Retailer Aims to Make 1 Stop Enough for Mobile Shoppers
John Wiegand spent more than two hours driving to Cingular Wireless, Verizon Wireless and other brand-name stores in his search for a new mobile phone.
Not only was it a hassle, it was unproductive: He found it difficult to compare the different plans and handsets.
“Everywhere I went, each salesman would say, ‘This is the best plan for you,’ ” the Costa Mesa firefighter said.
So on the advice of a co-worker, Wiegand trekked to a new store, Wireless Toyz, which sells service from all the nationwide carriers as well as all their handsets and accessories.
“This is cool,” Wiegand said as he compared plans and phones at a store in Downey. “It’s got all the same plans and handsets, so why not come here?”
Not only was he able to compare prices and service across carriers, he said, but he also received help from salespeople who weren’t trying to push any particular brand.
Such choices and customer service are the focus of one of the newer concepts in franchising. Based in Farmington Hills, Mich., Wireless Toyz Ltd. bills itself as a cellular superstore -- a one-stop shop for all things mobile, plus satellite radio and TV.
“The vast majority of cellular stores are single-carrier operations, and that’s simply not consumer-friendly,” said Joe Barbat, founder and president of Wireless Toyz. “It’s like having to shop for 10 different brands of refrigerators by going to 10 different appliance stores.”
Started in 1995, the company has evolved from a kiosk selling pagers to an 82-store chain in 19 states, with 130 more stores due within a year. Seven of the existing stores are in California -- the Glendale store was the first to open a year ago -- and 26 more are expected to open by the end of this year.
There is nothing quite like Wireless Toyz in the United States, though similar operations exist in Europe, said Mark Krantz, a Sprint Corp. vice president. Best Buy Co.’s chain of electronics stores comes closest by offering plans from the top three cellphone carriers.
Wireless Toyz differs because it sells service and gear from all five carriers, plus regional carriers in some stores, and because it has developed a franchising plan to raise the capital for expansion.
Barbat stumbled into franchising after he and partner David Ebner opened five stores in Michigan and found it too difficult and expensive to reach their goal of 100 company-owned stores.
“So we decided in 2000 to sell off a stake in one store, where business was not good, and in two months, it was up 50%,” Barbat said.
That told him that people who invest their own money and are willing to work as many as 60 hours a week, as he does, would make successful partners.
But it took Richard Simtob, who founded audio bookstore franchise Talking Book World Corp., to persuade Barbat to develop a chain of owner-operated stores.
Simtob put together the plan and eventually became chief operating officer.
Wireless Toyz began franchising in 2001 and started offering so-called master franchising contracts in 2003 to area developers such as Jason Fike and his two partners, who own the rights in Los Angeles County to find sites and franchisees for the 80 to 100 stores they plan to open over 10 years.
“The key to this is customer service,” Fike said. “The cellphone business has the highest number of consumer complaints of any industry. This franchise format allows us to be very solution-oriented.”
Employees, for instance, will call carriers for customers to straighten out problems with billing, service or other matters, he said. “We don’t want wireless to be a bad experience for our customers.”
Industry consultant Howard Bassuk of FranNet, a franchise network in Carlsbad, said Wireless Toyz was a concept that could do well because it stood at the precipice of a technological shift.
“We’ll have cellphones that are going to have a camera, a phone, a PDA [personal digital assistant], voicemail, text messaging, Internet capability, video you can take and video you can stream,” Bassuk said. “That goes through a lot of markets, and a company that can put all that under one roof can really make a difference for consumers.”
Sprint’s Krantz also likes the concept, even though it competes with Sprint outlets. The Wireless Toyz store in Downey, for instance, is across the street from a Sprint operation.
“Some people are driven to their stores, but it also gives us incremental business,” Krantz said.
What Bassuk and Krantz also like is how Barbat is spreading the investment risk across a wide swath of people. A franchisee has to come up with $250,000, usually in the form of a Small Business Administration loan, to pay for inventory, fixtures, equipment and training.
Training runs for a month at the company’s headquarters, where franchisees like Tristen Rust, who opened the Downey store in March, learn everything they need to know about cellphones and operating the business.
“I knew zip about cellphones before I started,” said Rust, a former front-office manager for a Four Seasons hotel in San Diego.
What impressed her most at the Michigan stores she visited during training was that “every single person was so happy with what they were doing, and it was such a young, fun, energetic group.” Indeed, Barbat is 29. Rust is 27, and Fike is 34.
But what impresses Krantz is the “tight operating plan” that Wireless Toyz has set up to guide new franchisees. “This is not an easy business to compete in,” he said.
The rewards, though, can be big. Average store revenue is $900,000 a year, giving the entire operation $73.8 million in annual sales. And the gross profit margin, before overhead expenses, is 45% of revenue.
Nearly all the revenue comes from the cellphone business, partly because satellite offerings are new, Barbat said. The company is always looking at the possibility of offering new products, such as the various broadband phone plans from companies such as Vonage Holdings Corp.
But cellphones will remain the focus for the next few years, at least.
“People’s contracts expire every day, and they want to see what else is out there,” Fike said. “It’s amazing how many people stop in here to buy an accessory and say, ‘I wish I had known something like this was around when I bought my cellphone.’ ”
