Success
in a box

The franchise model appears to be a profitable — and affordable — option for leisure home agents. Brick-and-mortar leisure franchisees pay significantly more, but they, too, are finding success.

TW illustration by Jenn Martins

Travel agency franchisors are bullish about their businesses. That sentiment is particularly true for the two big names that offer home-based travel agency franchises: Cruise Planners and Dream Vacations/CruiseOne. 

The “business-in-a-box” model is such a good one, they argue, because a) it’s transparent, considering how regulated franchises are, and b) it’s profitable.

How profitable? World Travel Holdings (WTH) said it decided to shutter its host agency brand, Cruises Inc., based on the successful track records of its Dream Vacations and CruiseOne franchisees. Cruises Inc. independent contractors (ICs) were given the choice to purchase their own Dream Vacations franchise or affiliate as an IC under an existing franchisee. (Although CruiseOne is still a brand that WTH franchisees can opt to use, most switched to Dream Vacations when that moniker was introduced in 2016).

Considering the fervency with which those in the franchise space — both franchisors and franchisees — talk about their businesses, it begs a question: Why aren’t there more travel agency franchisors out there? 

The answer is most likely linked to franchises being regulated not only by the federal government but by more than a dozen states. Another nine states require registration filings. There are hefty legal fees associated with putting together the franchise agreements, each tailored to specific state regulations. 

And, of course, it’s costly to launch a national consumer brand — Cruise Planners and Dream Vacations have an early-mover competitive advantage in that regard, benefitting from years of brand recognition. (Cruise Planners and CruiseOne/Dream Vacations were founded in 1994 and 1992, respectively.)

But should someone have pockets deep enough to launch a new home-based agency franchise, are there enough potential franchisees to support another entrant?

Probably, industry executives agree.

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It would be hard for someone [new to compete with us] because of the brand recognition, the experience and the backing of World Travel Holdings.

—Debbie Fiorino, World Travel Holdings

Debbie Fiorino, World Travel Holdings

A FRANCHISE AT HOME

Ever since the advent of the internet as we know it, travel advisors have been packing up their desks and heading home. The home-based model offers flexibility, lower overhead and myriad other benefits, many of which surfaced during the pandemic.

According to Travel Weekly’s 2021 Travel Industry Survey, a whopping 79% of travel advisors now work from home. While the pandemic certainly contributed to that migration, the number of home-based advisors had already been steadily rising for years.

While it seems natural that some franchisors would want to cater to that growing market, such a model is complicated to construct: Buy-in and ongoing pricing has to be within reach of franchisees operating at a small scale.

It’s doable. Compared to franchisors that require storefronts, the cost of entry for a home-based franchise is much lower, said Vicky Garcia, co-owner and COO of Cruise Planners. Starting a Cruise Planners franchise costs around $10,000 (startup costs for Dream Vacations are similar).

In comparison, Expedia Cruises (Expedia CruiseShipCenters before a 2020 rebrand) estimates brick-and-mortar startup costs range between $165,250 and $291,245, according to its website.

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We’re an open book. We know we’re under a microscope with every single franchise owner, so we want to make sure we take care of them. We found the recipe.

—Vicky Garcia, Cruise Planners

Vicky Garcia, Cruise Planners

FRANCHISORS’ ‘INVESTMENT AND ENERGY’

She noted that the commitments for a franchisor, both financial and ethical, are significant.  

It’s also a very transparent business, she said, and not everyone is interested in doing the necessary legwork. The state franchisor agreements must be approved annually and require thorough audits of the company and its owners, she said.

“We’re an open book, so we’re very careful,” Garcia said. “Everything we build, every service we offer, every support we offer, it’s very intentional. We know we’re under a microscope with every single franchise owner, so we want to make sure we take care of them. We found the recipe.”

Fiorino agreed that the reasons Garcia cited are why Dream Vacations and Cruise Planners are likely alone, for the time being, in the home-based franchising space.

“I think it takes a lot of investment and energy to run a franchise organization,” she said, and also pointed to the highly regulated nature of franchising, noting it’s a more difficult business model to build up and grow than, for instance, host agencies.

“It would be hard for someone [new to compete with us] because of the brand recognition, the experience and the backing of World Travel Holdings,” Fiorino said. “It’s not as easy to break into, and to have that faith in the company.”

But could the right, motivated party enter the space as a new home-based franchisor?

“I never say never,” Fiorino said.

Garcia said there will always be room for more players in an industry where there are plenty of products to sell. Occasionally, Cruise Planners has been approached by people considering starting their own travel agency franchises, or asking for advice about franchising in other countries.

“Oftentimes, they’ll later come back and say, ‘Never mind, it’s too expensive,’” she said. “I’m not worried about [competition] too much. But there’s always room for other models or more travel advisors.”

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You’re really talking about a select group of agencies that can afford monthly fees, but also can take advantage of the services we offer.

—Roger Block, Travel Leaders Network

Roger Block, Travel Leaders Network

Purchasing a home-based franchise is a low-cost opportunity for individuals to own their own business, said Debbie Fiorino, WTH’s senior vice president and COO of owned brands. And the combination of low cost of entry and relatively low operating costs was a big plus for many franchisees during the pandemic.

Fiorino has reasons to be bullish on franchising. While WTH wouldn’t disclose the exact number of ICs who worked with the sunsetting Cruises Inc. brand, she said there were more than 500. Of those, twice the number she had expected to purchase a franchise had done so as of late last year.

