Growth in business opportunities has been put forward as a key reason behind O2’s decision to increase the number of its franchised stores.
O2 claims the move to franchise 82 more of its most profitable stores will allow for stronger business links with the local community.
Crispin Lowery, 02’s retail general manager, said: ‘Our aim is to innovate and grow in this space. This will be about local stores being able to host business events and business networking. Discovering entrepreneurial talent and having a strong presence in the local community is the aim. ‘We normally see strong b2b results from franchisees in their stores as they have strong links with the local business community.’ Lowery said the newly franchised stores were due to come into existence within the next nine to 12 months. He said O2 wanted to keep the ‘look and feel’ of the stores the same. If there was to be a refit, then O2 would also share the costs with the franchisee.
The franchise expansion will mean that in the next nine to 12 months, 202 of O2’s 450 stores across the UK, would come under the franchise model.
The operator confirmed franchises would be on offer for up to £50,000, raising ‘millions’ in cash, which it said would then be reinvested into the business. O2 has said it would encourage existing staff to apply for franchises.
Sam Hart, equity analyst at Charles Stanley, said: ‘Usually when a company decides to operate through franchise it’s a lower-capital way of doing it. It’s a freehold property and risk associated with rent would remain with the franchisee.‘
When a business is franchised, there’s usually an agreement about job security but it is usually for a limited period only – a nod term. However, if O2 has made it clear there are to be no redundancies, then I have no reason to disbelieve that.’
Both the Communication Workers’ Union and Prospect union have raised concerns about the franchising of more stores, saying jobs were potentially being put at risk.
Steve Roberts, MD of Communication Plus, which trades as O2, with 10 stores
Steve Roberts has been running 10 O2 franchised stores across the north of England since 2006.
He says as a franchisee it puts him in the unique position of being able to have his ‘ear to the ground’ and react quickly.
Roberts, 42, said: ‘We also have a specialist business compartment, we send out a team to potential clients. There are business networking events; for example, we’ve worked with the Chester Chamber of Commerce, which has helped to generate business.
‘Although I want to keep our stores in top condition, it’s refreshing to know that every five years O2 is willing to invest. As four of our retail stores are based in business parks, we have also managed to increase staff numbers since 2006. One of the big advantages is that as managing director, I’m able to walk onto the shopfloor and share successes and explore concerns quickly. Otherwise, it could take two to three weeks to deal with any issue.’
Roberts acknowledged the economic conditions continued to dictate and it was a question of ‘rolling up your sleeves and working harder’.
Editor: Shujaul Azam