British parcel carrier Initial City Link will end its franchising operations and come under thefull control of parent company Rentokil Initial. Initial City Link is one of the leading
independent express operators in the fragmented British market with 70 franchisees, of which itowns 25 businesses.Rentokil Initial, a conglomerate with businesses ranging from pest control and cleaning tosecurity and transport, announced that it would offer to buy out the remaining franchisees at afair price over a period of time. “The change will return full control of Initial City Link to thecompany and should deliver better returns for our shareholders while maintaining or improvingservice to Initial City Link’s customers,” it said in a statement.
The franchise model used by Initial City Link has been in place since the early 1990s largelyunchanged. Rentokil Initial said, however, that thanks to investment in sales and marketing and arenewed focus on personnel, better growth was being experienced in Initial City Link’s controlledand operated branches than in those of the franchisees. “When combined with the opportunity todevelop the business and address the increasingly complex demands of customers, a decision to movetowards owning the network makes strong commercial sense,” it commented.
Initial City Link specialises in premium next day parcel delivery and has outgrown the marketevery year for the last ten years. In 2004, Initial City Link’s turnover was £223 million andprofit £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 onaverage delivers 854,000 parcels a week to businesses and households across the country.
