Should PIRTEK Franchise Owners Pay for the Franchisor’s NASCAR Sponsorship?
PIRTEK USA CEO Kim Gubera, Director Glenn Duncan, Franchise Development Manager Nick Ridgway, Fluid Power Franchisee Association board members, current and former PIRTEK franchisees and innocent bystanders are invited to provide opinions as to the value and appropriateness of PIRTEK USA’s use of the franchisee marketing fund. Robust, constructive discussions help prospective franchisees make more informed investment decisions.
[NOTE: The PIRTEK franchisee marketing fund chart and discussion originally appeared in the companion post here: PIRTEK NASCAR Cup Sponsorship – The Caution Flag is Out . Also check out: Autopsy of PIRTEK NASCAR Cup Sponsorship Debut: Expert Opinions Invited ]
PIRTEK USA clearly believes that its expensive NASCAR Cup sponsorship and partnership with Team Penske adds needed credibility to its franchisee recruitment advertising.
In this franchise sales video, PIRTEK Franchise Development Manager Nick Ridgway narrates the video wearing a Team Penske Pirtek racing shirt. The Pirtek sponsored racecar is featured in all but about 5 seconds of the PIRTEK USA franchise sales video.
PIRTEK NASCAR Sponsorship Communications Promote a Deliberate Franchise Sales Message
PIRTEK USA crafts its racing communications to spread awareness of the PIRTEK franchise opportunity. Here’s the full text of the PIRTEK Sponsorship profile posted on the Team Penske page:
PIRTEK is the only franchise of its kind in the United States, providing hydraulic and industrial hose replacement and products.
With locations nationwide, our ETA 1 hour on site hose service available 24/7, is a simple solution that minimizes equipment downtime and eliminates the need for our customers to leave their jobsite or facility to locate a new hose.
PIRTEK Service & Supply Centers provide over the counter service for custom built high pressure hose assemblies, machining and component recovery and offers a comprehensive range of industrial products.
PIRTEK customers range from large corporations to small businesses operating in a number of key industries including manufacturing, construction, transportation, marine, waste/recycling, earthmoving, agriculture and defense.
PIRTEK Tier 1 and Tier 2 franchises opportunities are available in all metropolitan areas of the United States.
Through NASCAR, PIRTEK USA is Advertising to “All Metropolitan Areas of the United States.”
Why is PIRTEK USA advertising to “all metropolitan areas of the United States” through NASCAR when their franchisees only service particular markets?
PIRTEK hose replacement and repair services are offered by franchisees only in particular markets in the U.S..
If PIRTEK USA were focused on promoting to prospective customers in franchisee-serviced markets (in our humble opinion), a more targeted approach focused on the PIRTEK customer profile in those regional and local markets would be the most cost-effective strategy. This would eliminate the wasted marketing dollars spent on exposure in markets where there is no franchisee to benefit.
The choice of broad, national (even international) exposure suggests that PIRTEK USA’s primary focus may be on recruiting new franchisees in those currently unserviced areas.
If so, this would make the PIRTEK NASCAR sponsorship a corporate expense of PIRTEK USA, and not an appropriate expense to be billed to the franchisee marketing fund.
Is PIRTEK’s NASCAR Sponsorship a Valid Franchisee Marketing Fund Expense?
The 2020 PIRTEK USA Franchise Disclosure Document makes it clear that the franchisor alone decides how how franchisee marketing contributions are spent. The PIRTEK Franchisee Advisory Council (“FAC”), it states, will serve in an “advisory capacity only” and the franchisor has “the power to form, change or dissolve the FAC.”
However, there is one clear restriction. All recent PIRTEK Franchise Disclosure Documents state that “Marketing Fees will not be used for advertising principally directed at the sale of franchises.”
A review of PIRTEK USA FDDs indicate that when Australian racing fan Glenn Duncan took the helm of PIRTEK USA in 2016, he reallocated nearly half of the franchisee marketing fund to its NASCAR racing sponsorship. Racing sponsorships, arguably, come with no convincing method of determining any tangible, measurable benefit and no clear metric to determine success, failure, or progress.
One franchisee told me “The van signage rebate was very significant to me and was a major factor in my growth. Without it, I couldn’t afford to continue to grow my fleet.”
Additionally, NASCAR has been in sharp decline in recent years both in terms of viewership and attendance. The global pandemic, which has resulted in a disruption of the NASCAR race schedule and elimination of in-person attendance, is accelerating this devastating decline.
Some PIRTEK franchisees claim that, in order to indulge his appetite for racing, Glenn Duncan eliminated the very tangible benefit to franchisees: Van Signage Rebates.
One franchisee told me “The van signage rebate was very significant to me and was a major factor in my growth. Without it, I couldn’t afford to continue to grow my fleet.”
