Reebok mandates franchisees to adopt cash-and-carry model

Apparel

Reebok mandates franchisees to adopt cash-and-carry model

by
14 Sep 2012

German sports goods maker Adidas AG is moving its

Reebok business in India to a cash-and-carry model to protect itself from further losses in operations. As a part of this exercise, the company has asked franchises to shift to the new terms and conditions latest by November. Recently, Adidas Group Chairman, Herbert Hainer, had said, “We will clean up our India business there is no doubt, because we want to have a clean sheet. Reebok customer review will be completed in the next few weeks and the company will move towards a profitable business model for the brand.” The group has also roped in Ernst and Young to undertake a restructuring process.

But Delhi Reebok Franchisee Association, comprising 120-odd franchises are against accepting the new model terming it as unviable as they had invested in real estate and human capital. Earlier, they were given a notice to either accept the new terms or shut shop by August 31. As of now, only two-thirds of the franchisee stores are expected to move over to the new business model.

Meanwhile, according to sources, Serious Fraud Investigation Office is finding it difficult to make headway in the Rs 870 crores alleged scam at Reebok India because it is either unable to access documents or taking much longer than expected to get the relevant records from the company, which could result in company missing the September-end deadline set by the corporate affairs ministry.