Card Connection is one of the UK’s largest card publishers and a market leader in the franchise distribution of greeting cards in the UK and the Republic of Ireland (ROI).

Established in 1992, it is regarded as one of the Britain’s best-run franchise operations and has been a member of the British Franchise Association since 1995. As a print and paper company, Card Connection has been able to endure effectively in the UK in the face of digital era and online communication era. The print cards market remains strong in the country primarily due to the British culture and a tradition focused on card sending and card display at home. However, the economic challenges and complexities pertaining to a future Brexit deal may have an impact on all businesses including the time and cost in adjusting to a new economic environment—and Card Connection is no exception.

Its franchisees don’t operate under a standard retail format and, instead, act as intermediaries in supplying cards to a range of retail outlets in allocated franchise areas.

Typically, its franchise holders supply products to post offices, convenience stores, gas stations, and other retailers. Given this customer base, Card Connection’s management takes advantage of a business model that requires it to place its products in the outlets on a “consignment” basis—customers don’t buy the stock and they only pay for what they sell. This proved to be a success. At the beginning of 2019, there were 63 franchises across Britain and around 12,000 retail outlets using its services in ROI. At any given time, the management of Card Connection looks for potential franchisees.

To decide which areas to allocate to which franchise holder, Card Connection analyzes several data sources. The primary data drivers are demographic, a combination of raw population figures and the number of households. The decision makers must also analyze the number of potential stockists, competitors in the area, the average income of the population, and other elements. While the initial process of dividing the UK and the ROI into equal portions is simple, as the franchises develop and with changes in demographics, regional and local economics, and other criteria, the value of each area changes.

Each franchise holder has a discrete and exclusive territory that only they can supply to. It is because of this that Card Connection’s decision-making process regarding territories often revolves around geography. In most cases, this is how franchise areas are determined and how territories derived. A major problem arises when a franchisee attracts business from a customer outside of its franchise area. The franchisor needs to be clear about these instances. Some franchise agreements allow the franchisor to change the territory, should the circumstance arise. This is an indicator of changes in the demographics within a territory, a development in technology, or a rise in the demand for the product or service offered within the franchise system.

DISCUSSION QUESTIONS 

2-1. What ongoing decisions are necessary about the size of franchise areas?

2-2. What factors should you consider when deciding to acquire a franchise?

2-3. How might globalization impact the company’s decision-making process?