Technology is changing our world and revolutionizing the franchise industry. Dan Martin, president and founder of IFX Online.com, has helped bring franchise companies into the new millennium with cost-effective, easy-to-use Intranet/Extranet technology. With this technology, franchise companies can provide franchisees with a 24-hour "lifeline" to virtually any information they might need for their business via a private, password protected web-based support system, along with a wide array of other mission-critical communications solutions.

With 18 years of franchise management experience and five years of Intranet and Extranet development and hosting experience, IFX Online has quickly emerged as the leading applications service provider for franchisor-franchisee communications systems. Since debuting its Intranet system in 1996, the company has built, developed and hosted systems for more than 100 franchise organizations, saving franchisors thousands of dollars in printing and mailing costs and significantly improving their communications support with both franchisees and vendors.

Franchising World recently had a chance to interview Martin about Intranet/Extranet technology in the franchise industry - its past, present and future. Here's what he had to say:

The historical perspective

Q: When did the franchise industry begin to evolve into the "Intranet/Extranet era"?

A: "Our first clients began a formal rollout of their Intranet systems in early 1997. Today, I would estimate that 35 percent of franchise organizations in North America utilize an Intranet/Extranet system for full-blown online support and communications with their franchisees and vendors."

Q: What was the impetus behind gradual widespread use of Intranet/Extranet systems in the franchise industry?

A: "Franchise companies were seeking a more sophisticated means of communication, and Intranet/Extranet systems designed specifically to suit their needs filled the gap. The rest of the world was finding innovative, cost-effective ways to improve communications, so it was only natural that franchise companies evolved into the technology age along with the rest of the business community. Franchise companies welcome with open arms any new technologies that improve their bottom line, reduce their expenses and present them in a favorable light in the eyes of their franchisees. Whenever you have a corporate office and several franchisees across the nation to inform on a daily basis, communication becomes a challenge. Although telephones, fax machines and U.S. mail still have their place within the franchise industry, faster, more efficient means of communications, such as Intranet/Extranets, have greatly complemented these tools."

Q: How has the Internet revolution impacted the market for Intranet/Extranet systems within the franchise industry?

A: "The introduction of the World Wide Web opened the doors to a world of information and technology available to franchisors and franchisees, which in turn, generated a whole new mindset in terms of how to best communicate with each other and with the outside world. As the Web became increasingly accessible and Internet connections became standard for conducting business, the logical next step was for specific industries to find a way to utilize this amazing new technology in a manner that suited their specific needs. For the franchise industry, an Intranet (a private, password protected website that the franchisor makes available to franchisees day or night via the Web) was the ultimate solution. A franchisor's Intranet puts valuable information at a franchisee's fingertips when they need it, using a simple process, without having to wade through extensive manuals in bulky 3-ring binders or attend remarkably long training classes. Increasingly, more franchise companies came to realize that an Intranet system was one technology they simply could not afford to overlook."

The Intranet/Extranet 'way-of-life'

Q: Please explain how a typical franchise company would utilize an Intranet/Extranet system on a day-to-day basis.

A: "Most franchise companies utilize their Intranet/Extranet system as a communications tool via topic-oriented group discussion forums (online chats) and secure webmail designed to record delivery and receipt of critical messages. With an Intranet chat room or group discussion forum, franchisees can network with dozens or hundreds of other franchisees every day online, not just annually at the convention. They propose and refine ideas. They post questions and receive answers from other franchisees. Suppliers also often get into the act by conducting seminars and informational sessions online in front of groups of interested franchisees.

Posting and retrieval of key resources is the other most critical function. A franchise company's Intranet becomes the primary resource for information 24-7, including training, marketing materials and operations manuals.

For example, franchisees can look up a specific procedure or a supplier's price list immediately, searching by "keyword" to obtain instant results. They can search for documents and pull them up on screen in seconds and in color, and print each document on an ordinary laser printer. They can electronically submit purchasing, royalty reporting, employee hiring, and local government forms. The opportunities and functions are endless, but the bottom line is that both franchisors and franchisees benefit from the ability to instantly locate information or network with other franchisees or suppliers online."

Q: It has been said that Intranet/Extranet systems have literally changed the way of life for franchise companies in the new millennium. How so?

