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Thread: Joining Forces - Consolidation Curious

  1. #61
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    I think its important that the members put up equal amount of money. Each has the same say and voting power of what happens. We form a board of directors to make the minor decisions and we each get one vote on major decisions. We open a call center in New Jersy or New York and hire a top notch salesman to start opening accounts. Our phones can be forwarded to the nantional call center in the evening to help us small guys...hey, we might want the national center to take all calls all the time. Each member makes a concerted effort to open new, national accounts in their local markets. We pay our national headquarters on a 30 day basis and we get paid in 45 days. Think of the possibilities.

    Wade Randolph

  2. #62
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    One more thing. We would have the best Carey and Dav-El affiliates jumping to join our network. Think of the level of service we could offer if we all owned a piece of our network. Im in and will put my money where my mouth is if any others are interested.

    Wade Randolph

  3. #63
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    I hate to rain on your parade, but I think you vastly underestimate the complexity and economics of setting up and operating a network. The first problem I have with your suggestion is the management. Remmeber, a camel is a horse designed by a committee, and that's exactly what you'll get with your one vote per company approach to management. Also, hiring one hotshot salesman will go absolutely nowhere. It takes years to develop significant accounts, and you'll be competing with the likes of Carey, Boston Coach and Dav El. And if you expect to get an in-flow of business from the members of the network, forget that also. Boston Coach has been working to get affiliates to input 5% of what they receive from the network, and hasn't gotten there yet. And although every limousine operator that I know claims he or she is vastly better than all others, without a way to establish and enforce uniformity in service and standards you're setting the stage for failure - but I remember from my American History classes that you Southern Boys always liked confederations and eschewed federations, so I understand where you are coming from. Trust me (to borrow a phrase from Tommy Mazza), your design for a network will lead nowhere except to everyone being $20K poorer when the experiment ends.
    By way of contrast, I suggest that a half dozen operators acknowledged in the industry to have superior managed c ompanies get together than hire a consultant in ISO 9000(2000) certification and that they get their companies certified in a common effort. Then I suggest that they hire a nationally prominent franchise lawyer and an executive experienced in firing up new franchise operations, and they use the ISO 9000(2000) manuals to design franchise operations manuals, and then the companies that want to belong use their $20,000 PLUS to become franchisees of a franchise system built upon the best industry operations. That system should have a common name, logos and a branding program, as well as software to support a national network. I suggest that that software be purchased in tact from a company that currently has good software in a web reservations system. I can't guarantee success, but I submit that this approach, historically, at least has a chance. Frankly, I think it will take no less than $1M to fire up this type of operation and the franchise fee would be more on the order of $50K. By my reckoning, it would take no less than $50K per franchisee. I also admit that my $1M estimate is only a starter and that a successful effort could burn through a lot more - as things become successful they tend to burn more rather than less money. And as soon as you start funding the operation out of franchise fees you are flirting with legal problems which are solvable only by spending yet more money on franchise lawyers to prepare prospectuses. I could go on and on, but those are my early thoughts.

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Wade Randolph:
    One more thing. We would have the best Carey and Dav-El affiliates jumping to join our network. Think of the level of service we could offer if we all owned a piece of our network. Im in and will put my money where my mouth is if any others are interested.

    Wade Randolph<HR></BLOCKQUOTE>

    James H. Joseph
    Pegasus Chauffeured Motor Cars
    Pittsburgh, Pennsylvania
    jhj@pegasus-pittsburgh.com

  4. #64
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    JHJ my ideas are just suggestions to maybe jump start something larger. As far as Boston Coach and others trying to derive more income from their affiliates, I think when each affiliate has more of a financial incentive they will get off their ass so to speak. Its very hard to get excited about opening accounts for some national company that might open in your own city and take your accounts with them. I do like your idea about ISO 9000. As we have discussed before I would be glad to join a group of us getting ISO 9000 certification, but we need at least 10 companies to start to make it affordable.

