YTB's Marching Orders To The Reps

The following letter of clarification and talking points was issued last week and immediately posted on hundreds of blogs and recruiting sites to explain the concept of franchising as it applies to YTB. While some people see this letter as complete, all encompassing, and encouraging; I find it the opposite. It is full of rhetoric and vague promises of a better life to come. I have a good idea as to why franchising is on the table now and I will be posting about that in a few days. Rather than interject my comments, I have put in "footnotes" for some areas that should be of concern to existing Reps and RTAs, potential Reps and RTAs, and the travel indiustry in general.

DATE: July 17, 2008

TO: Directors

FROM: Scott Tomer, CEO

RE: Franchise Press Release

I realize that many of you want more information about our July 14th announcement of the potential use of a franchise model at YTB.

While there are some things we are unable to comment on at this time, the intention of this letter is to answer many of the questions posed by our Reps and RTAs. I also want to provide you with correct information regarding the rumors, misrepresentations and untruths being circulated on the Internet.

But first, let’s talk a little history. Our goal from day one has been to become the world’s largest Internet travel company. In 2007 we were recognized as the 26th largest seller of travel in America and we are in the top 10 of those that are Internet based. While we are delighted with these results, we believe the franchise model will enable even faster growth. (1)

Here are some important points for you to know and remember.

The founders of YTB learned direct sales from Art Williams and built one of the largest

organizations in his company. We know how to build a successful sales force that will stand the test of time and the facts supporting this claim are easy to substantiate. 27 years later, my brother still operates a very successful business inside what is now known as Primerica Financial Services. (2)

We know how to recruit, build a sales force and sell products and services using the direct sales or network marketing approach. We are convinced this is the best marketing system ever created and we are ABSOLUTELY COMMITTED to continuing the use of this system with YTB. (3)

While there will be changes to the process as it relates to the sale of franchises, the downline genealogy and network marketing division will remain intact.

People may question our decision but no one can question our commitment to this industry or our people. Many factors, none more important than the protection of our Reps and RTAs futures, and many months of due diligence preceded our July 14th announcement. I’d like to share some of our thoughts with you.

Our commitment to becoming a world class travel company will be supported in the franchise system with additional tools and training for those who choose to actively pursue the travel business. The operations manual available to franchisees will provide details of the critical aspects of how to successfully operate their franchise. (4)

We believe a franchise model of our existing business will be easier to comprehend and more readily accepted by the general public. Since franchising is recognized as a traditional business model in virtually all developed countries, YTB’s timeline for global expansion will be accelerated. (5)

Additionally, franchising will allow us to rapidly diversify the products and services

offered by our franchisees. This will enable YTB to more quickly attain our goal of becoming a major distribution channel for products and services sold in the U.S. and abroad. (6)

Now let’s discuss how this will affect our existing RTAs. We anticipate everything that currently exists for RTAs will be in the franchise model and any additional products offered through the franchise will be available to RTAs should they elect to become franchisees. (7)

We also anticipate providing favorable terms to those RTAs who convert to the franchise model although we have not decided on those details as of this date. If RTAs elect not to become franchisees, they will be able to continue with no change to their status with all income opportunities and privileges they currently enjoy. (8)

I acknowledge outsiders will question this decision. We’ve been questioned before. Many so called industry experts doubted our ability to sell travel, but they can’t argue with the fact that we sold $414 million of it last year. (9)

We became a publicly traded company in 2004 and the skeptics said we would never make it.People said we were crazy to introduce a Reps ‘Bill of Rights’ at the 2005 ‘Your Time to Build’ national convention. It was unheard of in our industry. No one had ever guaranteed earnings for its Reps prior to the 2006 ‘Business of Champions’ YTB convention, but that didn’t stop us from introducing the Success from Home Magazine program with its $6,000 Guarantee. We became members of the Direct Sales Association in 2007 and added the First Amendment to the Bill of Rights’ at the ‘Cleared for Take Off’ National Convention to the dismay of our detractors. (10)

We’ve never asked nor do I care about the opinion of our competitors and skeptics. Let them say what they will. So what if they don’t agree with what we do. While it disturbs me that they make inaccurate, deceitful, slanderous and outright fraudulent statements about YTB in an attempt to recruit people, I refuse to respond. (11)

What I do know is this. YTB is responsible for more travel sales through YTB Travel Network than all of the other network marketing companies selling travel combined. I stand on our record of Rep and RTA protections and challenge any of them to step up and compete.