A: "Basically, with a PC and an Internet connection, Intranet/Extranet systems have turned once-cumbersome and expensive tasks into simple procedures that leave franchisors and franchisees free to focus on the central aspects of their business. For example, camera-ready flyers, point-of-sale pieces and advertisements were delivered to franchisees in large envelopes, often late or damaged in transit. Now, electronic versions are posted in seconds for immediate access. Franchisees can open the latest advertisements on screen and either print them in color or download them and take them to a commercial printer. Many franchise companies provide "insertion fields" where franchisees can insert their specific address, telephone number and local pricing information automatically into the final advertisement.

The two words that best summarize the new way-of-life would be `instant access.' With an Intranet system, franchisees can quickly and easily gain instant access to current business tips, pricing information, ad campaigns and announcements from management - and that's just the tip of the iceberg."

Q: How do the Intranet/Extranet needs of a franchise company differ from other types of businesses/corporations?

A: "There are certain political, practical and legal needs involved with franchisor-franchisee communications. An Applications Service Provider (ASP) must be intimately familiar with and sensitive to these needs in order to develop an Intranet/Extranet system that will ultimately be successful for a franchise company in the long-term. You can't just throw a generic system in their face and say, `here you go - good luck.' From a technical standpoint, the system has to be able to store numerous documents in a variety of formats, such as operations and marketing manuals that are readily accessible and easy to update. From a philosophical position, you have to design a system that provides franchisees with an environment that creates a sense of independence to succeed on their own, as well as a sense of freedom to communicate and rely upon the advice of more experienced colleagues. At the same time, the system must present a feeling of support from the franchisor. We have taken great care to respect that fine line in the Intranet/Extranet systems that we produce and host."

Q: What kinds of cost savings can franchise companies expect to derive from implementing an Intranet/Extranet system?

A: "An Intranet/Extranet system saves franchisors thousands of dollars in printing, mailing, shipping, travel, long-distance telephone and fax costs. I removed an extra period. In fact, some of our clients have cut their communications costs by as much as 80 percent by implementing our system. Previously, a slight change to an operations manual meant resending the corrected page to every franchisee in the mail, then following-up with phone calls to ensure receipt. That's costly, especially with frequent changes necessitated by new legal constraints or regulations. With an Intranet/Extranet, the change is posted simultaneously to everybody in the franchise system, with automated electronic notification, instant access and the ability to track who received and/or read the notification."

Q: How long does it usually take a franchise company to implement an Intranet/Extranet system to full-efficiency? Who provides the training?

A: "We build systems that franchisees can immediately utilize with little or no instruction from the franchisor. Simple, icon-based navigation utilizing plain English and user-friendly document upload processes reduces the amount of required training and allow clients to use existing staff and infrastructure to maintain their Intranet/Extranet systems.

Our average client initiates the rollout of their Intranet/Extranet system in phases, typically starting with the introduction of their system to a Beta Test Group, Franchise Council or 'influential' group of individual franchise owners who can validate the system and assist others in getting online. Most companies we work with target 80 to 100 percent franchisee-participation in the first six to nine months. Over the past year, ramp-up schedules have accelerated due to increased franchisee acceptance of Intranet/Extranet technology and the Internet as a whole.

We typically conduct two extensive days of hands-on training for our clients' management team. About 30 percent of our training covers political, practical and legal issues inherent in the franchisor-franchisee relationship. How can they utilize a system to increase franchise sales? What form of User Policy should they have in place prior to rollout? Should they modify their UFOC to include a reference to their Intranet/Extranet? What features should they rollout first? We tend to spend more time instructing our clients on how to implement our technology in the franchise environment, rather than the technology itself."

Q: What kind of ongoing support can a franchise company expect from an Application Service Provider who specializes in Intranet/Extranet systems?

A: "Hosting, system maintenance, new feature development and technical support are at the top of the list. However, franchise companies should expect to receive ongoing consulting support as well. ASP knowledge of certain political, legal and practical issues relating to rolling out and maintaining a successful Intranet/Extranet in a franchise environment is a real plus when it comes to maximizing feature sets and user participation."

The crystal ball

Q: What do you see in the future for Intranet/Extranet communications systems in the franchise industry?

A: "One website address. Essentially, Intranets and Extranets will evolve to the point where they become the singular, central gateway that franchisees will access in order to utilize a series of private, web-based applications to help better run their business. As document delivery and online networking become more commonplace, additional feature sets involving sales reporting, wholesale product ordering, electronic vendor support and online training will be successfully introduced in phases. All of these applications will be integrated into the same, user friendly Intranet/Extranet 'portal' that franchisees have come to know and love. Most of our clients allow their franchisees to submit sales data, view training courses online, order supplies, and even update their own localized B2C website entirely from within their singular Intranet or Extranet communications system. 'Pure integration utilizing a singular, user-friendly interface'. That's the future."

