Harvey Norman responds to JB franchise criticism

Exclusive by Patrick Avenell

SYDNEY, NSW: Harvey Norman has responded to JB Hi-Fi CEO Richard Uechtritz’ recent criticism of franchise business models. In a passionate message to the industry, executive director David Ackery said he was totally committed to Harvey Norman’s unique system.

Shortly after JB Hi-Fi announced its record profit results, Current.com.au asked Uechtritz if he’d ever considered franchising for his business. Not only did he say “no”, he also criticised franchise systems in general.

“We don’t need to franchise, and we believe we can a run a more disciplined organisation the way we run it now,” Uechtritz said. “Good retailers, the outstanding retailers of the world, are all in control of their own destiny, not through franchises.”

In an interview this morning, we asked Ackery for his response.

“It is a unique system, but it’s also the most successful system. Richard’s entitled to his opinion, however misguided that may be,” he said.

When asked why Ackery thought the Harvey Norman business model, which involves multiple franchisees working in the same Harvey Norman-branded complex, was the best, he said it was all down to the quality of franchisees the group recruits.

“It empowers the individual, and I don’t care what anyone says – you can have the best system in place, you can have the best looking stores, you can have the best price tickets et cetera – but if you don’t have the best people, and the best entrepreneurial people, who can create a difference in their own individual market, and their own individual stores and community, than you’ll never achieve potential.”

Part of the Harvey Norman business model involves the constant tuning of the franchisees and their respective stores. Depending on performance, franchisees can be moved around, in order to create the best mix of proprietors and consumers.

“We always have ongoing changes in our franchisees line-up because invariably you always have new talent coming through and you have to make those changes as they appear,” Ackery explained.

At times, these movements can be at short notice. We asked Ackery if he worried this system could create disillusionment amongst the ranks.

“Definitely not,” Ackery answered. “The ones who become disillusioned with the system are usually the ones who haven’t made it, haven’t cut the mustard.

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