Franchise; Fairway aims for 15% of market by 2010

Derek Sankey, Financial Post  Published: Monday, May 12, 2008

Lorraine Hjalte/Calgary Herald Following Karen Stewart's personal marital experience, she wrote Clean Break, which launches this week.

Karen Stewart has relied heavily on her instincts as an entrepreneur to build and sell numerous financial service companies in Calgary for 15 years.

But her divorce in 2001 and the next four years she spent in a heated legal battle that cost $500,000 in lawyer fees, and finally and painstakingly navigating through the divorce system, triggered her to think of devoting all her time to her part-time passion.

However, it wasn't until she set up her flagship location in 2006 that she was able to do that.

"Over the course of that four years, I kept thinking there's got to be a better way," she recalls. "It was just massive chaos right through to the end game. It creates this circle of pain and suffering."

She knew she wasn't alone. As a financially savvy entrepreneur, she was constantly thinking how she could parlay her skills to create a solution to help other families avoid the bitter mess she endured.

Ms. Stewart began developing ideas and experimenting with different processes throughout her divorce. After the dust had settled, she earned her certified divorce financial analyst (CDFA) designation and began doing initial consultations with families.

After doing extensive research and proving a third-party, mediated model, she took what she had learned and launched an international brand in divorce solutions --a unique alternative that challenged the traditional, lawyer-driven system.

The process incorporates some traditional mediation methodologies, but removes lawyers and focuses on creating individual plans both spouses agree upon, guided by senior negotiators who align their interests.

The process follows an orderly progression, dealing with financial matters up front before any matters related to children. The cornerstones are equally simple: to reduce costs, time, stress and to save children from being used as pawns.

"This is a personal, life mission," Ms. Stewart says. "It's about saving children and people from the devastation that happens in the traditional system."

There were lots of naysayers predicting failure. Despite that, she raised $1-million to launch her first location under the banner of Fairway Divorce Solutions with the intent of rolling out her concept across Canada, and then into the United States.

She must have been on to something because she attracted backing from Cameron Herold, the entrepreneur who took 1-800-GOT-JUNK from a $2-million regional operation into a $130-million franchise business operating in 10 provinces and 46 states.

"I swore to myself that if I was ever going to do franchising again, it had to be with a really ethical group of people that wanted to build a good brand, wanted to effect change, make a lot of money, but the franchisees really had to be able to make a lot as well," Mr. Herold said.

As soon as he heard about Ms. Stewart's concept for a divorce alternative, he joined as the firm's executive vice-president of corporate development. "It really resonated with me because it's a really ugly industry," he says. "What she wanted to do was to clean it and build a really great brand and take care of the kids and build a profitable model and make sure the franchisees made a lot of money."

From a brand-building perspective, Ms. Stewart has compiled all of the information she has learned along the way into a book, called Clean Break: How to Divorce with Dignity and Move on With Your Life, which launches this week and supports her franchise concept as it rolls out.

A location opens in Calgary this month, to be followed by two more locations in the Calgary area later this fall.

Plans to move into Ontario and the rest of Canada will be rolled out later in the fall and into 2009. Ms. Stewart's goal is to have 56 franchised locations in Canada and the United States by 2010, pulling in $25-million in revenue with 15% of the market share. The cost to start a franchise is $20,000, although franchisees require about $250,000 to get it going.

Ms. Stewart, who is from a family of lawyers, respects the traditional system but insists it must be challenged.

Clark Johannson has followed Ms. Stewart's progress for the past five years and jumped at the opportunity to buy the first location, and will use the expertise of a matrimonial lawyer and negotiator.

"There doesn't seem to be a middle ground, so I think people just try to find their way through the system," he says.

"Part of our job is just to say: 'Before this spins out of control, let's take a moment to avoid a legacy.' The kids aren't used as pawns to get assets."

A client of Fairway says it was a perfect alternative for two people willing to come to a negotiated agreement without going through rounds of lawyers and legal fees.

"The legal system is inherently adversarial: one person wins and one person loses," says the client, who wished to remain anonymous.

Ms. Stewart will be happy if the franchise model rolls out successfully. But more importantly, she says: "If we can remove emotion from the decisions that go through divorce, then we've accomplished something huge."