Q: How does the dismal state of the dot.com market and failure of many technology startups affect the market for Intranet/Extranet providers in the franchise industry?

A: "Gone are the days when dot.coms could raise millions of dollars in funding or conduct a lucrative IPO with nothing more than a business plan written on a cocktail napkin. Although IFX Online is considered a dot.com, we are mostly known as a franchise management firm with a strong background in UFOC development and franchise program implementation. As a 'dot.com' company offering web-based products and services to the franchise industry, we knew we'd stand a better chance of success if we stuck to what we knew … franchising. Our business plan evolved to producing and hosting Intranet/Extranet systems when our UFOC clients indicated that they were incurring exorbitant costs for ongoing support. An ability to recognize a need, convey a 'real world' solution and actually make it happen is critical in order to succeed in today's market. Targeting a niche you know well, expanding into vertical products and services and establishing solid, long-term business relationships will defy all economic pitfalls. Dot.coms that understand the franchise niche and establish technologies that service 'real world' mission-critical business functions will most likely rise to the top and thrive."

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Franchise Companies Share their 'Life-Changing' Intranet Experiences

So what do franchise companies have to say about their Intranet/Extranet systems? Here's a small sampling of IFX Online users, along with their insight on how the technology has affected their business functions:

Handyman Connection
(Launched its Intranet, "HandyNet," in August, 2000)

Keith Hahn, Director of Operations: "The HandyNet has provided Handyman Connection with an efficient system for communicating with our franchisees, and allows our franchisees to better communicate with each other. It has helped us build a `community' with our franchisees by allowing them to frequently tap into the experience and learning from others.

HandyNet has allowed us to put materials and programs where and when they're needed. We've discontinued mailings on a regular basis, eliminating the floating paper problem we were causing our franchises and decreasing the turnaround time on information and requests."

Heavenly Ham
(Launched its Intranet, Ham-net, in August, 2000)

Wade H. Brannon, Jr., senior vice president of franchise development: "We decreased our communication costs by almost 40 percent with the introduction of Ham-net. Because we no longer have to mail color copies of advertising pieces to each store, we save on postage and copy costs. With Ham-net, we can post a clear image of the advertisement to all our franchisees for them to preview and place orders. And because our Intranet provides private discussion forums, everybody saves on long distance calls."

"With Ham-net, franchisees can post any questions at any time to their Field Marketing Manager and count on a response within 24 hours. Ham-net also provides group discussion strings for all franchisees to share information. We post memos, sales ranking reports and vendor specials each month, and keep our Operations Manual, Marketing Manual, and other important resources for our franchisees and staff in the "library." Before Ham-net, if we needed to make a slight change to a manual, we had to send a corrected page to each franchisee. Now, we can make the change on the Intranet and notify everybody simultaneously."

Batteries Plus
(Launched its Intranet system in March, 2001.

Russ Reynolds, President and COO: "All paper and fax communications have been replaced by email and postings via our IFX Online Intranet site. Uploaded libraries include: all departmental manuals, orientation and training exercises, sales handbooks, product data and cross references, advertising support materials and POP artwork, and vendor links keeping our stores connected to every facet of our business. A message board and forums to discuss important and timely communications are critical in maintaining informed franchise operations."

Express Personnel

(Launched its Intranet in March, 2001)

Bea Battistoni, Vice President, Strategic Initiatives, Express Services, Inc.: "Express Services, Inc. has recently deployed its Intranet for its Express Personnel Services and Express Professional Staffing franchisees. We are pleased to be able to provide our franchisees with easy access to this searchable database of information. Within a few moments, our franchisees can have access to our extensive knowledge repository. In addition, we have heard many great comments about our communication forums. The forums allow our franchisees to communicate with each other, sharing success stories, wisdom and encouragement. We chose an ASP so that we could deploy quickly while remaining focused on our core business."

GNC
(Launched its Intranet system in April, 1999)

Russell L. Cooper, GNC Franchising Senior Vice President and General Manager: "Since the unveiling of GNC's Genesis System (General Nutrition's Electronic Support Information System) three years ago, GNC has streamlined communications between corporate and regional franchise support centers and its franchise operators. Through a secure website, franchisees can access this free Intranet system for up-to-the-minute marketing, sales, accounting and business support information - material that was once delivered through costly and sometimes delayed mailings. More than 800 GNC franchise stores take advantage of the Genesis System to improve their business and support their sales goals. GNC was one of the first franchise companies to offer this type of technology to its franchisees."

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