Purchasng a Newsagency?
If you’re reading this I can assume you have an interest in purchasing newsagencies and are possibly considering buying one as opposed to some other business or franchise. Well personally I think you are making a good decision. I have had 20 years’ experience running my own newsagency and feel I have a pretty good insight into the strengths and weaknesses of the business. And yes there are some weaknesses to consider which I will touch on in time, but first here is an overview of the type of newsagencies there are and what it is that sets them apart or rather their differences. Broadly there are 3 classes of newsagencies, keeping in mind newsagencies are territorial, that is the area in which the business can operate is specifically defined by both a contractual arrangement and a lease. The first is retail only, these are normally located in shopping centres from small centres with around 10 tenancies to major regional centres of 100’s plus. The contractual arrangements with the publishers who supply the business with the newspapers and magazines restrict the area of operation to the boundaries of the shopping in which the business is located. In some cases, in particular within the very large shopping centres, the publisher may allow another tenant such as a major supermarket to receive supply of their products as either direct supply or as a sub agent of the newsagency in which case the agent receives 50% of the margin for products sold, in accordance with the “supply contracts’” terms and conditions. The second is retail and delivery. These types of newsagencies are generally found in what is termed “strip shops” and normally the territory attached to the business would include the surrounding suburbs and it is the responsibility of the newsagent to deliver the publishers products, newspapers and magazines to any delivery subscriber on a daily basis for which he receives a fee as well as the original profit margin. Similarly as in the first instance should the publisher agree to supply another business within the Newsagents territory the business is appointed a sub-agent and is supplied direct by the newsagent for which the agent receives 50% of the profit margin. It is possible in some areas for an agent to have dozens of sub-agents. Thirdly is delivery only. These businesses also have a territory defined by a delivery contract with the publishers. These businesses do not normally operate out of a retail shopping prescient, mostly because the area required to operate the business is too large and the cost of a shopping centre tenancy would be too prohibitive. One thing is sure, over time all things change. Over the years there have been many changes to the way newsagencies operate. Already there are newsagencies that blur the lines I have described. The design and layout of the newsagencies and the type of products sold and distributed are all changing and for the better. The Golden Casket Corporation and their products, gold lotto and instant scratch tickets is the main driver of the newsagency industry. The guaranteed foot traffic brought to each business is the heart of the business and what underpins its value. As an owner of a business, guaranteed a huge traffic flow through the door, you are off to the best start any retailer could ask for. In my next blog I will expand on the role the Golden Casket has to play in the continued success and growth of the Newsagency industry. I have many newsagencies for sale on my books. If you would like to discuss them with me feel free to call me Neil Barry on 0419 720 262 or Benchmark Business Sales on 1300 366 523.