EE’s franchise store programme has been hit with serious setbacks after more than half of the franchise partners selected for the programme earlier this year pulled out, frustrated by delays, management disarray and unacceptable financial terms, say sources.
The operator took on around ten new franchise partners early this year as part of a major plan to roll out over 100 franchise stores by 2015. The move is part of EE’s wider strategy to carve out a greater presence on the high street.
All ten franchise partners planned to open multiple EE franchise stores, with many of them chosen for their previous experience in running major franchise brands including, Specsavers, CEX, McDonald’s and O2.
However, sources say the partners became increasingly frustrated by sudden changes to the price book, hikes in the cost of stores, and lack of clarity on P&L information.
One franchise source told Mobile: ‘It was very disappointing. We put in an enormous amount of work, we spent a great deal of time in meetings and training sessions, putting together a business plan and recruiting. Then, just as we were about to sign, they changed the price book and raised the price of the stores, making the deal completely unacceptable. It would have been commercial suicide to sign.’
Another former partner said: ‘We could never get any answers. We kept asking for more information and they would never give it to us. We are experienced franchise partners. We know the business and this is not the way to run a franchise, so we quit.’
One source said partners had been caught up in changes to the way EE pays its franchise partners. He said: ‘They were taken on when very different terms were operating and then those terms were changed, creating all sorts of problems.’
One franchise partner echoed this view. ‘We were offered all sorts of terms. They made promises they couldn’t keep. They had no control over what they could deliver. That was decided somewhere else.’
Partners also complained about the rapid turnover in management on the programme, which saw franchise manager Michael Bellinger leave in December last year to be replaced by head of franchise Brett Simpson, who then left in July this year. Simpson was replaced by interim franchise head Suzanne Homewood, former EE business head of corporate account management. Homewood is now faced with turning around the programme, which is running significantly late, with no more than around 30 franchise stores operating from an original target of 100 by the end of this year.
An EE spokesperson said: ‘We have a strong franchise team in place who are in the final stages of negotiations with potential franchisees to take the scheme forward.’