Hunters has said that the circumstances that led one of its franchisees to cease trading were “unique” and that it hopes that “challenging” market conditions will encourage more independent operators to join the franchise.
The comments came as Hunters unveiled an increase in income of nearly 10% in 2017.
In a trading update ahead of its full-year results in April, Hunters said network income rose by 9.8% to £38.9m and that results for 2017 would be “broadly in line with expectations”.
Its share price jumped 10.7% at the news and closed yesterday at 57p.
The business said: “Whilst we expect 2018 to be no less challenging we believe this will provide us with the opportunity to expand our branch network further and strengthen our brand.
“Market conditions will continue to encourage independent operators to be part of a stronger group that can also offer significant cost reductions, particularly in terms of portal charges for Rightmove, Zoopla and OnTheMarket.
“We are already seeing an improved level of enquiries from high quality independent businesses.”
Hunters said it added 37 new branches last year, ending 2017 with a total of 213.
However, since then Kudos Residential, which ran the Hunters franchise in Norfolk, has ceased trading and entered liquidation, with the loss of 21 jobs and the closure of eight of nine Hunters branches in the area.
A spokesperson for Hunters said: “When asked about this last week, we were unable to comment due to confidentiality.
“We have worked diligently with Kudos’ management to consider all possibilities to find a solution.
“The business experienced a series of specific operational and financial difficulties which resulted in the Kudos’ directors having to take this course of action.
“The immediate and long-term service to customers was a primary concern and a solution was obtained through a third party.
“This was a unique and complex situation with significant costs for all involved and we empathise with everyone who has been affected.”
Hunters’ full-year results are expected on April 12.
A spokesperson for Hunters said: “When asked about this last week, we were unable to comment due to confidentiality.
“We have worked diligently with Kudos’ management to consider all possibilities to find a solution.“
The business experienced a series of specific operational and financial difficulties which resulted in the Kudos’ directors having to take this course of action.
“The immediate and long-term service to customers was a primary concern and a solution was obtained through a third party.
“This was a unique and complex situation with significant costs for all involved and we empathise with everyone who has been affected.”
A load of meaningless waffle. Anyone got an interpreter?
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Interpretation: ‘We got tucked up by this shower when we paid them a large wad to join the franchise. When it looked obvious that it was going T*ts we cut our losses and distanced ourselves pronto in case our reputation got tarnished in the inevitable fall out. We’d rather give any residual income to a bunch of local bottom feeders in exchange for them taking the grief’………..
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Worth considering that with a franchise royalty fee of 8% of turnover, that’s a £20,000 charge for a branch with an annual turnover of say £250K, This sum could be the difference between a reasonable profit and no profit for the owner or even a loss.
Noting that: average network income (turnover at branch level) fell from £201,000 per branch (£35.4m/176 branches) in the previous year to £182,000 per branch (£38.9m/213 branches) in the current reporting year – not a great advert for adopting a franchise marketing model. Notwithstanding branches joining part way through the year of course.
On reading the Hunters text; their focus seems to be only on cost reduction and the expansion of the brand and its value, not on increasing market share and therefore revenue for network members.
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