Recently by Michael Webster

Everyone has heard that personal connections are the key to successful negotiation in China, but what happens when your relationship goes off the rails?  Resolving conflict across cultures is tough, but not impossible.  The key is to manage your relationship so that mutual trust survives the first conflict.  It's easier said than done - but certainly not impossible.

On Thursday, October 27, 2011,  9:00 am, Andrew Hupert is giving a seminar on Managing Conflict in China.

Andrew Hupert is founder and CEO of Best Practices China Ltd., based in Shanghai. Since 2003 he has been advising and coaching executives and managers in multinationals to improve their deal-making and negotiating skills with Chinese counter-parties. His corporate clients include Philips, Schneider/Clipsal and Keuhne + Nagel. He is an Adjunct Professor at New York University (Shanghai campus) and has also lectured at Strathclyde University's EMBA program.

Andrew first came to Asia in 1990 after receiving his MBA in International Finance from New York University Stern School of Management. He gained extensive senior sales and management experience with leading financial institutions in Taipei, Hong Kong, Kyoto and New York before settling in Shanghai as a consultant and lecturer.

He has also published articles in business journals such as Shanghai Business Review and the China Economic Review, for which he writes a column on China-business strategy and negotiation. Companies around the world follow his discussions about negotiation tactics in China at ChineseNegotiation.com

To Read more of Michael Webster's articles, please click here.

Are You FDA Compliant?

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The FDA has a news release of interest to everyone in the food service industry.

FDA issues first new rules under Food Safety Modernization Act


Rules to prevent potentially unsafe food from reaching consumers

The U.S. Food and Drug Administration today announced two new regulations that will help ensure the safety and security of foods in the United States. The rules are the first to be issued by the FDA under the new authorities granted the agency by the FDA Food Safety Modernization Act (FSMA), signed into law by President Obama in January. Both rules will take effect July 3, 2011.

The first rule strengthens FDA's ability to prevent potentially unsafe food from entering commerce. It allows the FDA to administratively detain food the agency believes has been produced under insanitary or unsafe conditions. Previously, the FDA's ability to detain food products applied only when the agency had credible evidence that a food product presented was contaminated or mislabeled in a way that presented a threat of serious adverse health consequences or death to humans or animals.

Beginning July, the FDA will be able to detain food products that it has reason to believe are adulterated or misbranded for up to 30 days, if needed, to ensure they are kept out of the marketplace. The products will be kept out of the marketplace while the agency determines whether an enforcement action such as seizure or federal injunction against distribution of the product in commerce, is necessary.

Before this new rule, the FDA would often work with state agencies to embargo a food product under the state's legal authority until federal enforcement action could be initiated in federal court. In keeping with other provisions in the FSMA, FDA will continue to work with state agencies on food safety and build stronger ties with those agencies.

"This authority strengthens significantly the FDA's ability to keep potentially harmful food from reaching U.S. consumers," said FDA Deputy Commissioner for Foods Mike Taylor. "It is a prime example of how the new food safety law allows FDA to build prevention into our food safety system."

The second rule requires anyone importing food into the United States to inform the FDA if any country has refused entry to the same product, including food for animals. This new requirement will provide the agency with more information about foods that are being imported, which improves the FDA's ability to target foods that may pose a significant risk to public health. This new reporting requirement will be administered through the FDA's prior notice system for incoming shipments of imported food established under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.

With prior notice, in the event of a credible threat for a specific product or a specific manufacturer or processor, the FDA is able to mobilize and assist in the detention and removal of products that may pose a serious health threat to humans or animals.

"The new information on imports can help the FDA make better informed decisions in managing the potential risks of imported food entering the United States," Taylor said. "These rules will be followed later this year and next year by a series of proposed rules for both domestic and imported food that will help the FDA continue building the new food safety system called for by Congress."

The issuance of these rules is the latest accomplishment of FDA in implementing the new food safety law. In April, the FDA launched a consumer-friendly web search engine for recall information and issued the first annual report to Congress describing FDA's activities in protecting the U.S. food supply. FDA also released a guidance document to the seafood industry on ways to reduce or eliminate food safety hazards.

In addition, since the law was signed, the FDA has held two large public meetings with industry and consumer groups on the import and preventive control provisions of the law, and reached out extensively to partners in other federal, state, and foreign governments.

