O2 Ireland explains franchises

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O2 Ireland has opened its retail franchise programme beyond independent dealers. It said it no longer wants its brand to be sold alongside rivals’.

O2 Ireland has set a target of recruiting 35 franchise stores by the end of the year. It said it was “half way there”, and was working from an original dealer base of 75. Its franchise stores would work alongside 65 existing O2 retail outlets and 65 Carphone Warehouse stores across Ireland.

O2 Ireland director of consumer sales Tony Hanway told Mobile News:

“We don’t want our product sold in multi-branded outlets. We think the brand would be better served in a dedicated environment with staff that are trained to fully understand the products and services on an exclusive basis, and showcase products in the way we want them showcased. It is difficult to get the message across in a non-exclusive environment.

“The new stores are a step forward in terms of design and point of sale. The customer is looking for somebody to guide them through a handset’s features. We see ourselves as carving out a position where we become the destination of choice for the latest devices. We want to keep the brand experience in stores consistent.”

Hanway said O2 Ireland’s retail channel would now consist of O2 Retail stores and O2 Exclusive stores, which is how the franchise outlets will be known. Ten franchise stores are already trading. DigitalFone O2 in County Donegal is one of the first dealerships to join the franchise programme, opening five franchises in total and creating 15 jobs.

Hanway said: “We introduced our guys to the franchise concept and we believe they could make a lucrative living out of it as the O2 brand is doing the best it has ever done. We came up with a detailed, robust and rational plan. We haven’t treated anybody with disrespect or disloyalty.

We explained to our dealers that the market has changed from a customer land grab over the past 10 years, to saturated over the past year. Those days of just adding numbers are over and dealers need to adapt to the new times.

“Standards have gone down as there is less business to share out. We want even higher quality sales channels but we need less outlets to make this more viable.”

Hanway refuted the notion that the franchise fee of €100,000 (£88,200) per store was to boost the network’s revenues.

He said: “We’re not making money off the franchise fee; it won’t add to our revenues. What it will be spent on is rebranding the store, new uniforms, training, point of sale and electronic systems. Our main directive is to deliver customer satisfaction and it is not a cost saving exercise.

“We have looked at franchises across a range of industries and we believe the fee is not onerous in comparison. We also understand that it is a recession so dealers have the opportunity of paying upfront or over a six-month period.”

The franchise programme will allow for new O2 stores to open where previously there were none. The programme has also opened to entrepreneurs from other industries through advertising in the media.

Hanway said franchisees from non-mobile backgrounds could be successful as long as their stores were in good locations and they had good business plans, although they would make up a small percentage of the overall franchise number.

“Customers are going to see brand new O2 stores where there weren’t any before. One of our key criteria is to keep as many of our good people as possible, but location and current circumstance may make some not want to do this,” said Hanway.

“That is regrettable. We would like to have everybody. If dealers trust us, we can help them grow their business. The O2 brand is stronger now than ever – we have outperformed the market in the last two quarters and now is a good time to be working with O2.”

Full article in Mobile News issue 447 (September 7, 2009).

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