We’re building a company for the ages and I am proud to be in business with you.

YourTravelBiz.com.

APPROVED FRANCHISE STATEMENTS

For the RTA:

- We anticipate everything that currently exists for RTAs will be in the franchise model.

- Any additional products offered in the franchise model will be available to RTAs

should they elect to become franchisees.

- We anticipate providing favorable terms to those RTAs who convert to the franchise

model although we have not decided on the details.

- If RTAs elect not to become franchisees, they can continue with no changes to their

status with all income opportunities and privileges they currently enjoy.

- An Operations Manual will detail the critical aspects of how to successfully operate the franchise (not yet approved).

For the Rep:

- While there will be changes to the process related to the sale of franchises, the downline genealogy and network marketing division will remain intact.

General Statements:

- We believe a franchise model of our existing business will be easier to comprehend and more readily accepted by the general public.

- Our commitment to becoming a world class travel company will be supported in the franchise system with additional tools and training for those who choose to actively pursue the travel business.

- Franchising will allow YTB to diversify the products and services offered by its franchisees more quickly.

- Since franchising is recognized as a traditional business model in almost every country, YTB’s timeline for global expansion will be accelerated.

- Franchising will enable YTB to rapidly attain its goal of becoming a major distribution channel for products and services sold in the US and abroad.

1. Nowhere in this letter does it say how franchising will affect that growth.
2. How does the success of Scott Tomer's brother in Primerica (a struggling entity as it is) have any impact on the success of YTB?
3. If they are convinced that network marketing is the "best marketing system ever created", why the switch?
4. This tells me that the training to date has not been adequate enough to market YTB as a "world class" travel company.
5. While franchising is certainly more accedpted than MLM, I thought the whole principle behind YTB was to not rely on any public conception, but to utilize the market of friends and family. To date, the global expansion has been met with resistance in Canada and essentially failure in Bermuda and the Bahamas.
   
6. Curiously absent from this paragraph is any mention of travel. Does this model now include other products on top of cars and flowerrs and camping gear? Is this new franchise looking to model after Market America?
7. This essentially advises the RTAs that there will be additional ongoing monthly expenses in order to poerate as a franchise. Can the average RTA who earned $120 in commissions last year afford to pay any more money to YTB?
8. Like (7), this is advising the existing RTAs that there indeed will be a franchise fee associated with this move on top of the $500 already paid to become an RTA. While it is undecided at this point, my best guess would be $5000 for new and $2500 for existing financed over a year interest free. What is curious is that they say if they decline to franchise, they will still maintain what they have. Is YTB a franchise or an MLM? They need to decide because I am not sure you can have it both ways. Or are they simply saying they will keep the website alive for $49.99 a month?
9. Sure we can. There was no real substantiation of your sales in 2006 and a partial substantiation in 2007. While Scott claims $414 million, it needs to be noted that according to Travel Weekly, $203M of that was not by the RTAs.
10. It also needs to be noted that they became public by a reverse merger which required no SEC oversight. And once they took over, they were delisted for irregular accounting practices which have recently been corrected to allow them to be relisted on the OTC. Ast to the Bill of Rights and other documents, they are essentially worthless once the company is sold or liquidates. Although many presentations will tell you that YTB registers these documents with the Attorney Generals of "every state", they are mere marketing ploys.
11. OK, the comment about inaccurate, deceitful, slanderous and outright fraudulent statements to recruit really strikes me as funny. I would like to see what Dr. Seligman thinks about that!