YTB International, No. 26 on the 2008 Travel Weekly Power List, is considering replacing its referring travel agent business model with a franchise system. Kim Sorensen, CEO of the YTB Travel Network, agreed to a Hot Seat interview with Editor at Large Nadine Godwin but said some of his answers would not be "real direct."
Q: How many RTAs do you have?
A: While the rate of growth has been slowed by many factors, most noticeably the economy, our number of RTAs has increased since the beginning of the year. [As of March 31, YTB reported nearly 139,000 RTAs.]
Q: Would you envision trying to convert all RTAs who are willing into franchisees?
A: Our desire is to answer as many of your questions as we possibly can. However, there are things we cannot comment on as the potential franchise system is still in development. As soon as we are able, we will provide you with additional information.
Q: In reality, what portion might switch? What happens to those who don't?
A: We anticipate everything that currently exists for RTAs will be in the franchise model, and any additional products offered through the franchise will be available to RTAs if they elect to become franchisees.
We also anticipate providing favorable terms to those RTAs who convert to the franchise model, although we have not decided on those details as of this date. If RTAs elect not to become franchisees, they will be able to continue with no change to their status, with all income opportunities and privileges they currently enjoy.
Q: So much of the company's income has come from RTA sales rather than travel. Wouldn't this be a risky switch?
A: We know how to recruit, build a sales force and sell products and services using the direct-sales or network-marketing approach. We are convinced this is the best marketing system ever created, and we are absolutely committed to continuing to use this system with YTB. While there will be changes to the process relating to the sale of franchises, the down-line genealogy and network marketing division will remain intact.
Q: Can you explain the reasons for a possible switch in more detail?
A: Our commitment to becoming a world-class travel company will be supported with additional tools and training for those who choose to actively pursue the travel business. The operations manual available to franchisees will provide details of the critical aspects of how to successfully operate their franchise.
The proprietary e-commerce platform will substantially improve our customers' experience and will allow customer profiles. The ability to support multiple languages and currencies will facilitate and accelerate international expansion.
Q: Would this improve your supplier relationships? Could you get back in the good graces of IATA and RCCL?
A: We believe a franchise model will be easier to comprehend and more readily accepted by the general public. Since franchising is recognized as a traditional business model in virtually all developed countries, YTB's time line for global expansion will be accelerated.
Additionally, franchising will allow us to rapidly diversify the products and services offered by our franchisees. This will enable YTB to more quickly attain our goal of becoming a major distribution channel for products and services sold in the U.S. and abroad.
Q: When will you make the final commitment to making a switch, or not?
A: By year end.