Cast-adrift store owners look at bid for Stirling

Without the support a master franchise would usually provide, individual store owners had been forced to form an informal network which acted as a parallel franchise operation.

www.stuff.co.nz
June 26, 2005

Cast-adrift store owners look at bid for Stirling
Greg Ninnes

Stirling Sports store owners may make an offer to buy their master franchise after the unexpected collapse of negotiations with the Briscoe Group.

And Briscoe Group managing director Rod Duke has not ruled out buying some other sports and leisure retailer to speed up his plans to expand his Rebel Sports chain.

Paul Zwart, a co-owner of Stirling Sports' largest store, at Manukau City, said there was an opportunity to buy the Stirling chain.

"It really depends on what the banks want to do with the franchise company and how much they are asking for it," he said.

All Stirling Sports stores are owner-operated, but the master franchise for the chain was put on the market last year after its largest shareholder, a company associated with recently bankrupted Christchurch businessman Mark Taylor, was placed in receivership.

Briscoe Group was in the final stages of negotiations to buy the Stirling Sports franchise, when Duke pulled the plug two weeks ago.

Zwart said Stirling Sports' store owners had assumed the Briscoe deal would go ahead and were staggered when it was canned.

"They just said, 'No, it's finished.' There was no further discussion."

Briscoe's withdrawal has turned up the heat on Ferrier Hodgson, the receiver acting for the banks in the sale of the Stirling franchise, to get another alternative.

Zwart said the resources of the master franchise operation had been run down during the drawn out sales process.

"It has virtually no resources other than one buyer at the moment," he said.

And the chain had stopped advertising because store owners assumed they would soon be rebranded as Rebel Sports outlets.

"I'm sure if we were a managed operation it would have collapsed long ago," Zwart said.

"But because we are owner-operated we have managed to survive at store level."

Without the support a master franchise would usually provide, individual store owners had been forced to form an informal network which acted as a parallel franchise operation.

"We still look at ranges as a collective when we are buying product," Zwart said. "And our key suppliers are still working with us, which is great."

But he acknowledged that the more the uncertainty dragged on, the more difficult the group's position became.

"Time is of the essence, and we really need to be making some sound decisions in terms of where we're going. We've stuck it out for a year and we need to see some action," he said.

Store owners were seeking further information from Ferrier Hodgson with a view to making their own offer.

But it is believed that Briscoe's exit has left the door open for other potential buyers.

"We've been told there are other people queuing up to buy it, but Briscoe was first in the queue, so the others assumed that would go ahead," Zwart said. "So I assume those people will come to the front again."

The price potential buyers may be prepared to pay for the Stirling Sports franchise may be affected by the increasingly competitive environment in which the company is likely to be operating.

Duke has indicated that the gloves are off now he has withdrawn from the Stirling negotiations.

"Every sports and leisure store that does not carry the Rebel Sport brand is a competitor," he said.

His plan is to open smaller Rebel Sports stores in places such as shopping malls and provincial towns, where the chain has not previously had a presence.

He believed Rebel could open 25 smaller stores to complement its 22 existing mega stores.

Many Stirling Sports stores could find themselves going head to head with a Rebel store in towns and shopping centres where they had previously had the market largely to themselves.

And Rebel would be able to expand without significantly increasing its overhead costs, giving it a competitive advantage.

"I've already got Rebel's operating platform in place and I won't need any extra buyers or accounts people, and I won't need to advertise any more because I already distribute enough catalogues and the television advertising goes to the regions anyway," Duke said.

"So there's not a lot of incremental cost attached to these new stores."

But walking away from the Stirling Sports deal did not mean Briscoe had closed the door on buying some other chain.

"There are other franchised or loosely knit sporting goods retailers, so it won't stop us looking at them.

"We've got an enormous amount of cash sitting on our balance sheet ready to do some stuff, so it's just a question of how long it takes."

And some Stirling Sports stores could find a Rebel Sports outlet in their backyards sooner than expected.

Duke said he expected introduction of the new-format Rebel Sports stores to start "very, very, very shortly."


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