Carrefour accused of mistreating its franchisees by a former executive

Are franchisees the “cash cows” of the Carrefour distributor? This is what the former legal director of the litigation department, Jérôme Coulombel, who left the group in 2017 after burnout, states in “Carrefour, the great scam” (Éditions du Rocher).

In the book which appears this Wednesday, he accuses his former employer of penalizing the owners of franchise stores with excessively high wholesale prices, citing several testimonies from former franchisees who changed brands. According to them, certain wholesale prices and external services (auditor or maintenance technician approved by Carrefour for example) are significantly lower with other brands. Two of them also told AFP.

As a result of such high purchase prices from the central office and less advantageous service provision than for the competition, these franchised retailers have had more difficulty achieving profitability under the Carrefour brand, ures Jérôme Coulombel. Unless you increase sales prices, with the risk of driving away customers in times of high inflation.

Too unbalanced contractual conditions

Jérôme Coulombel also denounces contractual conditions that are too unbalanced, particularly when Carrefour owns part of the capital of the franchisee’s company. A fairly common scenario, in which the group holds a minority share but sufficient to block a change of brand, or even to recover the store in the event of the franchisee’s departure, he notes.

In France, the stores operated by Carrefour under franchise or lease management (a variant in which the group remains the owner of the business) are the vast majority: out of just under 6,000 Carrefour stores at the end of 2022, only 565 (166 hypermarkets, 255 supermarkets, 144 convenience stores) are owned and operated by the group.

Supermarket brands, notably Carrefour, are increasingly relying on the franchise model, which allows them to keep their commercial space and therefore their level of turnover while outsourcing a certain number of expenses, starting with through salaries or investments in stores.

Carrefour responds by praising its attractiveness

Jérôme Coulombel claims to “support more than six hundred” franchisees in his fight against Carrefour, which had accused him of theft, blackmail and attempted extortion, a case at the end of which he was acquitted by the Caen criminal court in January last.

Asked by AFP two days before the book’s publication, Carrefour responded that “the author’s argument is contradicted by the attractiveness of a franchise which allows thousands of partners to benefit from its growth”, stating “not less than 250 new partners who join the group each year to create or take over a franchise store.”

He added that his relationship with his franchisees “has never been affected by the author’s arguments nor by the rare cases of litigation which are cited as examples and which testify to occasional disagreements”, representing according to the brand “less 1% of our franchise contracts.

The group also castigates its former collaborator “who left the group six years ago and whose professional activity has consisted, since his departure, of advising franchisees so that they join competing groups”.

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