Velocity Express, one of the largest same-day delivery couriers in the US, this week unveiled plansto expand its national network through franchising.
The company has formed a new subsidiary – Velocity Systems Franchising Corporation (VSFC) –which will be responsible for striking franchising deals with local and regional couriers inmarkets Velocity Express does not currently operate.
“Through our franchise model, Velocity Express can offer our national customers increasedgeographic coverage and enhanced service offerings by partnering with the best, local and regionaldelivery companies in a specific market,” explained chairman and CEO Vince Wasik.
“In turn, by becoming a Velocity franchise operation, our franchisees will have access toopportunities created by our national account sales strategy, which they may not have had accessto. This is truly a ‘home-run’ for both of us,”he added.
CFO Ted Stone said that the franchising would allow VE to improve its gross margins by “dramatically reducing” the capital expenditures required to open new markets, while allowing it toexpand its capabilities. “As we migrate from our current agency relationships to franchiseagreements we will also strengthen our financial performance,” Stone said.
Drew Kronick, Velocity Express executive vice-president for business development and supplychain solutions, will also head VSFC, the company announced.
Velocity Express had USD 312 million (EUR 224.6 million) in revenues in the nine months thatended in March. In the half-year ending on 31 December 2006, the net operating deficit was USD 24.1million (EUR 17.34 million) compared to a deficit of USD 14.5 million (EUR 10.43 million) the yearbefore, directly due to the loss of two customers, Office Depot and Wachovia.
