Commander to ramp up franchising

Stuart Corner
Monday, 19 February 2007 10:57

IT Industry - Strategy

Commander Communications says its pilot franchise programme in regional Australia has proved a success and it now ramping up the programme and extending it into metro markets.

Details of the programme were announced along with the company's half year results in which it reported revenues for the half year of $509m, and said it was maintaining guidance for a full year EBITDA of $95m-$101m on revenues of $1.1b-$1.2b. Revenues were 59 percent up on the same period last year, buoyed by the inclusion of revenues from Volante, acquired in April 2006.

The franchise scheme was launched as a pilot programme in 2006 in regional Australia and Commander reports that it has proved to be successful with "both the service dispatch and management tools and the customer relationship management systems delivering the required oversight and operational support necessary for the full deployment of a structured franchise strategy."

The franchise outlets sell voice equipment and network services an ICT hardware and services to the SMB market. According to Commander, "Each centre is fully branded and fitted out to give a consistent look and feel and receives a full range of support services from Commander, resulting in a service tailored specifically to the needs of SMBs."

Accordingly "The initiative to deploy Commander franchises has been accelerated in order to reduce the disruption being experienced in the voice business and to take advantage of the increased efficiency inherent in the owner managed distribution model for second half sales." The company says it has now signed 27 franchise agreements of which 11 are operational and will be extending the franchises from regional into metropolitan locations.

Commander says that "the high take up of franchises by existing Commander staff has resulted in some first half restructuring costs with the majority likely to arise in the second half. The effect of franchising will be an increase in sales, movement of costs from fixed to variable and a reduction in direct labour costs with an increase in commissions."