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Franchise leaders unite under IFA's umbrella: in its unique position as the "umbrella" organization for all segments of franchising: franchisors, franchisees and suppliers, IFA is charged with setting the highest principles and goals for franchising as well as developing the leaders to carry those goals forward. (Follow The Leaders of Franchising).

"We are on the threshold of a whole new world for business-format franchising," says James H. Amos Jr., CFE. "It is changing, and as it is changing, it is taking us back to what made franchising powerful in the beginning--solid relationships based on real and recognized accountability."

Amos, chair of the International Franchise Association (IFA) and Mail Boxes Etc.'s president and CEO, is intensely focused on strengthening relationships and accountability throughout the franchise community. It's his top priority. As the outgoing chairman of the association, he looks back on a term highlighted by two major initiatives: system-wide membership for franchisees and a comprehensive self-regulation program for the franchise community. Working hand-in-hand with Amos and IFA's board of directors to implement these programs are leaders from the three segments of franchising that come together under IFA's umbrella: franchisors, franchisees and suppliers of goods and services to the franchise community.

"I believe there are three kinds of people or organizations in this world: those who watch things happen, those who make things happen and those who have no idea what happened! Obviously IFA decided a long time ago that it needed to be one of those organizations that make things happen," comments Lloyd Tarbutton, CFE, who speaks to IFA's leadership role from nearly 30 years of experience. As founder and CEO of Econo Lodges, he attended his first IFA convention in 1973, quickly became active in association activities and rose to the position of chairman in 1978. He still is involved in the Past Chairman's Committee, received the prestigious Hall of Fame Award last year and currently serves as vice chair of the Awards Committee.

One of the franchisees who helps make things happen at IFA is Regina Gardner of Uniglobe Dynamic Travel in Houston. She headed up the first IFA Franchisee Advisory Council (now the Franchisee Forum) when the association invited franchisees to become members in 1993 and is now in her second, four-year term on the IFA board of directors, while remaining active in the forum. "I am so proud of franchisee involvement in IFA," she says. "Because of it, IFA is a much better organization." Gardner believes that system-wide membership of franchisees is a major breakthrough for advancing franchising's goals. "As more and more of us participate and buy into IFA as an organization, legislators will recognize that thousands and thousands of franchisees are active members."

And as active members, many of them will become leaders. "IFA generates leaders for franchising and attracts them," according to attorney Carl Zwisler of the Washington, D.C., office of Jenkens & Gilchrist. Zwisler's involvement with IFA goes back more than 25 years, first as a staff member, then as a supplier in various roles, including past chair of the Supplier Forum, member of the board of directors and of several standing committees. "IFA helps shape leaders," Zwisler continues. "People who want to have an impact on something other than their own company join IFA, and those who become active are by definition leaders, because once you get on a working committee, it will be looking for people to lead on projects."

Why a Self-Regulation Program?

After two years of in-depth discussions with all three segments of IFA's membership, a comprehensive self-regulation program was adopted by the association's board of directors in 2001 to provide an effective alternative to litigation and legislation, both of which are costly, time consuming and potentially destructive to franchising. The program's key components are: a revised and straightforward Code of Ethics; a code enforcement mechanism; an ombudsman program; an investor awareness education program; a franchise compliance education program and a reward and recognition program.

The revisions to the IFA code transformed a four-page legal document that few people read and fewer understood into a clearly worded one-page statement reflecting IFA's commitment to positive franchise relationships. "The code is not intended to anticipate every possible occurrence that could happen in a franchise relationship, but rather to articulate what essentially is a set of values," Amos explains.

Gardner comments, "The change from an operational code to an "aspirational" code really established the framework for the implementation of best practices in franchise relations. The new code is straightforward; it can be understood by all parties, and it contributes to IFA's leadership role."

Under the revised enforcement mechanism of the code, alleged violations by a member company are reviewed by the IFA Executive Committee, which determines what, if any, sanctions may be appropriate. Sanctions range from a reprimand to suspension to, in extreme cases, termination of membership. "Since we have instituted this process, we have applied lighter sanctions so far; we haven't come to the place where we needed to terminate," Amos says. "But if that were indicated by the tone or tenor or substance of a violation, I can absolutely assure you we would take that action.

"The process is healthy," Amos continues. "It simplified the code; it put in teeth in terms of sanctions. I believe it makes IFA stronger as a truly representative umbrella organization for all of franchising."

The Ombudsman Program

A central component of the self-regulation initiative is the ombudsman program, designed to curb and resolve disputes between franchisors and franchisees in a non-legal manner. IFA named Julie Becker, president of JBA Dispute Resolution. L.L.C., as its ombudsman, and the program she tailored especially for IFA's members was introduced in March. During Becker's 26-year career at McDonald's Corp., she was the company's ombudsman from 1989 to 1997, handling disputes including store awards, store sales, contract rewrites, relationships, operations and financial problems.

Becker says the first hurdle to implementing an ombudsman program is getting people to know and understand what it is all about. "If you didn't operate in a world that had an ombudsman, you wouldn't know what one was," she says. "The toughest row to hoe is going to be communicating to the franchisees, educating them as to what it is and that it is available to them."

