INDIA: Adidas remains committed to Reebok restructure
Sportswear giant Adidas remains committed to its restructuring programme in India, despite reports some of its Reebok franchisees are unwilling to change to the new franchise model it wants them to adopt.
The new terms reportedly seek to do away with the minimum guarantee model under which the franchisees previously operated - and which assured them a miniumum amount irrespective of sales.
Adidas, which bought Reebok in 2005, is instead looking to offer stock to franchisees at a reasonable discount, the Business Standard newspaper reported.
Adidas has told 70 franchisees to accept the new terms or shut their shops by 31 August, the report said. The franchisees have also set up a consortium called Delhi Reebok Franchisee Association, and say the shift is not viable because of the amounts they have invested in the sportswear brand so far.
However, in a statement issued to just-style today (24 August), Adidas said: "Despite the challenges, we are committed to the Indian market and believe in the growth potential of Reebok India.
"Hence, we are working closely with our franchise partners and discussing revised business terms to drive strong profitability for both the franchise partners and Reebok India."
Earlier this month, Adidas said it will accelerate the restructure of its Reebok India business, in which a third of its 900 stores may close.
Under the plan, affected employees will be given the option to take part in a Voluntary Retirement Scheme (VRS) and local sourcing activities will be integrated into the retailer's global operations.
Today's statement added: "So far, we have received very good response: however some of our franchisee partners are a bit uneasy about making a change from an existing model. Most business partners understand the need to make changes and are engaging with us to transition to the new model.
"We value our relationship with our business partners and we are working on continuing our strong business relationship with as many current business partners as possible.
"As a responsible organisation, we will follow the good standards of respectful and professional conduct to engage with our stakeholders while restructuring the business at Reebok India company."
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