PMD Furniture Direct To Switch To Franchising

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Furniture Today:

PMD Furniture Direct, which says it saw a healthy same-store sales gain last year but has not added new dealers as fast as it has lost others, will convert to a franchising operation early this year.

The conversion isn’t expected to cost PMD dealers more money, but is intended to position the company to seek prospects that typically have greater access to capital.

Jeff Hosking, president and CEO of the 90-store chain of primarily licensed stores, said some dealers that have been with the Top 100 company for six years or more had their best year ever in 2008. But with financial markets in turmoil, PMD’s total network sales are down because it hasn’t been able to replace the 20% to 25% of dealers it loses annually to attrition.

“It takes $50,000 to $100,000 (plus a $35,000 licensing fee that can be financed) for someone to start with us, and they don’t have the access to capital they had five or six years ago,” he said.

But Hosking believes the conversion to franchising will improve PMD’s recruiting efforts. People burned out on corporate jobs regularly look at franchise opportunities and as a as a franchisor, PMD will advertise where these people are looking.

Until now the company was largely advertising for territory managers/owners in the help wanted sections of newspapers and online.

“The difference is we’re going to be fishing in a much bigger pond, where franchisees expect to outlay that kind of money (required for a startup),” he said.


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