    Wade Randolph

  5. #65
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    BC is giving affiliates plenty of incentive - they score affiliates each month and outgoing reservations is part of the scoring. If you don't keep your score up you can be replaced as an affiliate and lose the incoming business. The big problem is the tendency of all companies to underprice. Can't tell you how many calls I get a week from BC affiliates looking to send a ride in to us direct instead of through the network, for reasons of price. If these rides went through the network, the 5% target would look silly. We don't accept them direct if we know that it is really a BC diversion, which puts the referring company in the position of taking a chance on a non-network company, or going through the network. Until you have a franchise or closer relationship and can police this kind of thing, it would be hard to stop this kind of behavior.
    I say if you want to jump start something, let's try to move incrementally. Any takers out there to gather 10 companies to proceed to ISO 9000(2000) certification? Second question - any limousine operators out there who were once executives in the franchisor end of a national franchise business - or do we know of a possinbly retired executive out there who is available on a loan basis, such as through SCORE?
    I do have a confession to make - of sorts. When we realized that acquisitions in this business are essentially impossible, we decided on the model we have been discussing, i.e., we are going to certify our company to the ISO 9000(2000) standard, and since I have done a fair amount of franchise litigation, we intend to design a franchise in the limousine business using resources available to us. There is no timetable for this, and it's a long-term project, and we have no problem with others trying it, either individually or as a group, since its sort of a challenge more than profit-driven, which is how we got into this business anyhow.


    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Wade Randolph:
    JHJ my ideas are just suggestions to maybe jump start something larger. As far as Boston Coach and others trying to derive more income from their affiliates, I think when each affiliate has more of a financial incentive they will get off their ass so to speak. Its very hard to get excited about opening accounts for some national company that might open in your own city and take your accounts with them. I do like your idea about ISO 9000. As we have discussed before I would be glad to join a group of us getting ISO 9000 certification, but we need at least 10 companies to start to make it affordable.

    Wade Randolph<HR></BLOCKQUOTE>

    James H. Joseph
    Pegasus Chauffeured Motor Cars
    Pittsburgh, Pennsylvania
    jhj@pegasus-pittsburgh.com

  6. #66
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    i LIKE this line of thought of lot. Only problem with the ISO then Franchise path is your certifying a business process locally that will not completely translate nationally. I suggest that a "core" needs to be merged into a corporate entity and single brand representing 10-30 million in revenues between 5 - 10 operators. This core will then establish infrastructure and business processes focused around national operations...THEN and only then can you persue the ISO cert because now your certifying the local and national ops in concert...finally the franchise can be offered with supporting proof in the operations and certification of the core. I don't personally believe the ISO cert is needed to see this vision, but I think the certification process is a great tool to document the processes required for successful national rollout of a process and brand...

    Show of hands as to how many people are interested enough to go into a non-disclosure? I've got a corporate governance framework, management team, national network, software backbone, legal, accounting and bankers ready to put their money where my mouth is. Raise your hand by emailing me at consolidationcurious@hotmail.com.

  7. #67
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    I like this alot for the main reason that it indicates you can get past the control issue and are willing to rally behind a common brand nationally...however...why not take it the next logical step and merge the operators with some sort of short term credable "jump ship" clauses in case its a bust. One major issue with not merging the entities is the access to funds for expansion, infrastructure purchases, etc...no one will lend to a shell, it has to have real revenues as well as credible command and control with no chance of a "rouge" warrior offering service out of line with the company standards...as far as protection is concerned the corporate governance plan would be able to include ways for the founding partners to voice opinions by a vote. You loose minute to minute control to the management team, but the major directional issues are still held by shareholders through mechansims such as the Board and ultimately their installment or removal of the management team.

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Wade Randolph:


    Consolidation I have an idea about what might work. What about getting the top independent operators in each market to put up say 20 grand to form our own national network. We would each own a percetage of our own national company. We would share in the savings of cars, insurance, gas, office supplies, health insurance, software and so on. The smaller operators would benefit as well as the large ones. What do you think?

    Wade Randolph<HR></BLOCKQUOTE>

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