Franchisees also bemoaned the fact that Glenn Duncan eliminated free freight/shipping, stopped accepting credit cards for payment, and (allegedly) may be getting rebates from some of their vendors, causing higher prices for franchisees.
| PIRTEK USA Marketing Fund Expense | 2014 | 2015 | 2016* | 2017* | 2019* |
| Sponsorships | .03% | 1.5% | 43% | 36% | 48.60% |
| Marketing Fund Rebate Program | 16.04% | .49% | 15% | 25% | 17.86% |
| Media | 1.78% | .01% | 0% | 18% | 17.58% |
| Public Relations | 7% | 7.77% | |||
| Miscellaneous + Admin | 4.14% | .05% | 7% | 5% | 2.87% |
| Printing | 7.31% | 3.21% | |||
| Promotional Items | 1.21% | ||||
| Tradeshows | 4.57% | .97% | 0.90% | ||
| MSST Conference | 2.01% | 5.15% | 4% | 3% | |
| OPS Manager Conference | 1.7% | 3.63% | 3% | ||
| Printing | 14.79% | 5% | |||
| Production | .76% | .13% | 4% | ||
| Promotional | 6.17% | 2.41 | 2% | 1% | |
| Public Relations | .15% | 2.21% | 6% | ||
| Van Signage rebates | 13.62% | 21.26% | 0% | 0% | 0% |
| Internet Cost of Goods
Sales Contests Salaries/Wages Other Marketing Expense Direct Mail |
3.75%
.57% 24.2% 2.85% 2.88% |
3.36%
.50% 23.4% 1.62% |
|||
| * Under leadership of Peter Duncan,
Glenn Duncan |
Should PIRTEK USA Cover the Costs of its Questionable Racing Sponsorship… And Reimburse the Franchisee Ad Fund?
Some franchisors resent it when UnhappyFranchisee.com pokes around in what they consider “their” business.
Even some franchisee associations also take it personal when we ask valid questions. Despite the fact that we advocate for fair treatment of franchisees, they sometimes get defensive if we challenge whether they are truly pushing hard enough for the best interests of the franchisees they represent, or if we hint that they have gotten too cozy with the franchisor or too complacent.
While we are sensitive to the well-being of current franchisees, we feel the greatest responsibility to the prospective franchise owners who are considering putting their careers, savings and family’s financial well-being on the line.
If Director Glenn Duncan and CEO Kim Gubera aren’t willing to address challenging yet fair and valid questions regarding the terms and conditions of their franchise agreement and the application of those terms in real life, that is a factor prospective franchisees should consider.
If Director Glenn Duncan and CEO Kim Gubera aren’t willing to address challenging yet fair and valid questions regarding the terms and conditions of their franchise agreement and the application of those terms in real life, that is a factor prospective franchisees should consider.
If members of the Franchisee Advisory Council [FAC] and the Fluid Power Franchisee Association [FPFA] are unwilling or prohibited from discussing valid issues of interest to prospective franchisees, or if they are afraid to share their opinions due to onerous non-disparagement clauses, franchisees should know that, too.
It appears to us that PIRTEK USA may have co-opted the franchisee marketing fund, misapplied funds to cover sponsorships that boost recognition and credibility of its franchise opportunity, and continue to waste half of the franchisee marketing fund on a sponsorship that will not, nor is intended to, primarily benefit the franchisees who contribute to the fund.
However, we could be wrong. That’s why we invite Kim Gubera, Glenn Duncan, Nick Ridgway, FPFA board members, and PIRTEK franchisees and former franchisees to share their opinions and, if appropriate, set us straight.
Prospective PIRTEK franchisees can then benefit from the dialogue, and make a more informed decision.
WHAT DO YOU THINK? SHARE A COMMENT BELOW OR EMAIL ADMIN IN CONFIDENCE AT UnhappyFranchisee[at]Gmail.com.
ANONYMOUS COMMENTING WELCOME.
PIRTEK USA related:
PIRTEK NASCAR Cup Debut Wows Empty Seats at Darlington
Autopsy of PIRTEK NASCAR Cup Sponsorship Debut: Expert Opinions Invited
PIRTEK USA Franchise: Not All Leaps of Faith End Well
As Pressure Mounts, Franchisee Associations Push Back
PIRTEK USA Letter to Kim Gubera, PIRTEK CEO
ALSO READ:
FRANCHISE DISCUSSIONS by Company
Franchise Ownership? There’s No Such Thing
ARE YOU A PIRTEK USA FRANCHISEE OR CORPORATE EMPLOYEE? OR YOU FAMILIAR WITH NASCAR OR RACING SPONSORSHIPS?
WHAT DO YOU THINK? SHARE YOUR OPINION BELOW.
TAGS: NASCAR Cup Series, Team Penske, Penske Race Sponsorship, Brad Keselowski, FOX FS1, PIRTEK franchise marketing fund, Pirtek franchise, Pirtek USA franchise, PIRTEK franchise opportunity, PIRTEK Racing, Penske Racing, NASCAR sponsorship, Kim Gubera, Peter Duncan, Glenn Duncan, Roger Penske, Sean Kelly, Fluid Power Franchisee Association, FPFA, Craig Heitkamp, Ken Adair, Carl Jones, Mike McCarthy, Todd Miceli, David Herbert, Eli Dorfman, Sharon Dorfman