Going the fast way

Expanding: Fastway Courier’s Richard Thame.

Stepping into the shoes of a company’s founder is never easy. But when the founder is Bill McGowan, the first person in the world to franchise parcel delivery, the fit is even more awkward.

But 2½ years on from replacing McGowan as chief executive of Fastway Courier’s Australian operation, Richard Thame displays the confidence of a successor who is increasing the company’s biggest franchise five times faster than the postal and courier services market is growing overall.

Thame is positioning Fastway to exploit a trend having a chilling effect on most other real-world businesses: the rise of online commerce.

Vendors can now plug their websites directly into Fastway’s delivery system and have parcels delivered by a national network of courier franchisees for less than Australia Post charges.

Thame is also adding 40 long-haul trucks connecting 25 distribution centres (operated by a similar number of regional franchisees) and more than 700 courier franchisee territories.

“Our aim is to be the No. 1 provider to online retailers,” he says.

It would not be the company’s only top ranking in its 28-year life.

After introducing New Zealand and the world to franchised parcel delivery in 1983, McGowan exported the concept across the Tasman 10 years later. Within five years, Fastway was the fastest-growing company in Australia, remaining on the BRW Fast 100 list until 2001.

That year revenue neared $200 million, as McGowan sold master franchises for countries half way around the world. While repeating the Australian experience in the United Kingdom and Ireland, the language barrier proved too high in continental Europe. A German franchise is the only legacy of an aggressive expansion plan put on ice in 2005.

“[W]e moved into the non-English countries too quickly,” McGowan conceded at the time. “We underestimated the levels of support that we had to provide each country and wrongly believed that after 33 weeks’ training, our national master franchisees would be able to emulate what we did in Australia and New Zealand.”

Now based in Monaco as global chairman, a chastened McGowan, 57, is re-activating those expansion plans albeit with less-demanding milestones.

The Australian franchise will contribute about $130 million to global revenue in 2010-11.

McGowan admits it took him a long time to find the right person to lead the group’s biggest-earning country before settling on the man heading Australia’s biggest-earning region: Sydney.

Thame, who previously worked in the franchising operations of McDonald’s and Thrifty Car Rental, says: “Operating a 15,000 square metre facility manned by more than 180 courier franchisees, delivering in excess of 135,000 parcels each week, remains one of the most challenging yet rewarding experiences of my career.”

But the 40-year-old insists the logistics, marketing and training provided by the national and regional levels of the company’s three-level franchise structure only supports its true competitive edge: courier franchisees.

Courier franchisees service an exclusive territory Monday to Friday. In the morning they pick up packages (and deliver any packages that arrived overnight). Around lunchtime they drop off packages at the regional distribution centre while collecting packages left by other couriers destined for their territory.

Thame says Fastway’s mostly business customers develop a relationship with courier franchisees and can rely on their timetables.

Customers pre-pay deliveries, which appeals to small and home-based businesses without sophisticated account-keeping processes and also improves cash flow for courier franchises.

Courier franchisees pay an upfront franchise fee of $25,000-$100,000, depending on the territory’s size, and then earn a commission from each delivery.

The franchise has no expiry date, giving couriers a strong incentive to build up their territories in the hope of selling them one day for a healthy gain.

Many split a single territory into two and sell off the best-performing one while they build up the one with more potential.

Initially, the service appealed to businesses delivering to other businesses in the area, such as printers and dental suppliers. But overlaying a long-haul network has made it competitive for cross-town and interstate deliveries by wine and other online retailers too.

Franchisee selection is critical, Thame says. “We don’t want couriers who are disgruntled with their current employer,” he says.

“We want people who are effective salespeople and want to build a business. It is not for everyone.”

Thame might never fill McGowan’s shoes, but the fit is less awkward than it used to be.

Company: Fastway Couriers

Founded: 1983

Founder: Bill McGowan

Chief executive (Australia):

Richard Thame

Revenue (Australia): 2010-11

$130 million

Track record:

BRW Fast 100: 2001 (ranked 52); 2000 (ranked 14); 1999 (ranked 12); 1998 (ranked 1)

BRW Fast Franchises: 2007 (ranked 59); 2006 (ranked 37); 2004 (ranked 20)

BRW

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