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By Linda Lisanti
ANKENY, Iowa -- Nearly 40 years after entering into its first franchise agreement, Casey’s General Stores Inc. closed that chapter of the company’s history. As of this year, Casey’s is 100 percent corporately owned—a move the Midwest convenience retailer said will bring greater consistency across its network of 1,470 stores.
"With franchising, you had dual operating models: an employee/employer relationship and an independent contractor relationship. A customer does not differentiate between the two and thus, with a dual operating model, you run the risk of losing consistency from your corporate stores to your franchise stores," Bill Walljasper, the company’s chief financial officer, told CSNews Online in a recent interview.
Casey’s began franchising in the early 1970s as a way to expand its store base and gain critical mass, at a time when the company did not have the capital to grow. Eventually, this led to increased buying efficiency and ultimately, self-distribution, Walljasper said, noting franchising typically has a higher return due to the lower investment cost.
At its peak, Casey’s had a total of 230 franchised stores. The initial term in its franchise agreements was for 15 years. Subsequent to that, the company continued most of the franchise agreements on a year-to-year basis maintaining the first right of refusal.
The active pursuit of franchising began to phase out in the mid-1980s, shortly after the company went public. "We wanted to ensure that we had consistency and control over each location to better meet the changing demands of our customers," Walljasper said of the decision. Other contributing factors were that the non- compete provision in the franchise agreement prevented Casey’s from penetrating certain markets with its corporate store base. In addition, the earnings contribution from a corporate store is greater than that of a franchise location, he added.
Casey’s ultimately bought back roughly 130 of the franchise stores.
Now that the chain is 100 percent corporate-owned, Walljasper said the retailer can do a better job varying its product offerings by region and even by location.
"Being corporate-owned, we now have the ability to adapt the product offerings at each location to better meet the different demands of our customers," he told CSNews Online. "We also create greater operational consistency across our store base."