For more information:

• FDA Web Page: Food Safety Modernization Act

Federal Register Notice for Interim Final Rule on Criteria Used to Order Administrative Detention of Food for Human or Animal Consumption

Federal Register Notice for Interim Final Rule on Information Required in Prior Notice of Imported Food

Fish and Fishery Products Hazards and Controls Guidance - Fourth Edition

The FDA, an agency within the U.S. Department of Health and Human Services, protects the public health by assuring the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices. The agency also is responsible for the safety and security of our nation's food supply, cosmetics, dietary supplements, products that give off electronic radiation, and for regulating tobacco products.

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Many years ago, I had the pleasure of teaching the Logic of Collective Action, by Mancur Olson, to a group of University of Waterloo students.  (I believe that the book is out of print, but it is a wonderful classic of great interest to franchisee association leaders, their executive and staff, especially those in government relations.)

One of the topics, the role of associations and their influence on the legislative process is very relevant to a recent discussion of the pro's and con's of the passage of Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (HR 4).

Legislation always has costs and benefits; an association wants the lion share of benefits to accrue to its members or constituents and the costs to be visited on its competitors.  Naturally, not all associations can win this game and the role of rational governance is to make sure that this game of musical chairs doesn't get so intense as to remove the entire benefit of anyone playing it.

Today's letter, April 5th, 2011, from AICPA, the Accountant's trade association, sets out with clarity the cost issues related to the repeal of 1099 reporting requirements.

"Both of the 1099 reporting requirements were intended to raise revenue. To pay for repeal, the bill will increase the amount of the new IRC § 36B health care premium assistance credit that is subject to recapture. Under this amendment, taxpayers whose household income is over 400% of the poverty line for a particular tax year would have to pay back their advance health care premium assistance credit payments (previously this provision applied to taxpayers whose household income was over 500% of the poverty line). For taxpayers whose household income is less than 400% of the poverty line for a particular tax year, the amount of the increase in tax under section 36B(f)(2)(A) due to excess advance payments of the credit will be limited to the applicable dollar amounts in this table:

Household Income table

The associations successfully persuaded the legislature that the regulatory position taken by the IRS would not decrease significantly the compliance costs associated with 1009 and the repeal has now passed.

The IRS position and AICPA response is nicely summarized by the AICPA letter of February 14th, 2011.

"In May 2010, Commissioner  Shulman stated that the IRS plans to use its “administrative authority to exempt from this new requirement business transactions conducted using…credit cards and debit cards.”  This potential  exemption may mitigate some burden; however, we are still concerned with the overall level of burden placed on taxpayers.  Thus, we remain convinced that repeal of section 9006 of the PPACA and section 2101 of the SBJA is the best solution for both taxpayers and the government."

The Wall Street Journal neatly summarized the trade-off as follows:

The approved repeal would make up for taxes lost to vendor evasion by requiring low- and middle-income Americans who receive a tax credit for buying their own health insurance to repay the credit if their income winds up being too high. The repayment obligation would show up as a tax charge during the tax filing season.

Now, after this legislation has passed, all the associations will explain to their members why they are economic winners and the costs associated with the repeal of 1099 will be visted on other people.  Of course, not all of these associations can be right anymore than we can all be above average in height, intelligence and looks.

So some associations must have backed the wrong horse, as a matter of pure logic.  

Who do you think will be the winners and losers among those associations who lobbied for the repeal, now that we know how the Healthcare Act is going to be funded? 


From David Meerman Scott's blog, on The Business Value Behind Social Media, both good and bad.

Martin Giles, U.S. Technology Correspondent, The Economist who served as moderator. 

Chris Brogan, President of New Marketing Labs, popular blogger and co-author of Trust Agents and author of Social Media 101

Charlene Li, founder of Altimeter Group and co-author of two books: Groundswell and Open Leadership.

Interesting, at points, discussion about how some businesses are using social media correctly. For example, Rackspace who uses Twitter to replace its customer service, when your server is down, twit it to Rackspace who knows who you are and so can reboot your server.

What opportunities are there here for franchisees?

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After the Convention

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You are missing some Flash content that should appear here! Perhaps your browser cannot display it, or maybe it did not initialize correctly.

Imagine your franchisee trade associations next advocacy program, a call for PAC money, a demand for change in state or federal legislation, or simply a call to action from your supporters.

Next, you are offered the social media tools that fueled both Howard Dean's remarkable primary campaign and Barack Obama's Presidential run!  Are you interested?

Last year, the American Marketing Association Non Profit Marketing conference discussed this very opportunity - how non profits can use the social media tools which lead to empowerment.

"In 2009, more data will be generated by individuals than in the entire history of mankind through 2008.  It�s clear that in order to thrive in times of change, innovation through social media is critical to empowerment.  

Nonprofit organizations, in particular, are recognizing the benefits of adapting to emerging social media technologies. 

