coffee will stay hot for 30 minutes.

According to the company behind the invention, there is nothing like it on the market and it will revolutionise the way people drink coffee. What’s more, the company says, the technology could also be used to heat tea, cocoa and soup products. In fact, by mid 2005, it will be tested on foods from rice to fish. The coffee, in the recyclable, single-serve container retails for about US$2.25.

Bakers Delight wins with corporate responsibility

MELBOURNE: Franchise Bakers Delight has topped a list of leading corporate citizens, compiled by Woolcott Research .

Bakers Delight out-performed a number of large reputable companies in a range of industries including aviation, telecommunications, major financial institutions and franchised organisations.

The study measured the response of more than 1000 Australians on where they viewed the position of a cross-section of organisations in terms of corporate citizenship. Key attributes in the measurement of corporate citizenship encompassed the extent to which an organisation demonstrates not only corporate social responsibility, but also economic and ethical issues at both an organisational and community level.

According to Woolcott Research, one of the most important attributes in measuring an organisation’s corporate citizenship is its contribution to the community. Indeed, results indicate that 76 percent of Australians prefer to purchase goods and services from an organisation with good corporate citizenship. Further, 87 percent of investors also prefer to invest in a company that is a good corporate citizen, and 83 percent of workers would prefer to work for an organisation with such an ethic.

The Corporate Citizenship Study highlighted Bakers Delight’s recognition by the public of its significant involvement with the community on both a local and national level. Included in this involvement is the franchise’s partnership with Breast Cancer Network Australia (BCNA) over the past five years. Bakers Delight and its bakery network continue to play a major support role to BCNA, housing its national office, hosting its web site, conducting fundraising activities and providing project support. The partnership has raised $740,000 in just five years.

Additionally, through its bakery network Bakers Delight donates over $25 million in bread each year to various community organisations, including the Salvation Army, while encouraging its franchisees to actively support charities and community-based organisations in their local areas.

Woolcott Research notes that the trend worldwide among customers, investors and employees is to demand a high level of corporate citizenship from organisations. In some countries governments are considering legislating that companies provide citizenship reports in the same manner in which annual reports are provided.

Franchise Index surges

WASHINGTON: The index that tracks the market performance of the top 50 US public franchisors has increased 34.5 percent since January 2000, compared to a drop of 20.1 percent in the S&P 500 over the same period.

The Rosenburg Centre Franchise 50 Index (RCF 50 Index) tracks the market performance of the top 50 US public franchisors that represent more than 98 percent of the market capitalisation of all US public companies engaged in business format franchising.

“There is more than a 50 percent performance gap between the Franchise 50 Index and the S&P 500 since 2000. Franchising has skyrocketed 34.5 percent while the S&P has tumbled. To grow at such a rate during a tough economy speaks to the vitality of the franchising sector,” says former International Franchise Association (IFA) president, Don DeBolt.

Most recently, the RCF 50 outpaced the leading indices in the third quarter of 2004. The RCF 50 Index was up 0.4 percent while the S&P 500 slipped 2.3 percent, the Dow Jones dropped 3.4 percent and NASDAQ fell 7.4 per cent for the July-September period.

“Franchising is a major force in the economy, and many of the best-known and most successful businesses in the country are franchisees,” says The William Rosenberg International Centre of Franchising director, Udo Schlentrich.

The Index was developed by The William Rosenberg International Centre of Franchising at the University of New Hampshire Whittemore School of Business and Economics. The centre was created by Dunkin’ Donuts and IFA founder Bill Rosenberg, whose grant launched the centre in 2002.

Franchising has a significant impact on America’s economy beyond the stock market. According to a recent study conducted by PricewaterhouseCoopers (PwC), it generates one out of every seven jobs in the US. PwC’s Economic Impact of Franchised Businesses study found that there are more than 760,000 franchised businesses that generate $506.6 billion in payroll.

Pizza chain expands staff charity scheme

MELBOURNE: Domino’s Pizza has expanded its charity to provide financial support to staff facing personal misfortune, grief or tragedy into Melbourne.

The pizza chain, which entered the Melbourne market in July 2004, has donated more than $125,000 to staff since 1997 through its charitable trust, the Domino’s Pizza Partners Foundation, which until now has run nationally except for Victoria.

Domino’s Pizza managing director, Don Meij, says the Partners Foundation will be able to help members of its 350 staff across Melbourne as the company expands to open 20 stores in the city before the end of this year.

“We wanted to set up a charitable trust that would be funded by our staff and go towards helping our staff in times of need. As we enter Victoria and the Melbourne market we are extending the Partners Foundation here as well,” Meij says.

In the past the Partners Foundation has helped a Canberra family after their home was burnt down during bushfires and donated to the NSW Department of Microbiology and Infectious Diseases for research into meningococcal meningitis after a staff member died from the disease.

“The Foundation has also modified an employee’s car so he could drive again after a debilitating car accident, and provided financial support to a staff member whose baby was born 17 weeks premature,” Meij adds.

He believes that as the company grows to open its target of 85 stores within three years in Melbourne, the Partners Foundation will become increasingly important.

Brumby’s opens 300th store

ADELAIDE: Almost three decades after it began as a single shop in Victoria named the Old Style Bread Centre, bakery franchise Brumby’s has opened its 300th store at the West Lakes Mall in South Australia.

Brumby’s managing director Michael Sherlock says that like many successful businesses, Brumby’s had a modest beginning with its first store in the Melbourne suburb of Ashburton in 1975.

Brumby’s 300th store is owned and operated by Kym and Jake Mitchell and Scott and Bernice Hillman and located outside one of the busiest Coles supermarkets in South Australia.

“We all grew up in the West Lakes area and Scott, who is a qualified baker, and I are cousins,” says Jake Mitchell. “Kym and I recently left the army and when we moved back to South Australia from Queensland, we knew we wanted a business with a good reputation for quality and service.”

The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.

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