John A. Zsisidin, the new director of franchise development at Erol's Inc. of Springfield, should have no problem setting his agenda.
Faced with a slowdown in the video rental industry and increasing competition from heavyweights such as Blockbuster Entertainment Corp. of Fort Lauderdale, Fla., Erol's must expand through franchising to maintain its market share, according to industry analysts.
Erol's officials said Zsisidin -- a longtime Erol's customer who has franchised computer stores, car dealerships and clothing shops -- has the credentials to lead the effort.
"I needed someone who had a knowledge and conviction of Erol's, as well as a proven track record with franchise sales," said Troy Cooper, executive vice president of Erol's Franchising Inc. "John does."
Erol's was the only big name in Washington area video rental throughout the 1980s, but it lost ground when Blockbuster -- a chain of 1,400 stores, half of them franchises -- arrived in this area in 1989. Erol's created Erol's Franchising Inc. in August to help the company climb back to the top.
Zsisidin, 47, has spent the last three years as a consultant, setting up franchises for a national restaurant chain, a women's retail company and a publicly traded corporation. He declined to name his clients specifically.
From 1982 to 1987, Zsisidin oversaw the franchise expansion of the 400-store Entre Computer Centers Inc. of Tysons Corner, which grew meteorically during the personal computer boom of the early 1980s, but faltered in 1985 when demand for PCs wore off and dozens of franchisees filed suit against the parent company for breach of contract.
All but two of the suits were thrown out or settled out of court, according to Bert Helfinstein, president of Entre from 1986 until it was acquired by Intelligent Electronics Inc. of Exton, Pa., in 1988. Entre won one case that went to trial, and successfully appealed two of three convictions against it in the second case.
Helfinstein, now president of Viteq Corp. of Lanham, described Zsisidin as a skilled franchise salesman and said the litigation against Entre has made Zsisidin more precise and cautious in dealing with franchisees.
"He understands what the franchisee is looking for and he's able to project an air of confidence ... to people who are looking to franchise," Helfinstein said. "It can be an area of great trepidation to people, and John is able to give them comfort."
The idea behind franchising is that individual stores can benefit from the recognition of the parent chain's name and the special touches the chain offers, like nighttime drop-off of tapes and broader video selection.
In return, franchisees pay royalties and fees to the parent chain and share advertising costs with other area stores, allowing the chain to expand rapidly at minimal cost. Problems can erupt when the franchisees are dissatisfied with the attention and support they receive from the parent, as in the case of Entre, or when the parent is unhappy with franchise performance.
Video consultant Tim Baskerville said a slowdown in video rentals will make it tough for Erol's to catch up to Blockbuster, which launched its own franchising at the height of the industry's growth.
"We've reached virtual saturation," Baskerville said. "It's very much an open question whether there is that much growth in franchise expansion anymore."
Chains trying to franchise their way into new markets face a Catch-22, Baskerville added, because the advantages for franchisees lie in the parent store already having a significant presence in the area.
But Zsisidin brushed aside those concerns.
"There was a day when no one knew what a McDonald's was," he said. "The advantage to that was, early franchisees in a given market area got to pick the prime spots."
Successful franchising depends on giving personal attention and scrutiny to each potential franchisee, Zsisidin said, both before and after convincing them to sign on.
"My entire day is spent with a phone hooked to my ear," he said. "I look at each individual person -- are they right, is their market right, do they have the capital?"
More than 400 store owners and entrepreneurs have contacted Erol's since it announced plans to franchise in August, Cooper said.
The company is licensed to franchise in 35 states and expects approval for the remaining states before the end of 1990. It has not yet signed on any franchisees.
"Whether we do 20 franchises a year or 200 doesn't matter to me," Zsisidin said. "What is important is that we pick the right person."