System-talk via Intranet links:Password-protected Internet communication wave of future
By Len Strazewski

They're faster than the U.S. Postal Service, cheaper than a photocopier and available to any franchise operator with a personal computer and modem.

They're intranets: password-protected Internet sites that could save franchisors thousands of dollars in printing and mailing costs and, perhaps even more important, provide better communication with franchisees.

"The franchisor-franchisee communication system has always run on paper," says Daniel Martin, president of IFX International, Inc., a San Diego, California based Internet franchise consulting company.

Internet technology allows for nearly instantaneous transmittal of information, including printable documents and electronic mail between franchisors and franchisees, he says. That may be the perfect solution for franchisors, who need to verify that franchisees received the documents, and franchisees, who can process at their own convenience the average 10 mailings, newsletters, product announcements and management manual updates they get each month. They also can post questions to franchisor experts whenever they want.

Documents stored online need never be printed and are available continually to franchisees.

Mr. Martin says the intranet security that protects a private Internet-based network prevents competitors from reading the information, but it allows business partners, such as endorsed vendors, to use the network. As the concept evolves, franchisees could be made aware of special pricing on a daily basis, he says.

IFX International, Inc., founded early last year as an affiliate of InterAct Concept Development Corp., a franchise marketing company, recently went online with a prototype Internet online franchisee support system demonstration.

The Web site (http://www.ifxonline.com) features Las Vegas-based Purified Water to Go, a retail water franchisor, and includes pages for online management manuals, news and tips for franchisees, answers to frequently asked questions and electronic mail.

Ronald K. Quinn, president of Purified, says it is too soon to tell how effective the Web site will be in facilitating communication with the company's 38 franchisees; however, he believes the network will reduce franchisee support costs and improve communications. The company plans later this year to include a personal computer and modem in its standard franchisee package.

"Most franchisors need a couple of employees just to handle printing and mailing of material to franchisees," he says. "As we become more paperless and switch to this kind of network communication, we can count on reduced staffing. And as we integrate vendors into the network, we can begin to provide even greater value to our franchisees."

IFX charges franchisors a $5,000 site fee and about $20 per month per franchisee. Users will be able to use standard Internet browsers such as Netscape and Microsoft Internet Explorer and pay about $20 per month for local access.

IFX estimates the network will eliminate at least $35 per month per franchisee in franchisor printing and mailing costs.

Microsoft also is promoting intranet applications for franchisor-franchisee communications. Roger Gerdes, business development manager for small businesses at the Redmond, Wash.-based company, has conducted intranet seminars for members of the International Franchise Assn., Washington, D.C.

The company has coined a new term, "extranet", to describe a Microsoft-technology-based secure intranet connection between a franchisor and franchisees at remote locations. The extranet could be a two-way pipeline for proprietary information, replacing one-way dial-up data transfer systems.

"Unlike the proprietary data, this technology is completely user-controlled," Mr. Gerdes says.

"Franchisees do not have to be concerned over what kind of information is being transmitted to their franchisor. Instead, they use very familiar Internet Web technology to locate and receive information at their convenience."

Franchisors can use the extranet to receive electronic mail from franchisees as well as more sophisticated sales and marketing data, but information uploading is controlled by the user at the source.

New "push" Internet technology that directs information to users when they access the network eliminates the need for download schedules and allows franchisees to receive information updates easily.

Mr. Gerdes says extranets are less expensive to build and operate than proprietary networks.

Microsoft extranets cost $10,000 to $400,000, depending on the features and the user-base size. Mr. Gerdes says Microsoft resellers have designed experimental extranets for Mailboxes, Etc. and Marriott International, but are interested in building networks for smaller franchisors.

Craig Slavin, chairman of The Franchise Architects, a franchise marketing consulting company in Riverwoods, Ill., agrees that smaller franchisors are natural fits for the Internet.

"People are not great readers, and entrepreneurs are usually not very interested in reading and filing documents when they could be actively operating their business."

If nothing else, a manual stored on the computer "would eliminate the frantic last-minute search for the three-ring binder hidden somewhere in the corner of the office," says Mr. Slavin.