AAP is reporting today that the franchise model adopted by car audio and mobile phone retailer Strathfield Group is starting to reap financial benefits. The struggling Strathfield said it is on track to deliver a small earnings before interest, tax, depreciation and amortisation (EBITDA) profit for the six months to June 30, 2006.

This compares to an EBITDA loss of $11.3 million for the same period last year, which included a provision for the Cavastowe Receivable of $2.85 million. Cavastowe is associated with Strathfield founder Andrew Kelly. Strathfield said it had also completed all documentation in relation to its franchise program and had completed four franchisees who are expected to begin operating on July 1.

“We currently have many interested parties and are holding a number of security deposits,” Strathfield said.
“Strathfield expects to have a significant number of these additional stores franchised by December and to reap significant financial benefits from the change to the franchise model.”

The group said in March it would franchise 62 of its 87 stores in order to produce an annual cash profit of more than $10 million when the model is fully operational.

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