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| Technology.. |
Future cells
Carrier puts franchisees in the Zone
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Wireless Zone made a good call a number of years ago when it decided togrow on the coattails of Verizon Wireless. But is it risky putting all your cells in one carrier? |
Phones have live TV, GPS navigators and music players. Digital cameras have become so ubiquitous that they're considered a must-have option on free phones. Doesn't anything just make phone calls, anymore? Most of these phones will be obsolete by the time this edition of Franchise Times hits your mailbox.
"We make phones for everyone from 10 to 100," said Mark Asnes, executive vice president and chief operating officer for Wireless Zone, a 260-unit franchise cell phone retailer. For the 10-year-old, there is the GPS-enabled "Chaperone," which calls only four numbers and notifies parents whenever the child leaves a certain area. For the 100-year-old there is a phone with big buttons and three emergency-dial buttons at the top.
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Wireless Zone CEO Kevin Sinclair, left, with COO Mark Asnes at a new store opening. |
Indeed, Wireless Zone's history parallels that of the wireless phone industry itself. And these days that's a good thing. Fresh off a management buyout of 20 percent of the company, the franchisor is looking to expand beyond its home base in the Northeast and into the Midwest and South, turning into a major wireless retail chain. It has plans to expand to 400 stores by the end of the year.
"There's only one reason we're still around," Sinclair says, "and that's our ability to change."
The company was founded in 1988 when Russ Weldon opened "The Car Phone Store" in Connecticut. Cellular technology was decades old at the time, but cars were the usual location for phones and they were clunky and expensive.
Each store had to have a garage, where the phone was installed, and workers were not salespeople but auto repair technicians with special training and certification. Competition was not Best Buy or Wal-Mart, but the service station down the street. Asnes, who first started as a part-time salesman in 1990, said the store he worked in was an apartment with a one-car garage outside. The company warehouse was a closet with bi-fold doors. "That closet served 25 stores," he said.
For years, The Car Phone Store was better known than the companies for which it sold car phones. That gradually changed as technology improved and phones moved out of the car. By the time the chain expanded into Baltimore in 1998, those new-fangled portable phones represented nearly 90 percent of the company's business. In keeping with that trend, the chain changed its name to Wireless Zone.
Something else was also changing: Wireless carriers had grown more powerful. Instead of looking for a wireless retailer, customers wanted to do business with a specific carrier.
To that end, the Wireless Zone only sells Verizon phones, and the carrier's nationwide presence gives the retailer the opportunity to expand nationally. Franchisees of Wireless Zone are buying a Verizon location as much as they're buying into a Wireless Zone.
Charles Rosenthal, who sold wireless phone services for Radio Shack for 17 years, opened the first Wireless Zone in Minnesota late last year—at the time it was the furthest store from company headquarters. His main reason for choosing the franchise was simple. "To be completely honest, they already qualified for Verizon's premium sign package," Rosenthal says.
In other words, because it is a big, Verizon-only retailer, Wireless Zone qualifies for a larger Verizon sign on the front of its building, a sign Rosenthal couldn't get if he were to open his own, independent store. Thus, whenever somebody comes across a Wireless Zone retailer, they first see the Verizon sign. "You have no idea how much it helps," Rosenthal said. "They may not walk in if it said 'Chuck's Wireless.' It helps the brand. The walk-in traffic is huge."
Company officials say opening a Wireless Zone is inexpensive—initial investment is as low as $55,250—and, thanks to the Verizon relationship, relatively low risk. Franchisees are paid based on the amount of business the store brings in and the service upgrades. Stores also profit on the accessories they sell—one profitable strategy is to ask the number of cars customers own. Multiple cars can mean multiple sales of car chargers. Frequent travel and business trips may mean additional sales.
"Betty Crocker doesn't burn cakes," Sinclair said. "If you follow the recipe exactly, you're going to bake a good cake. If you get into our business and follow our recipe, you'll have a good business."
There are challenges, however. For one thing, sales depend almost entirely on walk-in traffic, and wireless dealers are everywhere. Sinclair says they use heavy local marketing of the location and strong customer service in order to drive traffic to the stores.
The company is also banking on the prevalence of cell phones. There are 243.4 million wireless subscribers—there were only 28.1 million just 12 years ago—and 81 percent of the population has a cell phone.
Calling the shots
Yet what about that relationship with Verizon? As Verizon goes, so goes The Wireless Zone, and although the relationship has been a boon for the retailer thus far, the rapidly moving nature of the business could change that quickly. Company officials point to a time in 1996, when the company's carrier at the time, SNE Telephone, tried to get the retailer to sign what Wireless Zone officials considered a bad contract.
"When they tried shoving that bad contract at us, they thought we would sign it," Sinclair said. "We went to Bell Atlantic and negotiated a great deal. On a specific time and date, we switched all our stores. Every single customer came back. If there were only one nationwide carrier, we would worry. But all the other carriers would be happy to take us from Verizon."
