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Compaq makes connection with franchisees

Compaq makes connection with franchisees

Compaq is forging ahead with its controversial Compaq Connect retail store concept, announcing yesterday its search for "upwards of 100" franchisees in all metropolitan and major regional centres.

While Rob Ballmer, Compaq's consumer division director, said yesterday the exact business model and locations for the franchises are yet to be decided, the commitment to "a full national rollout" is concrete and moving ahead at full speed.

According to Ballmer, the eight existing Melbourne and Brisbane stores have been successful and will remain in the hands of Compaq, with the first independently-owned franchise set to open in Sydney's CBD "within two months".

The owner of the first store in Sydney is an existing Compaq reseller who wishes to remain nameless at this stage but is committed to transferring the business to the Compaq Connect model, Ballmer said.

"There is no time limit to when we want to have all the stores in place - the number will grow incrementally - but we will have a national presence by the end of 2001," Ballmer said.

Though the financial costs and stock procurement commitments required by franchisees has not been finalised, Ballmer did claim there would be only one Compaq Connect business model on offer. However, franchisees will be able to hold multiple franchises. Using the franchise king McDonalds as an example, Ballmer claimed Compaq will have no input to the day-to-day running of the businesses "other than as a franchiser".

"We are still working on the details of the final franchise agreement, but I anticipate to have those within the next month," Ballmer said. "Like McDonalds, in the end there will be only one formula and the stores will be independent channel organisations that will live and die on the success of that particular business."Ballmer said the only differences between the businesses will be in the way they are funded. Some franchisees who are transferring existing businesses might be cashed up do so, while others may be looking to take advantage of funding available through Compaq Financial Services.

"We will have some options there, but in terms of the actual operating model, I think the McDonalds analogy is a good one," he said. "We are looking for a very consistent, repeatable and duplicable model we can open from store to store."Ballmer added this is important to the overall strategy as "the stores will also play the role of being the manufacturing centres for our computers".

"From an operational point of view we need to be making sure every computer sold from these stores has the consistency of a Big Mac," he said.

Ballmer said the fundamental role of the Compaq Connect stores has remained the same from the beginning. They will perform three main functions: inbound consumer sales through presence and branding, an outbound sales function directed at small business in the area and the supply chain for the configuration of the computers.

Despite fears from existing resellers, Ballmer also insists the target markets for the stores are areas where Compaq has been traditionally not been well represented - such as in small business and experienced consumers.

"Those target markets are ones that no global brand vendor has so far been able to effectively penetrate," Ballmer concluded.


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