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Ask Dan Prechtel
Ask President Dan Prechtel: October 2009
Franchise Alliance President Dan Prechtel addresses the sale of Business Alliance, Inc.Consultant Question: Why did you sell Business Alliance and open a competing concept? Was there a non-compete involved?
Dan Prechtel response: There was never a non-compete element in that sale, either written or implied. I had actually founded Franchise Alliance, Inc. almost three years prior to selling Business Alliance, Inc. to its current ownership.
In fact, during most of 2006 and 2007 Franchise Alliance, Inc. did contract training for new Business Alliance Affiliates. It was only when we began to expand and dominate the franchise broker space that a chasm started to emerge between the companies.
The model of training franchise consultants and supporting them through the payment of an over-ride, or royalty, was an excellent business model for the 1990s when I began training brokers. We had to fight for listings, fight for web space, fight for commissions. The home office earned every penny of those royalties!
Fast forward ten years, and what had been an outstanding model began to break down. Consultants were earning deep six figure incomes and didn't see the value of paying a royalty four, five, even ten years after they had been trained. They began working "out of network" to avoid paying over-rides on commissions.
On the other side, franchise companies were flocking to the major consulting companies, so listings weren't a problem. With the maturation of the internet, leads were also broadly available to franchise consultants that wanted them.
The handwriting was on the wall: What had been an excellent proposition ten years ago was fast becoming a dinosaur. Although the business was a cash cow, the cow wasn't going to live forever! My choices were easy: ride the cow until it was on life support and finally died, or move on to a sustainable model for the 21st century.
The new BAI ownership clearly understood what was happening, and purchased a cash flow that everyone knew would be finite. Bringing all commissions "in house" helped with collections of royalties, and aggressive recruiting has helped maintain the membership, but long term the outcome is very apparent.
We feel that the BAI ownership team is of high integrity and owns great management skills, and we look forward to a friendly competition and may the best concept win!
Thanks to you all for making this another record month! Dan Prechtel
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