During AMA�s 2009 Nonprofit Marketing Conference held July 15-17 in Chicago, experts in the nonprofit sector stressed the importance of nonprofit organizations using today�s technologies to empower their constituencies at the grassroots level. 

Thomas Gensemer, of Blue State Digital which managed Barack Obama�s 2008 online campaign, discussed lessons nonprofits could learn from the Obama strategy."

Thomas Gensemer has a short talk about how social media can empower your non profit.  I encourage you to listen to it and play with the Blue State Digital demo to understand how social media can help your association with its advocacy goals. Tell me what you think.
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Attention is Not Free

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Consider this fluff story about social media and franchising, from Entrepreneur.

"In April 2009, after a buy-one, get-one-free e-mail promotion bumped up his business by 40 percent on a single Tuesday, Zpizza franchisee Michael Blank of Alexandria, Va., decided that he needed to do more digital marketing.

As he started to look into social media, he realized that using Facebook and Twitter would give him an opportunity to inform his customers about deals and specials and allow him to begin conversations with them.

He persuaded the company's headquarters to move forward with social networking, and now the Zpizza Facebook page has more than 1,700 fans while his region's Twitter presence has nearly 600 followers.

Although the return on tweeting coupon codes and sharing specials on Facebook hasn't reached the 40 percent mark he had experienced earlier, Blank is sure that it will as more people learn about Zpizza's presence.

To get there, he's working with local mothers to encourage them to blog information about and reviews of the restaurant. "It's an incredibly cheap way to brand and market yourself," he says, because most social networking sites and blogs are free."

The tools by which traditional one way media is made social can be cheap, moderate or expensive. 

But what this article failed to highlight is how much time Blank put in "working with local mothers" to gain their attention and the rate of return for his attention getting efforts.

Would this have been better spent on simply re-marketing to existing customers using an opt-in email newsletter, with coupons?

Most market professionals note the very low rate of conversion using Facebook, primarily because people using Facebook are looking for attention with their posts, and not looking to buy.  Search still dominates this channel.

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Bridging the Social Media Gap

Image by Intersection Consulting via Flickr

Here is a good observation from ASAE about marketing to members.


Members and prospects need to understand how your organization:

Makes them smarter

Saves them money

Makes their lives easier

Don't take it for granted that your existing communication materials already do this. 

Our discussions focused on how we often talk about what we do but not the personal benefit we provide to members.

Smarter, cheaper and easier.  That sounds like a good slogan for association communications.

The ASAE also has a two program for small associations, July 13th -14th.

With the rise of social media, mobile technology, and a very vocal blogosphere, it sometimes feels like your members never sleep. 

How can you engage them nonstop without sacrificing your own shut-eye? More importantly, how can you accomplish this with limited staff and resources?

If these issues are literally keeping you up at night, you cannot afford to miss ASAE & The Center's latest online conference:

 Creating the 24/7 Small-Staff Association. 

Learn the essentials that will help you manage an ever evolving landscape with this conference designed specifically for organizations with 10 or less staff members.



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A McDonalds location in Moncton (mountain road...

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Employee relations between a franchisee and its employees is a headache for the franchisor. 

 
The reason is simple: vicarious liability
 
If the franchisor overreaches and actively controls the employee relationship, between franchisee and employee, then the franchisor might be liable under the legal theory of vicarious liability. 
 
If on the other hand, the franchisor does nothing, then at the very best, the franchisor may be complicit in allowing a violation of employment law.
 
At the Foley & Larnder LLP website, there is a nice explanation of the franchisor's dilemma.
 
 "In Myers v. Garfield & Johnson Enterprises, Inc., et al., 2010 U.S. Dist. LEXIS 3468 (E.D. Pa. January 14, 2010), a federal district court in Pennsylvania held that defendant Jackson Hewitt, Inc., the franchisor of co-defendant Garfield & Johnson, was potentially liable under Title VII of the Civil Rights Act of 1964 for sexual harassment allegedly committed by Garfield & Johnson managers. 
 
Rejecting the franchisor's motion to dismiss for failure to state a claim, the court held that plaintiff's joint-liability theory was plausible enough to proceed to discovery. 
 
What is particularly bracing about the court's analysis is its recognition that these factors could trigger potential employer liability for the franchisor even though they were, in many cases, typical of the control exercised in any franchisor/franchisee relationship. 
 
The court said that if the standards for control and authority derived from common law principles for application in the Title VII context were met, the fact that they arose between a franchisor and franchisee and reflected the type of control that almost all franchisors exercise would not insulate the franchisor from liability.
 