The movement from independent contracting to franchisee predates the Cruises Inc. announcement, Fiorino said. Over the years, she has observed that advisors would often begin their industry careers as a Cruises Inc. IC, but as their businesses grew, they’d migrate to become franchise owners.

WTH isn’t depending only on former Cruises Inc. ICs for its franchise growth. It’s preparing to launch a multimillion-dollar recruitment effort aimed at drawing in potential ICs for its existing franchisees.

Franchises are available in many industrial verticals, but Garcia thinks the odds for success in travel are particularly good. In 2019, almost 10% of Cruise Planners’ active franchisees had more than $1 million in total sales, she said. Its top 50 sold, on average, $2.5 million, and that year, sales for active stores brought in more than $580 million.

“Not that everyone always succeeds, but we want to be there to help them succeed and really build them up,” Garcia said.

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If you were buying a pizza franchise, you would want Domino’s, not Bob’s Pizza. I knew that the technology was best in class. It had the best chance of success.

—Shawn Friesen, Expedia Cruises franchisee

Shawn Friesen, Expedia Cruises franchisee

STOREFRONT FRANCHISES GOING STRONG

While the number of home-based agents has proliferated in recent years, franchisors of more traditional models — Expedia Cruises, Travel Leaders Network, American Express and BCD among them — are just as bullish about their businesses.

Although they have some aspects in common with home-based models, the buy-in costs and ongoing overhead aren’t among them. 

And most brick-and-mortar franchise agencies are leisure/corporate hybrids, with one notable exception: Expedia Cruises.

Since the pandemic began, Expedia Cruises has added more than 20 franchisees, along with the attendant number of agents required to operate those locations, according to president Matthew Eichhorst; in total, there are more than 5,000 Expedia Cruises agents.

Eichhorst is a big believer in the brand consistency that results from both franchising and the strength of the Expedia brand name (Expedia Group is No. 1 on Travel Weekly’s 2021 Power List). By the very definition of an “independent” contractor, a host agency cannot impose brand compliance on an IC, he pointed out. Expedia Cruises’ brand consistency, combined with behind-the-scenes technology, is what makes Expedia Cruises a success, he said.

Shawn Friesen bought his first Expedia Cruises franchise in 2007, opening it in Ontario. And to Eichhorst’s point, it was the Expedia name that called to him.

“If you were buying a pizza franchise, you would want Domino’s, not Bob’s Pizza,” he said. “I knew that the technology was best in class. It had the best chance of success.”

Friesen’s sixth franchise location will open Jan. 1, and he has plans for another four storefronts beyond that.

“We really believe in the model, for sure,” he said.

Travel Leaders Network also offers franchise opportunities, but the opportunity is a “conversion franchise,” meaning that only existing agencies are considered, president Roger Block said. There aren’t home-based options and there are requirements based on agency size and other factors (for instance, that the agency have both an ARC appointment and a GDS).

Travel Leaders franchisees tend to be like BCD affiliates and American Express Travel franchisees, in that they focus on both corporate and leisure travel, Block said. Many of the services provided by the franchisors tend to be geared toward corporate travel.

“You’re really talking about a select group of agencies that can afford monthly fees, but also can take advantage of the services we offer,” Block said.

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That feels very exciting to me, that I now have the opportunity to own my own franchise. It’s kind of giving me new life. It’s giving me a focus and a direction.

—Donna Abbene, World Travel Holdings franchisee

Donna Abbene, World Travel Holdings franchisee

Becoming franchisee gives ‘new life’ to longtime IC

For nearly 19 years, Donna Abbene was an independent contractor (IC) affiliated with Cruises Inc. She was new to travel when she joined, and her journey in the industry mirrors that of many advisors.

“I had a great love of travel, cruising,” Abbene, who is based in Kings Park, N.Y., said. “I knew way too much about any given cruise ship, statistics and the whole business that was just insane that any normal person would know.”

A travel agent friend of hers worked with Abbene to plan a family cruise, and when the trip was in the bag, the friend suggested Abbene herself would make a good agent. She did some research and joined Cruises Inc.

While cruises remain her favorite product to sell, she’s expanded her repertoire over the years as her clients have asked for different kinds of vacations. 

Last fall, World Travel Holdings announced it would sunset the Cruises Inc. host agency and brand, and it offered  ICs the chance to buy a franchise or affiliate under an existing franchisee.

The choice for Abbene was an easy one: She would buy her own franchise.

As a franchisee, she said, she could likely increase sales and have even more control over her business. The “newness” also held appeal after being in business for nearly 19 years.

“That feels very exciting to me, that I now have the opportunity to own my own franchise,” she said. “It’s kind of giving me a little bit of new life, especially coming through all of Covid. It’s giving me a focus and a direction.”

It will undoubtedly come with its own challenges, too, but Abbene said she is confident in the support she will get from the same World Travel Holdings team.

Another aspect also appeals to Abbene. As a franchisee, she can have ICs affiliate underneath her. She already has an agent in mind, someone she has worked with for years to provide cross-coverage during vacation periods. 

“Things change, but at the same token, when they do and you accept it, then you kind of get excited about what the future will bring,” she said.

— J.B.

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This report was updated to clarify that World Travel Holdings is preparing to launch a multimillion-dollar recruitment effort aimed at drawing in potential independent contractors for its existing franchisees.

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