Focusing on the future for mobile franchising

Focusing on the future for mobile franchising

The UK franchise market is a £15bn industry, one that the British Franchise Association estimates has grown exponentially over the past 25 years.


The franchising business model has been rapidly adopted across mobile, driven by independents such as Fonehouse, and networks EE and O2, the latter of which has built up a significant base of franchise partners.


Over the years there has been a number of hurdles facing those entering the franchise market, as experienced by EE’s franchise programme in 2014. At the time the network attributed delays to management issues and unacceptable financial terms. Carphone Warehouse Business ditched its franchise programme early in 2015, less than two years after launch.

Jumping on the bandwagon


According to independent retailer Fonehouse, the franchise market has grown rapidly. Chairman Clive Bayley says: ‘Over the past five years, we have seen a surge in retail franchise opportunities, with many retailers recognising the opportunity to reduce costs and roll out a substantial franchise footprint.

‘With mobile, the franchisee, in our experience, is a professional in their field, delivering excellent advice, based on product knowledge, and an unparalleled level of service to build and maintain its community base of customers.’

For O2 franchisee Communications Plus, the key shift in the market has been towards companies accepting franchise as being part of the larger business, rather than just one part to it. Speaking to Mobile, MD Steve Roberts says: ‘Franchise is not a dirty word anymore. Companies are now embracing franchise and believing that if they’ve got the right partners they will deliver exceptional customer experiences in the first instance.

‘In the past it’s been “we’ll try it; if it works, we’ll put it as part of our portfolio”. Now franchise as concept is believed to be the way forward and many companies are proving that and getting on the bandwagon.’

 Local value


The main value of a franchise lies in its links to the local community. According to Roberts, almost 50% of O2 stores are franchises, with the network converting 80 company-owned stores into franchise shops in 2012. These enabled O2 to build relationships with customers in local communities that it might otherwise have been unable to create.

 

Communications Plus’s Roberts attributes a major ‘industry swerve’ to the renewed focus on the importance of local business. He says: ‘When you can actually speak to the MD every day it does keep that connection and that trust within your employees – that’s a massive value of franchise.

‘There was a big industry swerve for all independents so there were smaller ones who were more local and then national ones that either were bought up by the networks or they went out of business. I think it’s almost a complete U-turn that we’ve got the local independent businesses that are flying the flag for the national brands – it’s the best of both worlds.’

 

‘No fear’ of consolidation


Communications Plus is unphased by consolidation in the marketplace, with MD Roberts claiming it is a frequent occurrence in mobile, one which he believes franchisees ‘need to roll with’.

‘Consolidation is a good thing, the industry started all those years ago with just Cell Net and Vodafone and then further networks came in such as Orange, T-Mobile and Three. It’s common within our industry and you’ve just got to roll with it. Although industry progress is being made, we still have some way to go; consolidation can bring it all together and ensure the bar continues to rise.’

His words are echoed by Fonehouse’s Bayley, who claims that the mergers in the market will be a good thing for both independent and network franchisees. He says: ‘Much as for the network-based franchisees, this will only be a bonus.

‘More customers are heading to a single retail presence. I can’t see, with the mergers that are happening in 2016, why any network-based franchisee will lose out. At the same time for the independents, the newly formed network power houses will continue to be focused on customer retention and a land grab for new subscribers, something which historically independents have always delivered and continue to do so.’

For Formby Connections, the threat of consolidation is one that co-MD Jonathon Beckett believes the channel will have to react to, however he explains that having confidence in the brand will be more important than ever.

He says: ‘As a franchisee you have to have confidence in our franchise and we’ve got 100% confidence in O2 UK business. There will be changes on the horizon should Hutchison take over, but that will be an interesting dynamic. Likewise, the BT/EE merger will throw up opportunities and threats to our own channel that we need to react to, but that’s the uncertainty of mergers and acquisitions. We can only react to the here and now and plan as if nothing is going to change.’

Keeping up with the consumer


O2 franchisee Formby Connections explains that there has been a shift in the type of technology that customers are looking for. Beckett says: ‘We’re in the throes of the digital age – customers of all ages are demanding more data. They have a greater desire to understand capabilities of the products and for the first time in 10 years it’s now come to customers asking us “what else do you have?”’

According to Northern Irish franchise Lordwardens, this is being driven by the growing demand to stay connected. Director Nigel Thompson says: ‘When we first started our franchise, 90% of the phones sold were Nokia, but now 90% of what we sell are Samsung and Apple smartphones.

‘The trend we see is that data bundles are increasing, there’s now a mid to high usage. We get a lot of younger customers looking to take advantage of other technology out there, such as wearables.’
For Lordwardens, franchisees are ideally placed to expand into new portfolio areas such as wearables because they have the opportunity, and staff levels, to offer demonstrations.  According to Formby Connections, this can extend even further, with the franchisee preparing for the day that smartphones move into the home.

Beckett explains that, more than ever, predicting what will come next is key for a franchise: ‘Far more than ever before we’re looking to the future, almost placing bets on what technology will come next and what we think can complement technology that exists today. Home automation is our next big bet and we’re educating ourselves on that for the future.’

 

According to Lordwardens’ Thompson, this is being driven by the growing demand to stay connected. He says: ‘When we first started our franchise, 90% of the phones sold were Nokia, but now 90% of what we sell are Samsung and Apple smartphones.

‘The trend we see is that data bundles are increasing, there’s now a mid to high usage. We get a lot of younger customers looking to take advantage of other technology out there, such as wearables.’
For Lordwardens, franchisees are ideally placed to expand into new portfolio areas such as wearables because they have the opportunity, and staff levels, to offer demonstrations.  According to Formby Connections, this can extend even further, with the franchisee preparing for the day that smartphones move into the home.

Beckett explains that, more than ever, predicting what will come next is key for a franchise: ‘Far more than ever before we’re looking to the future, almost placing bets on what technology will come next and what we think can complement technology that exists today. Home automation is our next big bet and we’re educating ourselves on that for the future.’
 
Diversifying services
 
Fonehouse uses its different brands to add layers to its business, expanding into accessories and phone repairs. Bayley says: ‘All footfall is good for business, a continued development of products and services stimulates the interest of the consumer.

‘Fonehouse is our traditional local mobile specialist consumer airtime store; Fonehouse Business is a complete B2B offering comprising fixed line, mobile and hosted and our latest opportunity, TechHouse Accessories is our high-end high street retail opportunity for accessories and repairs.

‘TechHouse Accessories add a new dimension and footfall increase with a more leisurely and fun purchase; TechHouse repairs add a more rounded service and profit opportunity, this also acts as a footfall driver for potential B2B opportunities.’

Communications Plus has chosen to expand its portfolio by broadening its services into different channels, targeting the SMB market as well as events.

Roberts says: ‘Increased data usage means we need to do more connections, so as a franchisee we’re growing our portfolio. We’re looking at more channels to market and this has allowed us to keep moving forward and stay ahead of the curve. While we’re predominantly in retail, we’ve got external teams that specialise in upgrades, SMB and events team.

‘The way the market is moving online could affect franchising, but again we’ve got to embrace it. Customers are now predominantly clicking and collecting, so we need to ensure that service is there so they don’t think twice about calling back into the store for support.

‘As franchise evolves, it’s what we need to do to grow and to stay ahead of the curve. You need to be able to dazzle your business customers and put on the best events and retain customers without any of those things being a distraction to the traditional shopper walking in through your door.

‘The industry is always changing and therefore it never changes. I struggle to differentiate between challenges affecting franchisees and the wider mobile industry, what challenges mobile challenges us and we simply have to work harder.’

 

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