Cheques are in the mail

LICENSED Post office franchises have increased in popularity over the past few years, with many business brokers pushing the virtue of the stores to their clients.

Where once there was one post office for each suburb, today there are post office outlets almost in every shopping centre.

Over the past eight years, since the retail roll out strategy was adopted by Australia Post, 60 new stores have been opened, many of which are now operating as franchisees.

A further 200 of the 383 retail outlets have had a partial or complete fitout.

When a new store becomes available, Australia Post calls for tenders, the licence can then be resold, although Australia Post must approve the new buyer and charges a commission on the sale.

The new business direction of Australia Post came about following the corporation of the Common-wealth entity in 1989. New legislation meant Australia Post had to become commercially viable.

“We agreed to roll out a retail post strategy, which was to convert all of our original – what I call the jarrah-counter post offices to the modern post offices we have today,” explains Chris Cole Australia Post’s retail and sales State manager.

Since then Australia Post never looked back. In 1999/2000 it posted a profit before income tax of $391.9 million on revenue of $3.7 billion and a return on assets of 14 per cent.

Without question, the retail and sales arm is responsible for the healthy figures contributing about 95 per cent of Australia Post’s revenue.

According to business broker Jack Teh, licensed post offices are one of the top two businesses in WA with strong demand from investors.

The income is derived from a commission on the sales. All revenue still goes to Australia Post’s bottom line.

Mr Teh believes post offices are an attractive investment because of the security which comes with government enterprises.

Mr Cole agrees: “The advantage to them is that they are buying a successful, proven business with existing operating systems.”

But he said people should still do the sums and make sure that the investment would suit their lifestyle before rushing into purchasing one.

“It’s like any business. The people still have to do their sums. We encourage them to see their accountants, and try to make sure that it’s for them,” he said.

While Australia Post has been on an expansion drive, efforts have also been made to offload, old offices in bad locations, or which no longer fit the requirements for a modern store.

Mr Cole said that his policy was that if the store was in an old strip shopping centre and was not doing too well, then the post office would relocate to where the pedestrian traffic was in a new shopping centre.

This opens opportunities for investors to buy an old post office and convert it into a restaurant as has occurred in Leederville and Collie or into a nightclub as in Northbridge.

Over the past two years, about 15 post offices have been sold, some of which Australia Post agrees to lease back the building, and others which are converted.

Tenders have also been called for the Fremantle Post Office.

According to the Valuer Generals Office, four post office buildings were sold in 2000. In 1999, 13 were sold and in 1998, nine were sold.

Mr Cole said it was unlikely that Australia Post would franchise 100 per cent of the retail outlets. Experience from other franchisers showed that keeping about 20 per cent of the stores in-house was normal and allowed for the franchiser to keep a finger in the pie as well as test new products or new areas.

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