Ontario to franchise some LCBO outlets

The Ontario government is going to allow franchising of its marquee LCBO wine and liquor stores but has no plans for the wholesale privatization of the government-owned stores, Consumer Minister Norm Sterling said yesterday.

The Toronto Star
September 22, 2001

Ontario to franchise some LCBO outlets
Colin Perkel

LCBO%20logo%20F.jpg

The Ontario government is going to allow franchising of its marquee LCBO wine and liquor stores but has no plans for the wholesale privatization of the government-owned stores, Consumer Minister Norm Sterling said yesterday.

The roll-out of franchises will be restricted to underserviced, rural and tourist areas, the government said.

“This is a form of privatization, no question about it,” Sterling said in an interview.

“This is, in fact, asking the private sector to participate in the retailing of alcohol for us, but it’s a long, long way from wholesale or real privatization.”

Even though the franchise model is new for the liquor retailer, the government has been closely watching six of its existing agency stores that serve rural areas.

The province already has about 108 so-called “agency stores,” most north of Parry Sound, which operate in conjunction with an established retailer.

The new system is based on lessons learned from them, said Andy Brandt, chairman of the LCBO.

“The biggest lesson learned is that franchisees can deliver quality service safely and efficiently to markets that just aren’t big enough for a full-service outlet,” Brandt said.

The new franchises – as many as 150 – will be scattered throughout southern Ontario.

Exact criteria have yet to be set, but new stores will likely have to be a certain minimum distance from an existing outlet and won’t be allowed to compete with existing stores.

Franchises in urban areas have been ruled out.

The outlets will also have to meet standards in terms of selection and will provide a “more professional look” than the current agency stores, said Sterling.

Sterling said no legislative changes are needed, adding he expected the first franchise to be up and running within 60 days.

Wile there won’t be any franchise fees charged, retailers will be expected to meet certain shelving and other standards at a cost of up to $12,000.

Nor will they be allowed to charge whatever they want.

Their profit will have to come from a 10 per cent discount they’re given by the LCBO suppliers, Sterling said.

The LCBO has been a shining jewel among Ontario’s Crown corporations, consistently bringing in huge profits for the government.

Sterling said he expected the new arrangement will make the corporation even more profitable.

“We’ll make more money out of this because as you get more points of distribution, there will be more alcohol sold,” said Sterling.

“We know there will be an increase in sales.”

Stores will also be subject to spot checks to ensure there are no sales to minors, and municipalities will be allowed to veto a store in their community, the government said.


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