UK Rentokil Initial’s parcels business plans to cease franchising
Rentokil Initial has today announced that its parcels delivery business Initial
City Link will, over a period of time, cease to operate on a franchised basis.
This is another important step forward in Rentokil Initial's development. The
change will return full control of Initial City Link to the Company and should
deliver better returns for our shareholders while maintaining or improving
service to Initial City Link's customers. Franchisees, who collectively have an
estimated annual profit of #5 million, will be offered a fair price for their
businesses and will be given plenty of time to plan the transition. The franchise model used by Initial City Link has been in place since the early
1990's largely unchanged and the franchisees have played an important part in
its growth. However, thanks to recent investment in franchisor sales and
marketing and a renewed focus on personnel, better growth is being experienced
in Initial City Link's controlled and operated branches than in those of the
franchisees. When combined with the opportunity to develop the business and
address the increasingly complex demands of customers, a decision to move
towards owning the network makes strong commercial sense.
Following consultation with individual franchisees, Initial City Link plans to
make offers to purchase their businesses over a period of time. Franchisees'
employees will be invited to join the Rentokil Initial group.
Initial City Link has 70 franchise territories of which it already controls and
operates 25. Initial City Link will be working closely with its franchisees to
ensure a smooth transfer of service for customers. The changes planned should
ultimately result in Initial City Link customers experiencing an enhanced
service.
Enquiries:
John Sunnucks, Gill Ackers; Brunswick Group LLP 020 7404 5959
Charles Grimaldi, Rentokil Initial plc 01342 833022
NOTES FOR EDITORS
Initial City Link
Initial City Link is one of the leading parcel delivery companies in the UK. It
specialises in premium next day parcel delivery and has outgrown the market
every year for the last ten years. In 2004, Initial City Link's turnover was
#223 million and profit #31.3 million. Sales in the franchise network not owned
by Initial City Link amounted to #197 million last year. Initial City Link
already employs 2,179 people across the country and on average delivers 854,000
parcels a week to businesses and households across the country.
Rentokil Initial
Rentokil Initial is one of the largest business services companies in the world,
operating in all the major economies of Europe, North America, Asia Pacific and
Africa. The company has some 90,000 employees providing a range of support
services in over 40 countries where the 'Rentokil' and 'Initial' brands have
come to represent innovation, deep expertise and consistent quality of service.
Services include pest control, tropical plants, hygiene services, facilities
services, electronic security and parcels delivery.
This information is provided by RNS
The company news service from the London Stock Exchange
END
Rentokil Initial to bring parcels arm back in house
The Guardian, Sec. Financial Pages, p 25 10-26-2005
Rentokil Initial said yesterday that its parcels delivery business, Initial City Link, would be brought back into the company and no longer operate as a franchised business. Buying the parcels group back from franchisees would take time, the company said, but help the company to deliver a better return for its shareholders. The announcement comes a week after Sir Gerry Robinson, the former Granada chief executive, ruled out a takeover of the group, which provides services ranging from kitchen cleaning to pest control. The chief executive, Doug Flynn, is seeking to restructure the group. Charlotte Moore
