Second-hand reseller looks to franchise model
- 20 October, 2004 11:47
Citing an ever-increasing demand for pre-loved hardware, The Computer Market has begun offering franchises of its second-hand PC reseller business.
One of the Queensland-based group's original owners, John Ferrett, said the decision was based on a desire to grow the business without having to directly manage the entire chain.
"The company suits an owner/operator model," he said. "With the franchises, we can expand more quickly."
In addition, a larger buying group would allow the business to attain better buying prices from suppliers, Ferrett said.
"In our business, it's how you buy the goods, not how you sell them," he said.
"The bigger we get the better [wholesale] price we achieve."
Although stocking some new IT hardware, The Computer Market's core business is built around ex-lease and second-hand PC products.
Once a trade-in services provider for computer hardware businesses, the group now offers refurbished PC systems and notebooks from a range of leasing agencies like RentWorks.
It also sources product through financial institutions including Macquarie Bank, Commonwealth Bank, Dell Finance and IBM.
Ferrett said there was a strong retail business in selling second-hand PCs.
"Our suppliers have a very big book of equipment they are disposing of," he said.
"A lot of stock is going overseas or being shifted through a wholesale channel. But more and more end-users are realising that ex-government computers are reliable and do what most people need them to do at half the price."
The Computer Market boasts of three retail stores in Queensland.
Ferrett said it had already franchised its Gold Coast operations, and would also look to sell its existing Springwood store.
Unlike many franchisors, however, Ferrett said he and co-owner, Kurt Kratzmann, would remain heavily involved in the business and provide support to all of its partners.
The pair will also continue to run the company's main shop front in Milton.
Ferrett said Computer Market franchise buyers would have a lot of leeway in determining the way their retail store would look and operate.
"We won't be exercising a lot of control over how they should wear their hats or what T-shirts they should buy," he said.
Franchise owners would need to develop their own relationships with the group's suppliers, as well as undertake their own refurbishments of PC products.
They will be charged an ongoing fee by the original owners, and be expected to contribute to a company marketing fund.
Ferrett said he forecast stores would record an annual turnover of about $1 million.
Currently, the group's existing Springwood store was just short of this amount each year, while its Gold Coast shop achieves slightly more, he said.
The group is looking to establish an additional 10 outlets by the end of this year in Queensland.
Ferrett said he would also look to opportunities to set up shops in other states across the country.
"One supplier at the moment is in the early stages of looking at a master franchise for other states," he said.
Given that its suppliers were now sending ex-rental stock overseas, there was also the potential to grow into other markets such as New Zealand, Ferrett said.