tx45

There is definitely a lot to think about after reading the June news letter and this thread. I’m sure I’ll have more opinions after we have our S.O. meeting Wednesday, but one thing right out of the gates I’ll comment on is our image. I have felt, for years, that our technological insight and web development/image/presence has been years behind the competition. I chose to move away from the corporate site a few years back and promote my own URL because honestly heavensbest.com is outdated and looks like a small local business (granted my site hasnt been much better, but I’m investing a lot of money into rebuilding it and making cutting edge and current). There is no way we are going to attract high quality individuals/franchise sales using the current corp site so I’m very glad to hear there is talk of updating the site! Here’s where I may ruffle a few feathers….EZ net Tools IS NOT the company to use for this in my opinion. I’m sorry but I think their designs and abilities are not up to what is being produced these days.

Here are some examples of what I consider modern, trendy, current sites:

http://www.currenthometechnologies.com

http://abovecorporation.com/

Now compare those to eznet sites:

http://www.eznettools.com/

http://christensenbodyshop.com/

Pretty big difference in my opinion…just my two cents.

I guess I don’t understand. Diminished returns? Not all of us are willing to go along with whatever Cody says. Some of us feel the need to stand up and speak our minds when we don’t agree or when we need to protect our investments/livelihoods. We have presented a very profitable idea to corporate and for Cody to pass it over and continue on with his proposal would be extremely unfortunate.

Bryan, to address something in one of your prior posts. If an operator is not complying with the new fee than they would be in breech of contract and, yes, could potentially get themselves chopped off. That has been one of this franchises major down falls – no one wants to chop anyone off(myself included) but there comes a time when it is necessary. Also, we may not have it “all figured out” but at least we’re trying be constructive rather than make negative remarks.

Someone has said this before, but another option for corporate is to consider selling off another state or two to come up with some operating capitol.

No one has it ALL figured out. I’m simply saying this plan is far better than the astronomical rise in area fees with nothing to show for it other than “hope and change”.

After reading the post from Justin along with a few other state owners, I have re-considered my initial thought on population based pricing for the Internet/advertising fee. An operator in Kentucky pays the same price as I do in Washington for a gallon of 101. why should this be different? It can be explained as a required tool/service. It’s tangible. A flat, across the board, advertising fee is a good idea. $50 a month for the first year and $100 a month from there out.

I also agree with With Laura on the fact that it would be nice to hear from corporate and alleviate this “limbo” feeling some of us are experiencing. Cody had said nothing would happen until 2010 but it still leaves a lot of uncertainty. This is weighing on me heavily and will make it difficult to sell a new franchise multiple areas with a clear conscience. Ultimately the decision comes down from Cody and how he feels the company should be run and the changes he feels need to be made. I just hope he takes into consideration the fallout he could potentially face if he proceeds forward with his previously outlined plan.

Cody, You and I have talked at length about some of corporates wants and needs and I support some of those. This proposal of a mandatory advertising fee (which would give each operator a landing page or micro-site) is an extremely good one and will generate needed income to hire staff and make some necessary upgrades. Remember we spoke of starting smaller than you initially wanted, but sooner? This is that plan, which is actually not that small (approx. $200,000 the first year and $400,000 from then on). I ask you to please consider starting with this Internet/advertising proposal now, and put this uncertainty to rest. I feel that, at this point, it is beginning to jeopardize a few of your relationships as well as the goodwill you have with some of your state owners.

I can stand behind Randy’s proposal of incorporating the “.us” site into the “.com” site 100% as long as the majority of the revenue would going to Mco. I previously posted against the idea of your Nate’s site being used, as it cuts out Mco, but Randy’s post has made me realize that the collaboration of his sons site with Mco could be much more efficient. I have a micro-site on the “.us” site as a secondary page to see what it can do. So far it has not been a big producer but that is mainly because it is a secondary site and I don’t direct a lot of traffic to it. I think that with some tweaking it could be a very good site as well as a useful tool. If all of the operators where to use it, the traffic to the site would be enormous and would certainly cause me to change it from my secondary site to my primary one. I have been calling for an “operator only/marketing” site for years along with many other operators and now it could potentially be here. I understand big franchises generate big revenue, product orders, brand recognition, etc. I run a fairly successful franchise myself, however, I have to side with Dan Burkhard and Dennis in that charging smaller franchises the same as larger ones mainly will benefit the larger franchises. An example would be: My brother Jeremy owns the majority chunk of the Portland Oregon market (about 700,000 population). I own the neighboring county (about 400,000 pop.) Any form of advertising we co-op on is divided by the percentage of pop. because that is the only way to make it square. You have to consider the exposure and potential sales percentages. How many more people are exposed to the ad in his larger area as opposed to my area with less people. That gives him greater sales potential. I support implementing a mandatory Internet program of some kind, whether it’s Randy’s sons site could be a very good option, but I think the price/fee should be population based.

