Card Connection is one of the United Kingdom’s largest card publishers and a market leader in the franchise distribution of greeting cards in the United Kingdom and the Republic of Ireland (ROI). Established in 1992, it is regarded as one of the Britain’s best-run franchise operations and has been a member of the British Franchise Association since 1995. Its franchisees don’t operate under a standard retail format and, instead, act as intermediaries in supplying cards to a range of retail outlets in allocated franchise areas. Typically, its franchise holders supply products to post offices, convenience stores, gas stations, and other retailers. Given this customer base, Card Connection’s management takes advantage of a business model that requires it to place its products in the outlets on a “consignment” basis—customers don’t buy the stock and only pay for what they sell. This proved to be a success. At the beginning of 2017, there were 63 franchises across Britain and around 12,000 retail outlets using its services in ROI. At any given time, the management of Card Connection looks for potential franchisees— a mix of new and unexplored territories and replacement franchisees. To decide which areas to allocate to which franchise holder, Card Connection analyzes several data sources. The primary data drivers are demographic, a combination of raw population figures and number of households. The decision makers must also analyze the number of potential stockists, competitors in the area, the average income of the population, and other elements. While the initial process of dividing the United Kingdom and the ROI into equal portions is simple, as the franchises develop and with changes in demographics, regional and local economics, and other criteria, the value of each area changes. Each franchise holder has a discrete and exclusive territory that only they can supply to. It is because of this that Card Connection’s decision-making process regarding territories often revolves around geography. In most cases, this is how franchise areas are determined and how territories derived. A major problem arises when a franchisee attracts business from a customer outside of its franchise area. The franchisor needs to be clear about these instances. Some franchise agreements allow the franchisor to change the territory, should the circumstance arise. This is an indicator of changes in the demographics within a territory, a development in technology, or a rise in the demand for the product or service being offered within the franchise system. Discussion Questions:
1. What ongoing decisions are necessary about the size of franchise areas?
2. What factors should you consider when deciding to acquire a franchise?
3. How might globalization impact the decision-making process for Card Connection?
CASE APPLICATION 2
Manchester City: