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NEW YORK-- Thomas DuFore of FranCorp gave two presentations to prospective franchisors at this week's International Restaurant & Foodservice Show.
DuFore began with a discussion of the various methods of financing an expansion strategy. A bit of audience debate ensued when a listener took issue with the feasibility of VC financing, but DuFore noted that the likely lack of liquidity in the IPO markets over the intermediate term was causing VCs to shy away from even solid opportunities.
DuFore's explanation of what franchising is and his recitation of the history of franchising were textbook mainstream presentations. DuFore then went on to discuss his company's history, and FranCorp's view of the franchise relationship.
The most vigorous discussion came when DuFore mentioned that one of the benefits of franchising is the ability to buy in bulk and thereby lower the zee's costs and increase the zee's bottom line. One of the audience was a Quizno's franchisee, and fireworks ensued.
DuFore departed from his prepared remarks to harshly criticize Quizno's, even referring to the impropriety of "kickbacks" going into the pocket of the franchisor and marking up purchases required to be made thru a franchisor affiliate. He went on to state that the official position of FranCorp is that the client should set a reasonable royalty and thereafter work to get the best possible pricing for the franchisees, but that if a company did wish to get "kickbacks" that the royalty should be commensurately lowered, and full disclosure made in the Offering Circular.
This was a frequent theme in DuFore's presentation, and unusual for the franchise consulting industry: DuFore stated the FranCorp recommendation, and then discussed options. While consultants often present options, what was unusual in DuFore's presentation was that the recommended course of action was one designed to foster zor/zee relations. Consistenly--on kickbacks, sourcing, defranchising and other questions--DuFore focused on the benefits of treating zees fairly and giving full disclosure. But DuFore discussed legally-permissible alternatives, and noted cases where FranCorp clients had chosen those alternatives.
At the conclusion of his talk, several audience members approached DuFore with specific questions. One question regarded "concept" franchisors: those who have an idea but no operating unit. DuFore's response was that FranCorp would not accept such a client, but that FranCorp would take on a client which was sufficiently advanced in development of an operating unit that the client would have an operating unit prior to selling the first franchise.
FranCorp and its colorful founder Donald Boroian have had their share of media attention. As such, I arrived at the DuFore presentation with a sharp pencil and plenty of notepads. But if there were any factual errors in the presentation (legal or otherwise) I did not spot them. What I saw was a presentation which was not only factually accurate but oriented toward a win-win model of the zor/zee relationship.
I have heard and read other consultant pitches, and (shocking as this may sound) I found DuFore's presentation to be the most low-key and the only one which I have managed to get through without my blood pressure going up. My Guest/FocusGroup/Bodyguard (in case they found me out, LoL) was impressed as well, and thought it was technically and substantively proficient.
I would stress that I am not only aware of Janet Sparks' extensive reporting on FranCorp's financial matters, but believe that she is correct in her reportage. The Sparks articles suggest matters which should indeed be a factor in a client decision to use (or not use) FranCorp. Likewise, the Robert Zarco lawsuit has been discussed here on BMM, and several BMMers have commented on that; the only thing I would add is that given DuFore's multiple mentions of where clients had chosen a course other than the one recommended by FranCorp, it is not unreasonable to posit that a client chose to pursue an alternate path.
I should note that I did not have a press badge, I had a regular attendee badge and the doorperson was an employee of the exhibition company, so FranCorp did not have an attendee roster at the time of the presentation. I don't think that the presentation was altered from the standard presentation, and much as this statement may come back to bite me one day, if I were looking to start a franchise I would put FranCorp on my list of possible consultants.
|Francorp Handout A Frontside.pdf||5.84 MB|
|Francorp Handout A Side 2.pdf||7.81 MB|
|Francorp Handout B frontside.pdf||5.3 MB|
|Francorp handout B back side.pdf||6.45 MB|