Micro D Inc. Signs Contract to Supply ComputerLand : Santa Ana Firm to Distribute to 600 Franchise Operators

In an attempt to ease supply problems for franchisees, ComputerLand Corp. said Tuesday that Santa Ana-based Micro D Inc. will distribute selected computer software and accessory products to ComputerLand’s 600 franchise operators in the United States and Canada.

Hayward-based ComputerLand, the world’s largest retailer of personal computers, said the contract it signed with Micro D is a non-exclusive agreement that replaces a less substantial one that the company had with First Software, a Lawrence, Mass., distributor that recently filed for protection from creditors in U.S. Bankruptcy Court.

The contract represents the largest single arrangement that Micro D, one of the largest distributors of microcomputer products, has with any of its customers, said Linwood A. Lacy Jr., chairman of Micro D.

He would not, however, estimate the amount of revenues he expects.

“There’s a wide range of possibilities,” he said. “The business is obviously substantial. We have a goal of becoming the largest distributor of microcomputer products in the third quarter (starting in July). We believe this is a significant step in that direction.”

Reaction from Franchisees

Franchisees, who knew about the monthlong bidding and negotiations, apparently were pleased.

“We think it’s great,” said Hank Gray, owner of three Orange County franchises. “This (contract) gives us almost single source shopping. Most of the franchisees are very enthused, and I’ve talked to many of them,” said Gray.

ComputerLand Corp., which has 200 additional outlets in 21 other countries, acts as a central purchasing office for its franchisees, selling computer hardware, peripherals, software and accessories at cost. It earns its money by taking royalties, averaging about 6%, on every sale its franchisees make.

The franchisees, who can and do go to other distributors and directly to manufacturers for products, usually cannot beat ComputerLand Corp. prices, said Dianne Douglas, corporate manager of public relations.

Micro D prices will be higher than ComputerLand prices but lower than franchisees can get elsewhere, she said. The prices also will be lower than Micro D charges for products that are not part of the contract, she said.

Array of Accessories

ComputerLand Corp. will continue to provide franchisees with the hardware and peripherals they need and with certain high-volume software products, particularly the IBM and the Apple brands. Under the contract, Micro D will provide software that ComputerLand does not provide and, unlike First Software, will provide an array of accessories.

The move is also an attempt to cut down on the time franchisees have been taking to order software from hundreds of dealers and manufacturers.

“The agreement lowers ComputerLand’s overhead because it doesn’t have to worry about warehousing or distribution or trying to get better deals,” said Ralph Gilman, vice president of Infocorp, a Cupertino market research firm.