Australia
03 September 2007
What happens when a franchisor has outlets in practically every shopping centre across the nation, or a shop on every corner?
While it might appear the company has reached maturity and exhausted options for expansion, it doesn't necessarily mean the company's growth has to stop there.
Another option is to acquire other businesses or franchises to keep growing.
Franchise Alliance director Phil Blain calls this super franchising.
''It's really a situation where the franchisor says, I still need growth and I can provide help and support to a variety of different businesses,'' says Mr Blain.
Mr Blain was presented with this dilemma in the mid-1990s, when he was at the helm of Pets Paradise.
The pet store chain had reached 120 stores nationally but he still wanted to grow the business, so the company bought Warner Bros Studio Stores from Village Roadshow and cafe chain Billy Baxter's.
Now, another iconic Australian franchise brand is planning to go down a similar path of expansion.
Foam and rubber retailer Clark Rubber, which currently has 86 franchised stores Australia-wide, is gearing up to reach its goal of about 120 stores.
Managing director Chris Malcolm says the company is also preparing to roll-out a new information technology system across the franchised business, which will eventually support the company's future expansion plans.
''In time, we want to acquire other bulky goods retail businesses and use the Clark model to run them,'' Mr Malcolm says.
Mr Malcolm revived the dormant Clark Rubber brand 12 years ago after he bought it from Pacific Dunlop.
Established under the umbrella company Retail Franchise Solutions, Clark Rubber was designed as a 'best practice' model of franchising, says Mr Malcolm.
Clark Rubber bought New Zealand company Para Rubber about nine years ago, which has proved a test case for expansion, Mr Malcolm says.
''That tested whether our model worked or not in another business in another company. And we were able to turn that business around. It very much proved our systems and proved our model worked internationally.''
Mr Malcolm says while his main focus is growing the number of Clark Rubber franchises over the next four to five years and developing the new IT system, he is also on the look out for acquisitions.
''We are ready for acquisitions now, but we're not in a hurry,'' he says.
The company would consider buying businesses that retail DIY-type products, for example, or bedding.
There is also a clear business plan about the size of bulky goods retail businesses desired, Mr Malcolm says.
One strategy will be to acquire a bulky goods retail chain that is mature and another is to buy a smaller chain of about 20 stores and grow the business.
He says many Clark Rubber franchisees owned a number of outlets and this would provide them with more opportunities to acquire more.
''Part of the business plan is that by acquiring another business, especially a youthful growing business, it affords opportunities for those franchisees in our system who have that desire to own several businesses and grow them.''
The move to expand the umbrella of companies under Retail Franchise Solutions follows other franchise expansions such as the ASX-listed Retail Food Group.
The Gold Coast-based company, which has about 289 franchised Donut King outlets and 71 franchised BB's Cafe outlets in Australia and New Zealand, successfully acquired Brumby's Bakeries this year.
Another listed company, Australian Pharmaceutical Industries, owns the franchised haircare retailer Price Attack, as well as Priceline healthy and beauty stores and Priceline Pharmacy.
The company sold homewares chain House in July for $8.5 million.
Source :
www.smallbusiness.smh.com.au
