O2 is preparing to expand its franchise estate in a move signalling a major vote of confidence in the franchise model.
The operator is expected to transfer between 50 and 70 directly managed stores in this next stage, sources say. The move could see the balance of O2’s retail estate tip in favour of franchise stores. The operator currently has 466 stores, of which 200 are franchised.
Sources say O2’s franchise team, led by O2 general manager Bridget Lea, has already starting talking to existing franchisees and new franchise partners about its plans to roll out more franchised stores in 2015. The programme follows the successful rollout of 82 franchise stores over 18 months from October 2012.
One claimed: ‘O2 has put the word out that it is looking to franchise more stores next year. The team is talking to new and existing franchise partners and looking across O2’s portfolio at those directly managed stores that aren’t performing as well as they could.
He added: ‘They are looking for experienced franchise partners with a track record in the franchise world, and new partners with franchise experience or at least experience in running a business.’
The process is expected to follow the same format used to roll out the 82 franchised stores announced in October 2012. Sources say O2 will offer interested parties the chance to bid for bundles of five or six stores by region, across the UK. The bundled stores will be awarded under 24-month contracts.
One industry source said: ‘There is already an appetite among their existing franchise partners for more stores. These are businesses that want to expand. They have the processes in place. They have HR teams and area managers and they have the capacity to do more.’
He added: ‘O2 is also an attractive option to new partners. Its franchise operation has a reputation for being slick and well organised. There is a straightforward, streamlined application process and the returns are solid.’
O2 has been operating franchise stores since 2005. The programme brings clear benefits for the operator, cutting the cost of running its retail portfolio and bringing in much-needed capital for further investment. The expansion is also aimed at strengthening O2’s presence on an already increasingly competitive high street, and its links to local communities and businesses through its franchise partners.
O2 remained tight-lipped this week about its plans. A spokesman said: ‘We constantly review our franchise programme strategy and we’re committed to its continued success, but we have nothing to announce at this time.’