Three Treasury Department franchises have launched a new advertising strategy by joining forces to market themselves as a single brand. Federal franchise operations are entrepreneurial entities that sell common support services on a reimbursable basis to other agencies. Under the Government Management and Reform Act of 1994, agencies were allowed to establish franchises that would compete to sell their services across the government. Franchise revenue is generated through contracts with customers; franchises do not get federal funding. This fall, Treasury franchise operations in St. Louis, Chicago and Seattle decided to collectively market themselves as a single brand - FedSource - and selected Osborn & Barr/Snyder Group, a St. Louis advertising firm, to support their marketing campaign. While these franchises have pooled resources to increase their purchasing power since being established in fiscal 1996, FedSource represents the first teaming up of franchises for marketing purposes. "The three offices came together and said they wanted to market themselves more pro-actively," said Angela MacBryde, a public relations consultant with Osborn & Barr/Snyder. "They realized that if they joined together [and] came up with a brand name for their organization, they could make more of an impact from a marketing perspective." FedSource offices are procurement shops that purchase a range of administrative and human resources for federal agencies. By pooling their contracts, FedSource offices combine their purchasing power to provide individual agencies with lower prices than they might get otherwise. "We get good prices based on the volume of business we do with a vendor," said Karen Blum, chief operating officer of the St. Louis office. "Unless you're an agency with a lot of volume all by yourself, you're not going to get that kind of discounting." FedSource offices have more than 450 federal customers among them, Blum said. Operating as a single entity for marketing purposes should bring increased savings to FedSource's customers. "If we all did marketing separately, each of us would have a larger bill than we do now. Joining together on procurement and marketing helps keep overhead down, resulting in lower prices [for customers]" Blum said. Osborn & Barr/Snyder will market FedSource through the print media, a direct mail campaign and by developing a Web site that should be available in a few months. FedSource is not the first franchise organization to build up a brand name through a private sector style marketing campaign. In September 1998, the Interior Department's Mineral Management Service turned to Osborn & Barr/Snyder to help devise a marketing strategy for its procurement office. The result was Gov.Works, a brand that has brought in new business. Osborn & Barr/Snyder does not consider Gov.Works, which provides a variety of acquisition services to other agencies, and FedSource to be competitors. While FedSource does compete with the private sector for the right to provide services to federal agencies, more than 90 percent of work solicited by the franchise is passed along to private sector firms. Still, some experts say that by acting as intermediaries between agencies and the private sector, franchises take business away from the private sector. "I have serious problems with federal entities performing commercial functions," said Charles Cantus, Acting President of the Professional Services Council. "It is our adamant belief that the federal government should not be competing with private sector capabilities," he said.
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