Elfa

Description

The oldest industry franchisee association in the United States, ELFA was formed in 1974 as the result of a group of franchisees who met in Norfolk, Virginia to share their mutual concerns. Here’s how the organization came to be: In the late 1960’s, a group of Norfolk, Virginia businessmen headed by Vernon Myers and Lloyd Tarbutton recognized a need for inexpensive lodging. They determined that they could meet that need by avoiding frills and designing a building which could be economically constructed. The first Econo Travel Motor Hotel’s were newly constructed with forty-eight rooms and a manager’s apartment at a cost of between $4,000 and $5,000 per room. In a franchisee newsletter published in 1972, guests recommended many items be made available in the rooms (many of whom at the same time, complimented us on our low rates) which included: stationery, pens, mirrors in the shower for shaving, free coffee, Styrofoam ice buckets, clocks, reading lamps, piped in music, radio, and small refrigerators. Although these were valid requests, the Company maintained that our guests preferred lower rates rather than extra frills, and felt that "we can’t have the right price and these items, too." They later went public with an IPO being issued through the State of South Carolina. Based upon problems which arose from the offering, a majority of the interests of the various partners was conveyed to Lloyd Tarbutton in trust in order for him to control Econo Travel entirely. Tarbutton remained the president and the controlling stockholder until 1974. The Company grew quite rapidly during this period of time with its growth being based almost entirely on the sale of franchises. In 1973, the motel industry and the country as a whole faced a serious economic problem when the Arab countries developed an oil embargo which severely impacted many industries. During that time, financial borrowing dried up for new motel construction of any kind. This had a severe impact on many of the franchisees because the fear of not being able to get gasoline kept people from traveling. During this period of time, a franchisee, David Drapella, called a meeting in Norfolk, Virginia, where Econo Travel was based, to discuss what could be done to save the franchisees and the Company, which no longer had income from franchise sales. In 1974, Econo Travel began accepting applications for hotel properties to be converted to the Econo Lodge brand. This step was taken because no one could finance new construction. However, conversions made the whole concept of inexpensive rooms more difficult to achieve. A second meeting was held to form the Econo Travel Franchisee Association, Incorporated which incorporated in 1975. Frank Young was named as the president of the association. It was decided that the best thing we could do was try to develop a cooperative effort between the Company and the franchisees to allow us to get through a very trying time. After some negotiation, it was agreed that several franchisees would be placed on the Company board and that they would negotiate a new franchise contract that would substantially lessen the franchise fees in order for the Company to stay alive. These individuals were all multi-property owners, and it was felt that Econo Travel’s goals needed to temporarily shift from selling franchises to aiding its franchisees operationally. The franchisee board members developed seminars and started educational programs to help both new and old franchisees and to instruct the Company on operational issues.

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