JAG franchises to slash costs

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JAG Communications is to close up to 12 of its worst performing stores and reassign them as franchises as it looks to stem the flow of decreasing sales.

In an internal email sent to all store staff, managing director John George (pictured) outlined how JAG will offer staff the buying power of the retailer in a ready-made shop with a ready made customer base.

JAG is offering each franchisee one month’s rent as a deposit and one month’s store rent and building insurance in advance. Staff will also get a £10,000 credit line to start their business.

Staff also get all the commission on deals, where JAG takes a five per cent margin on all purchases, with the retailer taking a five per cent handling charge on all commissions as well as an ongoing element.

George said: “Since Orange and T-Mobile introduced revenue share models on April 1, our sales have decreased by about 25 per cent. These 12 shops are not performing to the levels expected of them so I’m offering them as a no-cost start up franchise. There is a real danger that these stores will be shut down if this doesn’t come to fruition.”

In addition, from June 1 store staff will be on a fixed basic not affected by targets. Bonuses consist of two tiers – five per cent of all gross profit, plus personal sales bonuses which can raise the initial commission to 15 per cent of profit.

JAG will also take action against staff that fail targets. George said: “We will have to be ruthless on people. If it isn’t working out, we will be taking action.”

JAG is also reducing its opening hours, closing all stores Sundays and Wednesday mornings.

 

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