January 2010 Franchising World
Greatly expanded franchise sales management and compliance program to be unveiled during 50th IFA Annual Convention.
By Geoff Hill, CFE
As the franchising industry gathers to celebrate the International Franchise Association’s 50th year during its annual convention in San Antonio, the association will launch a revised and expanded franchise sales management and compliance program–IFA Fran-Guard. The new program culminates months of planning, research and design by task force members of the Institute of Certified Franchise Executives Board of Governors and the Corporate Counsel Committee.
On Friday, Feb. 5, ICFE, will present a full-day special session entitled “IFA Fran-Guard–Safeguard Your Franchise.” This session will be an overview of the new program with a top-down look at the major legal components and ways to protect your franchise system and avoid costly mistakes. Well-known CEOs will participate in both keynote and panel discussion during this session on why the business case for compliance is truly compelling. This session is especially designed for senior executives to show how you can take proactive steps to reduce risks, manage growth, and build a stronger, healthier franchise system. A case study will demonstrate how a proactive franchise sales compliance program can positively impact a company both monetarily and culturally.
On Saturday, Feb. 6, ICFE will present the main features of the IFA Fran-Guard program during a general session open to all IFA members. Information about how members can participate in future programs and receive a certificate for course completion will be presented at this session.
The new, greatly-expanded franchise sales management and compliance program grew out of discussions between IFA volunteer leaders and staff members of the Federal Trade Commission. Following these discussions, the IFA board of directors approved plans to expand the scope of the program and bring it under the umbrella of the Institute of Certified Franchise Executives. The program will educate franchisors on their obligations under federal and state laws about rules governing the offer and sale of franchises, and promotes sound compliance practices. A committee of ICFE Board members and representatives of the Corporate Counsel Committee was organized to develop plans for expanding the program, with these objectives:
• Expand the compliance program to more IFA members by making it more accessible, more convenient, and more affordable.
• Standardize the content and learning objectives of the compliance program for consistency.
• Incorporate the compliance program as part of the continuing education requirements of the CFE program.
• Establish franchise sales compliance core competency and the test to measure it. This is a prerequisite for granting a CFE certificate for completing the course. Successful completion of the course by an individual leads to the granting of the IFA Fran-Guard Certificate.
The IFA Fran-Guard program is designed for franchising professionals whose work involves different aspects of a compliance program, including:
For CEOs and senior executives: Understanding the business case. Not only does a system-wide compliance program protect your franchise system, it can make it more profitable.
For franchise development professionals, area developers/ representatives and brokers: There’s more to a compliance program than the legal requirements. Learn how a sales management and compliance program can increase your effectiveness and help drive franchise sales.
For franchise attorneys, paralegals and compliance managers: Learn how to integrate all the facets of a franchise sales management and compliance program, from disclosure and documentation, to franchise sales, field support, and operations.
IFA Fran-Guard seminars will be offered throughout the year at various venues including the IFA Annual Convention; the International Franchise Expo, April 9-11, in Washington, D.C.; the IFA Legal Symposium, May 16-18, in Washington, D.C.; and in conjunction with IFA Legal Roundtables in Dallas, Chicago, Tampa and Washington, D.C.
A series of “Introducing Fran-Guard” webinars will also be offered to all IFA members, and will be offered on a complimentary basis to all new association members who have joined IFA within the past year. Plans are underway to develop a series of IFA Fran-Guard modules online via www.ifauniversity.com . IFA will continue to support the FTC referral program currently being provided by Baker, Donelson, Bearman, Caldwell & Berkowitz, PC Of Counsel Joel Buckberg.
The Business Case: Fran-Guard vs.The Death Penalty
Just as the name sounds, IFA Fran-Guard was created to “safeguard” your franchise by having your key employees fully trained on the franchise sales management and compliance process. As anyone in the franchise business knows, the key to the success of any brand is the ability to grow with the right franchise partners. Managing the compliance program incorrectly can lead to what NCAA football fans know as the “Death Penalty.” Perhaps one of the best examples is what happened to Southern Methodist University’s football team, which in the 1980s was one of the leading teams in the nation. The legendary Doak Walker played for SMU, winning the Heisman trophy in 1949. In 1982, the team went undefeated and ended the year ranked No. 2 behind Penn State. All of this great success however came crashing down in 1986 when the NCAA gave SMU the “Death Penalty” for paying several of its players over a prolonged period of time. This penalty included cancelling the 1987 football season and limiting the 1988 season to seven games, all away. They also had their practices and number of scholarships restricted through the 1990 season. Their penalty also cost them a chance of joining the newly-formed Big 12 Conference in the mid-90s (SMU was previously a member of the Southwestern Conference with such great teams as Texas, Texas A&M, and Arkansas.) As a result of their violations more than 20 years ago, SMU’s football team has yet to recover. Just like SMU has discovered, violating state or federal compliance rules can damage your franchise brand beyond repair, make it difficult if not impossible to sell franchises, and eventually lead to the failure of your franchise system. The IFA Fran-Guard program is designed to show franchise executives how you can avoid the “Death Penalty”.
As IFA members prepare to celebrate our 50th anniversary in San Antonio next month, it’s good to remember the primary reason that a handful of franchise company founders banded together in 1960 to establish the association. They wanted to work together through an association to protect and promote franchising, which has been and is the mission of IFA. In the words of IFA co-founder Bill Rosenberg, founder of Dunkin’ Donuts, “Franchising was growing but it was also attracting ‘fast-buck con artists’.” He wrote later that “as a result of unscrupulous business practices people were getting hurt and losing their money in so-called franchise arrangements.” He and these other franchise company founders banded together to create an organization that would help promote and protect franchising by focusing on good business practices, and thus, the International Franchise Association was born.
Over the past 50 years, IFA has taken many steps to promote ethical business practices and to educate its members about best practices. In 1985, IFA leaders established the Institute of Certified Franchise Executives with the mission “to enhance the professionalism of franchising by certifying the highest standards of quality training and education.” Today, with more than 1,400 executives enrolled in the program, the ICFE offers franchising professionals the opportunity to learn, grow professionally, and reach a recognized standard of excellence in the franchising community.
Looking ahead, we believe Fran-Guard will provide another excellent way for IFA members to work together to protect and promote franchising by maintaining high ethical standards and good business practices. Those IFA members who participate in the program will be better prepared, will have a better understanding of compliance related issues, and will have a competitive advantage over those who do not.
Geoff Hill, CFE, vice president of Roark Capital Group, has more than 15 years of experience in franchising. Hill most recently served as president of Cinnabon, owned by FOCUS Brands Inc, franchisor of Carvel Ice Cream, Cinnabon, Schlotzsky’s Deli, Moe’s Southwest Grill, and Seattle’s Best Coffee International. He currently serves as the chairman of the board of governors for the IFA’s Certified Franchise Executive program and is a member of the board of trustees for the IFA Educational Foundation. He can be reached at 404-591-3330 or firstname.lastname@example.org .