O2 Ireland’s new franchise programme has caused huge disruption in the country’s sales channel as O2 dealers that refuse to sign up to the scheme will lose their right to sell O2 products. The scaleback would mean a reduction of national O2 sales outlets of around 75 per cent, from 670 to just 170.
The O2 franchise programme was rolled out last month to offer O2’s entire dealer base the opportunity to become an O2 franchise store. The network said it was too early to determine how many dealers would sign up to the programme, and how many would refuse, thereby losing their O2 account. But sources claim O2 Ireland has 670 outlets selling its products, including prepay concessions within variety stores.
Its plans are to cut this back to just 170, closing the concessions. It has also stopped working with Irish distributor Radius, which had connected 80 independent dealers.
O2’s new retail footprint, as outlined to dealers in a presentation, is to be made up of 65 O2 retail stores, 65 Carphone Warehouse stores and 40 O2 franchise stores, at a start-up cost of €100,000 (£86,650) to the dealer.
O2 would not confirm numbers. A spokesman said: “Having built up a substantial distribution base over the past 10 years in Ireland to match the growth of the mobile market, O2 has now reviewed its distribution channels as the market matures and reaches saturation. In the very competitive mobile sector, O2 must ensure that it continues to deliver the innovative products, value for money price plans and service that customers want.
“The review has resulted in a number of opportunities for O2’s retailers to opt into a franchise agreement with O2, an option which is being very well received. In implementing these changes however it also means that some retailers which sell O2 products and services, as well as other networks, will no longer do so.
“Those dealers who chose not to go the franchise route with O2 will not have an opportunity to remain as an independent dealer for O2 as our strategy is to build the franchise and O2 retail footprint in order to give customers a consistent O2 experience.”
One Irish B2B dealer said: “The whole sales channel is in turmoil at present. Dealers don’t know where they stand with O2. Most dealers are keeping their options open as to whether it will be financially viable or not to enter a franchise agreement. In a lot of rural areas the population will not sustain a franchise store. Many dealers are considering giving O2 a miss and carrying forward just selling the remaining networks on a sub dealer basis.”