Franchise chain Gloria Jean’s Coffees’ international expansion is continuing apace. It is a week away from signing a master franchise deal for India, says chief executive Ian Martin.
In the last financial year, master franchise deals were signed with nine countries, bringing the number of franchisees to 755 in 24 countries. The biggest export markets are Turkey, with 40 franchisees, and the Philippines, Korea and New Zealand with 30 franchisees each.
This financial year, Martin predicts the company will enter another nine countries. The Indian master franchisors will operate several franchises themselves before selling franchise right to franchisees. Within three to five years there will be more than 420 stores in India, he says.
The fast expansion has required the company to restructure its global supply chain. Coffee beans have been roasted, stored and distributed from Castle Hill, NSW. Martin says that European franchisees are now experiencing two to four-month delays after ordering supplies (including coffee, cups, etc) before receiving them.
The restructure, which involves outsourcing warehousing and distribution to four hubs – Alexandria, NSW, Amsterdam, Dubai and Singapore, will cut lead times to seven to 10 days by the time the strategy is fully implemented in the first quarter of 2008.
“In essence our supply chain strategy driven following acquisition of global rights,” Martin says. Gloria Jean’s acquired the global rights from its American franchisor in 2005.
Martin says the franchisees will be the biggest beneficiaries of the changes because it is massively reducing the amount of money tied up in inventory. He says the old distribution strategy had not made recruiting franchisees difficult but it would have, had it had continued.
“If we had not taken action it would have affected recruiting franchisees in the future. As the markets grow we would not have been able to do it out of Australia.”