Okay so I’m done chewing and ready to spit. Without question, improvements need to be made at the corporate level. It’s amazing that Cody and his very limited staff have taken the franchise this far. I spoke with Cody at length today about many different topics and was able to get a much clearer understanding of his position and where he would like to see things eventually progress to. He pointed out some very critical issues. From our conversation one of the biggest issues, I perceived, is our contracts. The contracts, in my opinion need to be re-vamped. There is a lot of “grey area” in our contracts that need to be made black and white. What happens if Cody sells? There is no firm language in our individual contracts that protect us from a new owner coming in and cutting state owners out of product payments, royalty fees, portions of franchise sales, etc. I believe Cody when he told me today he wants to protect everyone from something like that. There is no language in the contracts that would allow us to implement new programs into the franchise for example an “advertising fund” or a “contract maintenance fee”. We also spoke about the need to hire in capable staff. Maybe a General Manager to oversee the day to day duties. A controller, to handle the daily book keeping and accounting tasks. An experienced sales and marketing executive with graphic design and strong Internet advertising skills.

So, how do we proceed? How do we help M-co increase it’s revenue to make some necessary changes? Here are a few ideas and thoughts I have come up with along with rough numbers:

1. Enforce contracts. Operators who are not in compliance or are not making their payments or for whatever reason are not following their contracts-chop them off. These operators hurt the growth of the franchise.

2. Create a reasonable processing & handling fee on all product orders. $20 x 100 (?) orders a month = $2000 new income monthly

3. Consider a temporary change in the payment percentage of 101. This is a big one but I personally would be willing to give up 10% of my half of the 101 rather than raise royalties on my franchises. $6 a gallon x 300(?) month = $1800 new income monthly

4. Increase the price of 101 by 5% and only corporate receive the revenue from the increase. $3 x 300 gallons a month = $900 new income monthly

5. As Greg similarly mentioned, create some kind of a mandatory web site fee which would give each operator their own landing page on the Heavens Best website. Charge a reasonable monthly fee. This gives each operator something for their money. Sorry Randy, I know your son has been developing a web site for this but that is money corporate needs to be taking advantage of. $40 x 320 franchises a month = $12800 new income monthly

6. Eliminate special product offers such as buy 5 gallons of 101 and receive a 6th free. There is no competition when it comes to product sales. They are going to buy it regardless. Probably a minimal savings, but still a savings.

7. Begin charging for all of the pre-designed ads, pictures, and graphic design work that is currently available online for free. make it cheaper than if they were to have it done by an outside company, but still charge for it. Profitable?

8. Raise royalty fees responsibly. A $20 per area fee is reasonable as a one time increase with a 3 area cap (no more than a $60 per month increase for franchises with 3 or more area fees). 30% of the increase to the state owner, 70% to corporate. that’s $14-42 per franchise, per month, per amount of fees currently being paid = $7000+(?) new income monthly.

These are a few revenue generating ideas, much smaller than what Cody has proposed but, when you put them together they add up. Some of these ideas can be implemented immediately. Some will require changes to be made to the contracts. Where does that initial legal fees money come from? This is where I believe corporate needs to invest its own money, or borrow it if necessary, to restructure contracts and hire new staff immediately. Once the proper documentation is put into place the new income listed above (roughly $23000-25000 a month, $300,000 a year) should be more than enough to satisfy a few new employee’s wages along with contribute to some of the other corporate needs.

I truly believe that there needs to be a plan in place sooner than later so we can get this franchise back on track by re-structuring contracts, implementing a collaboration of revenue generating ideas as well as finding qualified people to take over some of the critical workload at corporate. however, I cannot stand behind the current plan which charges operators astronomical long term increases without giving them much more than a “hope and change” type outlook in return. I believe if we look at the options I and others have proposed we can come up with a more reasonable solution that is fair to everyone.

Ditto Jim and Thank You! With the words you posted I may actually sleep for the first night in days.

Bryan, I appreciate your willingness to come up with ideas. However, four areas fees is $320. Double that it’s $640. That’s a van payment and the monthly insurance premium put together. That’s 10 gallons of cleaner. That’s huge! The problem is its still a 50% increase and then another additional 50% increase (100%!!!). I didn’t know we were part of an HMO. Seriously though, HMO’s don’t raise rates this astronomically. A single 25% increase is huge, but I would much rather see that kind of an increase over 100%. A single 25% increase would generate an additional $20 per fee being paid. As an example, out of 1226 areas, If there are currently 700 fees being paid than that equates to $14,000 a month. That’s an extra $168,000 a year to corporate. What is the number of fees currently being paid franchise wide and how many are still yet to be paid? As more area fees come current the amount of $$$ will automatically increase as well. I think these are two questions that we need answered before we can effectively discuss what an appropriate percentage increase could be.
I want to re-address something I said previously. If this is, in part, a move to force under performing operators to sell off a portion of their large area than it is unfair. To me it seems like we’d be punishing the masses for a few slackers or ,more so, a few deals made by state owners who now don’t like the deal anymore and want more. You can’t sell something and then force the buyer to give it back when you’re not happy with the way they are using it. This is simply an issue of re-negotiating their contracts at time of renewal.