Now & Then
From index cards to robust database—a 25-year journey
FRANdata is 25 years old this month, prompting our conversation with its founder back then and its CEO today. The state of franchising over a quarter century—not to mention the change in fashion—gets a review.
The two men responsible for FRANdata’s past and future, respectively, are as different as—well, an entrepreneur and a banker.
“It’s wonderful to see where it is and interesting to see where it will go,” says Jeffrey Kolton, left, founder of FRANdata, with Darrell Johnson, its CEO today.
Jeffrey Kolton is the former, the talkative attorney and dealmaker who favors colorful socks and who started FRANdata 25 years ago because he couldn’t find any information about franchise systems.
“I come from four generations of entrepreneurs, and I saw a need,” says Kolton, who today owns Franchise Market Ventures, a strategic consulting firm in New York. “I thought if somebody could get as much information on franchising as on securities transactions, that would be valuable.”
Darrell Johnson is the latter, the buttoned-down president and CEO of FRANdata today, which he bought from Kolton on behalf of the bank where he worked, then led a management buyout in 2003 to build what he calls a franchise business intelligence firm, based in Arlington, Virginia.
Johnson isn’t the type to wear flashy accessories, or at least not to show them off. He speaks crisply about the reams of information FRANdata collects and most importantly analyzes for clients. Johnson likes nothing better than a deep data dive.
“We can base our analysis and consulting on facts,” Johnson says about the reports his firm provides, which he believes sets FRANdata apart. “It’s the ability to not make stuff up. It’s the objective analysis, having a deep reservoir of information.”
FRANdata started as a document retrieval company, long before the franchise disclosure document. “Back then it was the UFOC,” Kolton recalls, or the Uniform Franchise Offering Circular, and states were using 3x5 index cards to track their filings, often by one lone clerk. “So in L.A. when that person was sick for three weeks you could not get anything,” Kolton says.
He was practicing law in Washington, D.C., so he contracted with a quick-copy shop and began sending runners to nearby Maryland to collect paper fillings. “We could get about 85 percent of the filings” from two states. “It took us two years to get a complete set—that was 650 paper filings,” which they sold for 80 cents a page. (Today FRANdata collects annually more than 3,000 FDDs and tracks more than 4,000 active brands.)
“When you start a business you have no idea what to charge,” Kolton says, but six years later a client who was leaving her firm clued him in. “She told me, ‘We would have paid 10 times the price.’ That was a wake-up moment.”
Johnson doubled down on research and analysis initiatives after his acquisition.
Jeff Kolton's socks
“Now it’s an evaluation company around franchise topics,” he says, serving two sets of customers: the company that franchises or is intending to franchise, and the company that serves or supplies franchising—private equity firms, lenders and so on. Now, more often than not, they want to learn the causes of superior franchise performance, a promising area of research for FRANdata.
Kolton and Johnson have fun with their opposite personas. Why was Johnson interested in acquiring FRANdata in the first place? “It wasn’t so much his good looks as his socks,” Johnson quips about Kolton’s penchant. (They’re from Happy Socks, the Swedish company.)
In an email exchange before the interview, this reporter suggests images from the 1980s to illustrate the company’s roots. Johnson isn’t sure. “The thought of Jeff in his disco outfit might be a bit much for the conservative franchise community,” he jokes. “Maybe you could start with his heavy metal look but that might bring in the tattoo period and I’m not sure that’s any better.”
Kolton shoots back: “A more interesting photo montage would be Darrell’s innovative dress code. You could use the same photo for the ‘70s, ‘80s, ‘90s and 2000s (although I did see him without a tie—once.)”
It’s all in good fun for two men who admire each other’s strengths: the risk-taking entrepreneur and the executive who can build toward the future. They can likely agree on this point: excitement for FRANdata’s next 25 years. “It’s wonderful to see where it is and interesting to see where it will go,” Kolton says.