While the Post Office has offered franchises in the past, it has only offered locations that are likely to generate a worthwhile profit for the franchisee investor. While this makes good business sense, there is now increasing interest in finding a format that will justify the retention of Post Offices in loss-making locations in order to maintain services to local communities. Franchising is increasingly being suggested as a possible route to saving these vital Post Offices and there are four strategies in which the methodology of franchising can be used to bolster postal service coverage in the UK.

The first is to continue to offer sites that are commercially viable in their own right and sell as single-unit franchises. Additionally, if a franchisee candidate has the ability and resources to manage multiple units they can invest in a 'management franchise' and run a chain of locations. Postal services watchdog organisation Postwatch estimates that 97 per cent of Post Offices are currently in private ownership: "These Post Offices remain greatly valued by customers and continue to offer reasonable access to Post Office services for us all."

A second strategy is to allow businesses to open an in-store Post Office to operate in tandem with their own business. This can already be seen in many supermarkets, Co-ops, newsagents and local pubs and although it still requires the Post Office to be commercially viable its costs can be shared across other income streams. I suggested this route to Simon Cowie, Chairman of shipping and delivery services franchise Mail Boxes Etc, who revealed: "We have in the past approached the Post Office with a view to sharing premises and allowing services to continue in locations where they would otherwise be closed. We have been unable to gain their interest in such a development."

The third route is to offer Post Offices which are no longer considered commercially viable to local councils or communities to run as a 'social franchise'. In this situation a collective of local organisations is responsible for running the Post Office which simultaneously promotes other interests of the community. The Post Office is run from the existing premises and also acts as a hub for information on other local services such as accountants, baby sitters, hairdressers, etc. Simon reflects: "The idea of social franchising is attractive and the challenge to participating communities would be to find a sustainable basis for making the business work. Community-run activities are vulnerable to loss of interest on the part of the community as a whole and it can be difficult to replace the individuals who have set up and managed the operation when they move on. A networking approach across different communities, providing support mechanisms for continuity of management, would help make this viable."

My final proposal is for the Government to lift the impending restrictions on the sale of Post Office premises to commercial parcel businesses. This should be encouraged! Why not allow a commercial approach to serving a local community? "We think that it is a shame that a Government-owned monopoly seeks to impose restrictive covenants on the operation of small businesses in the community," agrees Simon. "Very marginal commercial benefits to them will be more than offset by damage to communities and to the public's perception of the Post Office. The Government has expressed a commitment to a level playing field in the development of services by the public and private sectors and it is disturbing that they are supporting this stance."

Text: Roy Seaman CFE