Franchise Insurance: New Sources of Value

• The corporate arm of the company needed to participate and had to be headquartered in the state of Michigan.

• It must be the only plan offered by corporate to its franchisees.

• If the franchisees come on board with the plan, it must be the only one offered to employees.

Perhaps the biggest sticking point was the franchise organization's ability to reach critical mass for participation, which was between 500 and 600 employees. Gerhardt was pleasantly surprised by the response he received from owners. "We negotiated a price that BCBS would lock in if we could get a substantial number to participate. We got roughly a third of owners on the initial rollout."