Learn how Elkjøp Nordic manages franchise contracts for 170 stores

by House of Control | Sep 25, 2020 4:22:49 PM

Nordic Franchise Director Eirik Jarl Nilssen explains that he would not have been able to manage the complexity, risk and responsibility for all the franchise contracts without a solution such as Complete Control.

In the last financial year, Elkjøp Nordic generated sales of NOK 42 billion from around 420 stores across the Nordic region. More than 170 of these stores are owned by franchisees, and each of the franchisee-contracts has three layers of complexity:

  • The contracts have varying terms, from one to five years.
  • Each contract has a unique extension option, also between one and five years.
  • The deadline for renegotiating also varies, with a minimum time before expiry of ten months.

The contracts have been designed to reduce risk and create predictability for both Elkjøp and the franchisee.

In 2016, before the new contracts were signed, Elkjøp experienced the difficulties that can arise from an unexpected termination of a franchise contract : they lost their foothold in the city, and while they did open a smaller store, annual sales fell by more than NOK 50 million, and it took four years to re-establish a store of the same size.

Nordic Franchise Director Eirik Jarl Nilssen explains that he would not have been able to manage the complexity, risk and responsibility for all the franchise contracts without a solution such as Complete Control.

“Let’s say that as a franchisee you want to change the chain. Then it’s worth keeping your head down and hoping that the chain doesn’t contact you before your contract expires. This is a massive risk for a franchiser like Elkjøp, and poor contract management can cost us dear in such cases,” says Nilssen, citing the above example.

He explains that before they started using Complete Control, they used folders and spreadsheets to manage contracts – a solution he regards as totally unviable.

“Now we have a tool that is both user-friendly and gives us the overview we need. There is also the notification function, which gives us a much-appreciated extra layer of security. If we miss a deadline and ignore the automatic alerts, we get a call from House of Control.

One of the add-on modules that Nilssen and Elkjøp Nordic most appreciate is Digital Signature.

“In 2017 our CEO signed all our contracts with a ballpoint pen”. He soon got tired of that. “Signed contracts also have an uncanny ability to get lost in the post. Digital Signature is the perfect solution for such challenges”.

Additional reading:

Elkjøp Nordic leases premises for 400 stores throughout the Nordic region, at a cost of NOK 1 billion per year. This is how the group behind Elgiganten and Elkjøp manages its leases.

 

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