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Franchising- A Viable Distribution Model?

Nationwide Brand Partner

Brand Drive

Proven Finance
business model Synergy

Infrastructure Business
and support Acumen

Split the uplift in profitability


Franchising- A Viable Distribution Model?

Why Brand Partners?


Money
• Brand partners fund up to 100% of start up
• Low cost expansion

People
• Recruit ‘the very best bankers’ (Bank of Queensland)
• Lower churn/more experience (Zeb Associates)

Entrepreneurial Spirit
• Their savings, mortgage and pension at stake
• Brand Partners are ‘hunters’. “They will pound the
streets looking for business” (ING Romania CEO)
Franchising- A Viable Distribution Model?

3. Franchising in Financial Services

Source: Zeb Associates: Entrepreneurial Banking in Europe


Franchising- A Viable Distribution Model?

Bank of Queensland
Deposits Loans
Income Company owned +6% +10%
Growth
Owner managed +37% +27%
Source: Couriermail.com.au (2005)

Cheap
expansion Franchised branches outperformed control
group by c30% six months after being
converted
Higher Source: RZB CEE Banking Report 2007, John Berry: Franchising in Financial Services

efficiency
“Franchised branches succeeded beyond anyone's
Intangible imagination…managers began joining golf clubs to
woo customers.”
Source: The Australian News
Franchising- A Viable Distribution Model?

• ING (Franchising model) spent equivalent


Income of £147 acquiring each customer*
Growth
• Ersie bank (traditional branch network)
spend of £877*
Cheap
expansion
Key difference was business model,
saving c.80% of the costs
Higher *Source: Zeb Associates: Entrepreneurial Banking in Europe. Based on £1:€1.26 (ING: €185, Erise: €1105)

efficiency
• Nationwide re-sites cost £700k-£1.3m
Intangible • New agencies cost c.£20k-80k
Source: Retail Financial Management
Franchising- A Viable Distribution Model?

Income
Growth Franchising mode, spent €185 per
client (30% insurance share)
Cheap • Ersie bank, traditional branch
expansion network spent €1,105
• Key difference was business
Higher model, saving c.80% of the costs
efficiency

Intangible
Source: Albert Roggemans, ‘Franchising and other sales channels’ conference