Franchising: ANZ to transform branch network into 'franchises'

By Graeme Kennedy

Friday 9th August 2002

The ANZ Bank will have its New Zealand branch network operating as franchise-style businesses by the end of this year in a bid to boost growth, customer and staff satisfaction and profits.

The bank's radical transformation is based on "shadow-franchises" run by chief executives in 23 local markets involving 99 branches.

Internal and external recruitment of chief executives has been completed and the new look will start being rolled out next month.

The CEOs will not buy their businesses as regular franchisees but will be financially rewarded for results in an incentive structure which mirrors the equity a full franchise-holder would have, ANZ managing director Murray Horn said.

They would also be rated on compliance in the way they ran their units as ANZ businesses and on security issues.

"Local CEOs have the potential to significantly increase their salaries based directly on the growth they achieve - the more they grow the more they earn," Mr Horn said.

A bank spokeswoman said the new structure would give CEOs the freedom and independence to achieve results similar to those an owner-operator would get by using hard work, innovation and entrepreneurial skills to attract customers.

"With freedom in their own market they can take initiatives such as offering products not available elsewhere and lengthening or varying trading hours to suit the local market," she said.

"They are in the front line, talking and listening to their customers - they know what's happening in their own areas and need to be heard."

She said many bank operations were centralised and did not adapt to local conditions and customer demands.

"We needed a fundamental shift to do something different and get dramatic results," she said.

"It needed more than just fiddling."

ANZ began developing the franchise-based model a year ago and established three pilot markets - two in Auckland and one in Hamilton - in April.

Their success encouraged the bank to take the scheme nationwide.

The New Zealand plan is based on Abbey National in the UK where its franchise programme has been running for the past two years and the bank is now considering selling some branches as true franchises.

ANZ Australia has begun shadow-franchising in Victoria and will extend the model to New South Wales next year.

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