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Melbourne, Australia

Hybrid model to drive Mr Rental franchise growth

Australian Franchise News – 17-11-10


Following industry award wins and an overall profit increase of 20 percent in 2010, international home appliance rental franchise Mr Rental is predicting further growth with increasing brand awareness and the introduction of a ‘hybrid’ business model in 2011.
Chief Executive Officer (CEO) of Mr Rental Glen Hickman said Mr Rental’s business model, based on recurring revenue streams, consistently worked well in any economic conditions.
“Last year our franchisees recorded a average growth well above the industry average,” he said.
“In a downturn our business makes a lot of sense to consumers. Most people will prefer to rent items when they have job instability because they can return the goods if anything happens.
“As for franchisees, the products they purchase provide recurring income for the lifetime of that purchase. Most products will last a minimum of three-to-five years, so it’s a great return on investment for them.”
Recently winning the Franchise Council of Australia’s (FCA) Franchisor of the Year Award, Mr Rental has enjoyed immense success since it started franchising a decade ago with 78 stores and another 12 stores opening within the next six months.
Mr Hickman said increasing brand awareness was another key element in the business’s continued growth.
“Three years ago our brand awareness was at 11 percent; today it’s 44 percent across Australia and New Zealand.
“This increase in brand recognition has contributed greatly to our growth, which in turn has produced greater economies of scale for our franchisees.”
On target to open all of its 110 territories by 2012, Mr Rental will soon execute its development plan for second tier territories with its ‘hybrid’ business model.
The new model attaches to existing external businesses to reduce the cost of operation by sharing fixed overheads and warehouse space.   
Mr Hickman said this approach would encourage expansion by providing opportunities in regional areas.
“Currently we choose territories and areas by geographical details.Generally we won’t open unless we know there is enough of our essential customer in the region to support the store.
“However, in regional areas there may be populations that fall short of the amounts we would normally need to open in an area. We realised we needed an alternative model, one with lower overheads that could work in partnership with existing businesses.
“It’s a win-win for both businesses involved and customers, as it allows us to service areas we normally might not be able to.
“By splitting rent, delivery costs or other expenses more people will be able to start their own business with minimal initial outlay.”
Mr Rental is expecting its hybrid model to be completely operational by the end of the 2011/2012 financial year.

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