While there is never an "average" or "typical" case, Becket describes a possible ombudsman scenario this way: "Someone calls with an issue to address. We talk it through--how it was done before, how it's being done now, what changed. Did they communicate their problem to the other side? Based on that, and my knowledge of franchising and of the particular industry, I do some research and contact the subject matter experts available to me. I try to get a sense of what is normal in the industry and compare that to what has happened to this person. Then we talk about the different courses of action available. These might include talking it over with local management or with higher management of the company. Or I could get involved in the case on an informal basis to see if there is some fairly simple way to work it out. Or the matter could go to a formal mediation through the National Franchise Mediation Program, which is designed specifically for franchise companies. Or we can go to arbitration. I find out if the franchise agreement has dispute resolution processes written in; some require arbitration, some mediation."

Although the ombudsman program is still in its infancy, it is generating a good deal of interest within the franchise community. "It gives franchisees and franchisors an opportunity to resolve their differences with highly-trained individuals in a fair, impartial, confidential and cost effective way," says Regina Gardner. "Everybody is excited about this program."

"I know how useful an ombudsman program can be for franchisors from my eight years of being ombudsman for McDonald's," Becker says. "Barely any of the issues we looked at went on to any kind of litigation. We were able to resolve so much from just being there, listening, being neutral, collecting the facts and insisting that the facts be what the decision was based on."

Education and Recognition

The final two elements of IFA's self-regulation plan relate to providing the educational programs and recognition vehicles that advance knowledge and best practices in franchising. On the educational side, two new online programs are available now on the IFA Web site, "Franchising Basics" and "Franchise Sales Compliance."

Zwisler, who was involved in writing "Franchising Basics," says the course is intended to provide investors with the most comprehensive opportunities to learn about the many facets of franchising before they invest. "We are not only telling what a franchise is, but spending some time telling some of the differences between franchise concepts and companies, talking about a lot of variables that often get brushed over in a briefer treatment. This will also be beneficial to regulators and lawmakers, because if they have a serious interest in learning about franchising, we try to address some of the myths and half-truths or wrong information that circulates about franchising."

In the compliance course, Zwisler says, "Franchise lawyers have put together information that explains the nuts and bolts of how to comply with franchise laws--to protect themselves from liability, to comply with the FTC (Federal Trade Commission) Rules, to make sure that prospective franchisees and franchisees in their system are getting what they are entitled to under their franchise agreements."

As the final component of its self-regulation program, IFA is developing a reward and recognition program that will highlight best practices in franchise relationships and recognize systems with innovative and effective programs. The association is partnering with J.D. Power and Associates to develop a comprehensive, independent survey to track and trend franchisee attitudes, satisfaction and emerging issues. A pilot study to help shape and refine methods for the overall study is under consideration.

Creating Leaders

IFA is able to pursue its ambitious agenda only because of its diverse and inclusive membership that enables it to develop leaders in all segments of franchising. The volunteers who serve on the board of directors, the franchisor forum, the franchisee forum, the supplier forum and numerous committees and task forces are the leaders who speak for IFA in the franchise community and the world beyond.

Lloyd Tarbutton learned the value of committee involvement many years ago when his mentor, Palmer Waslien of Southland Corporation, talked to him about how to be a franchise leader. "He said to get more active in the IFA committees. So I got involved in the education committee, wound up being its chairman and then going up the line to eventually become IFA chairman." Tarbutton cautions, though, that it is important to continually develop new leadership as older members step aside. "It's like being a grandfather. You have to give the kids room to grow and run."

Regina Gardner believes it is critical for anyone who wants to be involved in the franchise community to be involved in committee work. "I don't think there is anyone now on the IFA Board who could have possibly had the understanding and knowledge to offer something as a board member without being on committees. Participating in these committees gives you a broader range and perspective, which in turn allows you to develop into a leader in the community."

Jim Amos calls the IFA committees proving grounds for the next generation of leaders. "These folks find themselves in the committee eye-to-eye with some of the most tested and proven individuals in the business. That's where I grew up in franchising."

As IFA leaders look to the future, Amos believes managing change is their single most significant challenge. "The business cycle that has always been there -- entrepreneurship growth, decline and renewal has never changed, but the velocity of that cycle has been compressed to the point where no organization or business can afford to be anywhere but in a constant state of renewal today."

Recalling an ancient Chinese imprecation: "I curse you to live in significant times," Amos observes: "In light of recent events, all of us recognize that we are really living in significant times here. It just brings greater emphasis and importance to this whole issue of leadership. It may be the most challenging time in recent memory for leadership."

Polly Larson is a freelance writer based in Laurel, Md. She was editor of Franchising World for 14 years before retiring in 2000.
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Title Annotation:International Franchise Association
Author:Larson, Polly
Publication:Franchising World
Geographic Code:1USA
Date:Jan 1, 2002
Previous Article:Looking ahead 2002. (Chairman's Column).
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