Franchise model flawed, insists retailer

Claims that franchising will play a big role in the kitchen industry of tomorrow have been rejected by retailers.

Speaking at last month’s kbbreview Retail and Design Conference, Alno chief executive Jonathon Wagstaff, told delegates that, as consumers become more demanding and competition intensifies, brands and franchises will have a more prominent place in the market.

However, Andy Best of Best Trend Interiors in Leicester insisted the franchising model was actually in decline. “I beg to differ with Jonathon Wagstaff,” he told kbbreview. “I seem to remember him stating, when he took over from John Kinder as MD of [kitchen franchise] in-toto, that the number of franchises would increase significantly over the subsequent five years. Clearly this didn’t happen. It’s a similar situation with Schmidt and Mobalpa.”

Best went on to claim that retailers who embrace the franchising route risk damaging their margins.

“Despite the better trading conditions post-2008, our market is still a very competitive place and most retailers would agree that profitable margins, especially on appliances, are difficult to achieve,” he explained. “Adding a ‘Big Brother’ franchisor, who needs to pay their own copious overheads, to the franchisee’s overheads, makes for a poor business model.

“The franchisee’s purchasing power is clearly very limited. It can rightly be argued that a franchised outlet offers a good umbrella of protection to the end consumer and, used correctly, this is a powerful tool. However, a good independent offering Schüller, for example, or Trend Kitchens will always have a significant price advantage.”

Best called on the kitchen industry to provide proof that franchising is becoming more popular. “The current evidence would suggest otherwise,” he argued. “I feel with the rise of buying groups, the growing trend will come from this direction. This may well be worth investigating.”

Peter Loftus, divisional showroom manager with Grafton Merchanting, agreed that branded manufacturers have “a lot to offer independent retailers and that franchises de-risk the operation of a business”, but there was still “very little brand recognition by consumers”.

Loftus, who spent seven years as national sales manager with kitchen franchise Mobalpa, said it would be worth commissioning research on the subject with consumers. “The statistics are likely to show that most kitchens in the UK are bought on the basis of price, quality or personal recommendation, rather than brand,” he concluded.

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