Because the joint employer and agency tests involve multiple considerations with no single factor dispositive, it is not clear that any single contractual or operational step (short of drastically limiting the degree of control over franchisee operations that most franchisors feel is essential) could foreclose the potential for liability under this court's view of the law. 
 
Taking the decision at face value, it could be argued that, under Myers, franchisors find themselves between a rock and a hard place: 
 
The more closely they monitor franchisee employment practices, the greater the risk of their being subject to Title VII liability for the franchisee's wrongful behavior. If they eschew monitoring of that behavior, they may be subject to Title VII liability anyway under other elements of the applicable tests, and will not be in a position effectively to regulate conduct that could result in statutory violations. 
 
On the other hand, if they do monitor the behavior and then take draconian measures in response to franchisee violations, they may trigger liability under state dealership or franchise protection statutes."
 
So how does the franchisor both monitor to regulate the conduct, but not monitor so closely as to become vicarious liable, under common law or statute? It is a very difficult compliance problem for franchisors
 
One suggestion made by Michael Bowen is that the franchisor:
 
Insisting that all employment-related materials given to franchisee employees -- contracts, handbooks, policy statements, codes of conduct, and so forth -- be franchisee-specific and perceptibly distinct from franchisor materials.
 
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Logo of the U.S. government's Small Business A...

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From CS Monitor and Small Business

The first report,written by SBA economist Jules Lichtenstein, looks at planning by small business owners for their own retirement.

The author's results offer substantial evidence for concern that business owners are not saving enough and that their retirement savings may be inadequate. 

Some of the findings:

  • Individual-based (outside work) retirement account ownership, contribution activity and employment-based participation (at work) among business owners are low.
  • IRA ownership rate for business owners is only about 36 percent, and only one-third of business owners with an IRA contributed for the 2005 tax year.
  • Less than 2 percent of business owners own a Keogh plan. 
  • Only about 18 percent of business owners participated in a 401(k)/Thrift plan.

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images.jpegFranchisee associations have a positive obligation to communicate with their members, the franchisees, and to the franchisor.

"Members [franchisee] should communicate frequently with the [association] board," advises Barber.

This type of approach helped the Denny's Franchisee Association members work with the franchisor in adding a gift card program, including a program where gift cards are sold by third-party vendors.

"The negotiation of the legal documents, along with the financial settlement issues associated with the program, were worked through carefully and thoroughly before the franchisees were asked to participate," Barber says.

"The entire franchise community accepted the program and benefited from the hours and expertise of DFA board members who worked diligently for the good of the brand."

Communication with all franchisees, whether or not they are members of the association, is one of the four main functions of a modern franchisee association.

The other three functions are: education, providing member benefits, and advocacy.

But, as Craig Barber states, "Members should expect the association to focus on brand and franchise system matters," adds Craig Barber, Chair of the Denny's Franchisee Association.

"[They should] not expect the association to be the advocate for specific individual franchise issues with the franchisor."

Linked in is a very handy networking tool, and this is a good video which describes the proper use of Linked in.

It is about finding the right tools online to help you succeed with your projects.

A friend of mine and I were out last night at the Toronto Auto Show, a major disappointment, and we got to talking about how to keep up with what old
friends, employers, and the like were up to.

I mentioned that Linked in was very useful in helping you find a way to an expert, apart from simply cold calling or emailing the person.  Linked in helps you get an introduction to someone you think that you might need.

It isn't perfect, but for franchisee executives who want to talk with other association leaders or vendors it is a very good way to get that introduction which may make all the difference.

Franchisee Association Fees

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Les Stewart writing about successful franchisee organizations makes an important point, an uncharacteristically short post.  Can you tell what the important point is?

I was in downtown Toronto, Canada this morning, meeting with an old MBA classmate and a commercial litigator associate of his.

Very nice meeting.

We all agreed on one thing:
a professionally managed and funded franchisee group is critical in defending your economic interests.

Everyone needs a group to work on their behalf and +90% of all association work is not in conflict with the franchisor.

To me, budget $7 per day per year ($2,000 per store) to get it going.

Any less is a license for failure.

You might think that the $7/day fee is important, but it is not.  A professional executive director of an IndFA is going produce through vendor programs or other services more value than the membership fee.

No, the important point is this: a lot of the association work has nothing to do with resolving legal disputes with the franchisor.

This is the dilemma: franchise groups come together over serious distrust issues with their franchisor, but in order for the group to become an association they have to find, succeed, and continue doing all of the other hard work which has nothing to do with franchisor conflict.

Richard Solmon is a Franchise Lawyer from Texas, who publishes a wonderful blog on Blue Mau Mau about Franchisee Associations.