The Leonardo chain of footwear stores has established the development of a network of stores under a franchise system as its strategy for next year.
Leonardo''s plans for 2006 concern the opening of 10-12 stores in Romania, where the Bihor-based firm owns 75 stores at present, as well as the opening of 10 in Hungary, where it already holds 25.
"The decision to use the franchise system comes as a natural development of Leonardo''s business, all the more so as we''ve been urged to make this move by our customers and partners. While in 2004 we saw our business strengthen, and the year 2005 marked the transition to a new expansion stage linked to our network of stores, in 2006 we will focus on the development of the franchise network," Gratian Ivan, commercial manager with Leonardo, told ZF Transilvania.
The firm''s official considers that the main advantage of the franchise system is the fact that investments are partly transferred onto the franchisee.
"In the case where we open a store of our own, the costs are quite high, depending on the location, area and finishing. In the case of a franchise, for instance, investments in fitting out a space rest with the franchisee," said Ivan. He added that another considerable advantage is the fact that as part of this system the company will open stores in smaller cities, as well.
"For franchises, our main targets are smaller cities, those ranking second after county capitals. An example in this sense is Turda.
"We already have our own store here, but the opening of a store under franchise is a possibility we are considering," Ivan also stated.
At the same time, for next year Leonardo plans to expand its own network of stores in Romania and Hungary and open its first stores in Bulgaria and Moldova.
"As we are the only footwear network with national coverage in Romania, our competition is only made up of small domestic retailers.
In Hungary, purchasing power is stronger, but competition is much tighter due to the presence of major retailers," Gratian Ivan explained.
According to the company''s representative, next year Leonardo will log sales worth more than 54 million euros in Romania and 9 million euros in Hungary, 15% higher year-on-year.
He specified that the company''s financial expectations were linked to the development of its own network, while stores under the franchise system will bring additional revenues.
Besides Leonardo SRL and Leonardo Hungary KFT, the Leonardo group of firms also includes Leonardo Design, a producer of commercial furniture and home decor. Leonardo SRL and Leonardo Hungary KFT account for 99% of the group''s sales.
The company forecasts that turnover for the year 2005 will exceed 47 million euros in Romania, 17% higher than in 2004. alina.pahoncia@zf.ro
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