In a surprising and controversial move that could end the era of multilevel marketing, Scott Tomer, CEO of YTB International, Inc. said the company is “contemplating the replacement of its referring travel agent (RTA) business model with the implementation of a franchise operating system, potentially in 2009.” YTB has been at the center of travel agents' concerns with the proliferation of multilevel marketing.
In a filing with the Securities and Exchange Commission (SEC), Tomer said the company “expects that a franchising model, if adopted, would facilitate the company's expansion into additional markets by providing more comprehensive training and a new proprietary e-commerce platform.
“Details regarding price, product offerings and the conversion plan are all under consideration, but the company anticipates that its existing RTA base would be treated favorably under its forthcoming proposal," Tomer's statement continued. "If a franchising model is adopted, its distribution is expected to be managed by subsidiary and current marketing arm of the company, YourTravelBiz.com, also known as YTB.com.”
YTB International, Inc. is a publicly owned company. It provides Internet-based travel booking services for travel agencies and home-based independent representatives in the United States and Canada. It operates through three subsidiaries: YourTravelBiz.com, Inc., YTB Travel Network, Inc., and REZconnect Technologies.
YourTravelBiz.com, Inc. conducts business through the recruitment, enrollment, training, and support of its sales force.
YTB Travel Network, Inc.’s business is comprised of arrangements to sell airline tickets, cruise packages and other services, plus travel sales, from the approximately 138,814 (as of 3/31/08) RTAs’ websites which it hosts.
John Frenaye, president of the JVE Group and a critic of YTB, said the move should be watched carefully and may mean the end of the multilevel marketing approach in favor of the franchise model.