‘Vacuum cleaner retailer Godfreys has detailed plans to shift to a majority franchise model, with the move to result in $2 million in restructuring charges’, reported The Australian on 19 October 2016.
According to the paper, ‘investors have welcomed the plans despite the near-term profit hit, sending Godfreys shares up as much as 8 per cent in early deals’.
[quote]“Following an internal strategic review to address continued weak performance in the business, the board has concluded that rebalancing the store portfolio with a bias to franchise stores is the best option to place the business on a solid footing for long-term growth,” stated Godfreys chairman Rod Walker.[/quote]
[quote]“This streamlining of our store portfolio will enable greater management focus on our more profitable larger format stores. It will also deliver medium and long-term improvements to both profitability and the balance sheet.” [/quote]
If the move to a majority franchise model goes ahead, the company expects to see approximately ‘60 stores converted to franchise stores over a three-year period, including 18 in fiscal 2017’.
Godfreys also expects to have as many as 140 of its 224 stores operating under the franchise model by 2019.
Godfreys managing director John Hardy added that “the new strategy made sense given the comparatively strong showing of franchised outlets”.
[quote]“Our franchise stores have a track record of outperformance, underpinned by the fundamental driver of small business ownership, particularly in regional areas where local knowledge and relationships are a major element of success,” he said. [/quote]
[quote]“Refocusing the business on a franchise concept will enable Godfreys to accelerate the current business improvement program. We expect strong interest from within our existing team to become franchisees.” [/quote]
‘An implementation team will be headed by current chief financial officer Bernie Bicknell’.