Franchising provides opportunity to improve bottom line, says law firm

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Law firm Thomas Egger claims retailers can look to reduce the impact of public spending cuts on their bottom line by franchising stores.

Chocolate retailer Thorntons, for example, currently has around 360 company-owned stores and about 230 franchises throughout the UK.

Following a profit warning, it has announced it will be closing 120 of its company-owned stores over the next three years, with a further 60 under review. However, Thorntons hopes to replace these with franchised stores.

“With retailers being hit ever harder by lack of public spending they are looking at ways to reduce their bottom line – and one way is through franchising,” says Shaw Stapely, an associate at the law firm.

“What this approach means for Thorntons is it will reduce company overheads and should protect jobs if current store operators are prepared to invest the time and capital to become franchisees.

“This investment will of course also bolster Thornton’s bottom line. The increase of its franchise estate should also maintain Thornton’s high street presence and customer goodwill.

“In addition to franchises, the chocolate maker has said it will also focus on “driving good growth” via supermarket sales (which it predicted would be its main sales driver over the next three years) and its online presence via Thorntons Direct.”