Franchise Success By The Book

The Pack And Send Story

The Managing Director of Pack and Send, Michael Paul, knows so much about franchising that he could write a book. In a sense, he has. He credits much his transport company's steadily expanding national network of franchise outlets to the methods his team developed in the early years of the business. The result: a detailed operations manual that provides invaluable guidance to new franchisees, helping to accelerate the network’s growth.

Paul says: "We put a lot of time and energy into ensuring that we had solid operating systems, a clear blueprint of how the business should run. It was very difficult. We didn't grow that quickly, we only had 19 stores after the first six years but we were putting a lot of focus on developing support systems for our franchisees."

Taking time to lay the groundwork has paid off for Pack and Send. The company now has 50 franchised retail stores throughout Australia and is adding about 12 new outlets each year. Its rapid growth is reflected by 2001-02 turnover of $12 million, up from $8 million the previous year. Its operation includes 50 franchisees and seven people at the company's headquarters in south-western Sydney.

Pack and Send's business model is straightforward. It is a one-stop shop for sending just about anything - from grandfather clocks to didgeridoos - to just about anywhere. The company provides a service to businesses and households that have items that are too fragile, too large, too awkward or too valuable to send through conventional couriers. The company will pack up any item and arrange for it to be couriered for safe delivery.

Franchising is the key to Pack and Send's expansion. Apart from an initial franchise fee of $45,000, the company receives a royalty of 7.5% on the franchisee's gross weekly earnings. The franchisee also pays 2% of their sales into a national advertising fund. In return, the franchisees gain access to the intellectual property of the business, its branding, and ongoing support and advice.

"Obviously, for us to set up 50 stores and run them as company-owned outlets would cost us a lot of money," Paul says. "The franchising approach has permitted us to develop our business as a 'do-it-yourself' business kit if you like."

Business kits, however, depend on clear instructions, which is why Pack and Send has devoted so much attention to supporting its new franchisees. The company says it was an early adopter of local intranet technology, making information easily available to franchisees and staff. New franchisees undergo a two-week training program at Pack and Send's head office and company representatives spend one week with them in their store during the first week after its opening.

One common misconception about franchising is that it is a get-rich-quick business. Paul says this can be a dangerous assumption: "You have to be in it for the long haul," he says. "People who go into franchising need to appreciate that. I don't know too many retail business service franchise systems that have reached profitability until the seventh or eighth year."

Paul says franchisees need sufficient capital to set up the infrastructure for the business. Prospective franchisees need to have the cashflow to keep going until they reach profitability.

In June 1999, Pack and Send took on a partner, Barry Smorgon, who is now the company's chairman. Paul says an investor of Smorgon's calibre has brought additional credibility to Pack and Send and provided valuable guidance and direction.

The company's goal for its first stage of expansion is to develop a network of 115 national outlets. Having the right procedures in place is essential. "Because of our solid systems, if someone said they wanted ten new stores, we could roll them out very easily," Paul says. "Our business blueprint is our platform for accelerated growth."

Author Credits