As the wireless industry is rapidly growing due to the heightened importance of the cell phone for business and personal use, Wireless Zone is capturing markets and developing quickly in the ones that we enter. Detroit is one of those markets. After entering the market less than a year and a half ago, there are already 11 Wireless Zone’s in the metro-Detroit region. We are continuing to expand in the region and attracting great new assets to our team—new Wireless Zone franchisees.
Wireless Zone growing in Detroit by winning over small retailers
David Gagnon got his start in the cellular industry in 1986 and prides himself on reading where the industry is going.
With the current state of the industry, he said, the life expectancy of a six-store chain of cell phone stores like his is short, due to consolidation.
So when Wireless Zone, a Connecticut-based wireless retail franchise, came through town looking for takers, Gagnon got on board.
“We wanted to grow, but we were having trouble doing that,” he said. “All of a sudden, Wireless Zone is looking around in the area, and they want to grow, as well. They were doing a lot of what we were doing, but doing it on a much larger scale.”
Gagnon is part of a group of local cell phone retailers acquiring Wireless Zone franchises — which exclusively sell Verizon Communications Inc. services, unlike firms such as Madison Heights-based Wireless Giant, which sell multiple services.
In 18 months, Wireless Zone has started 11 franchises in metro Detroit, mostly by converting business owners such as Gagnon.
Nationally, the chain has built its empire to 330 stores with $200 million in revenue for 2008 and $165 million in 2007.
“Detroit has become the focal point for our growth in the Midwest,” said Sean Fitzgerald, national vice president of franchise development for Wireless Zone. “We've had a multiplier effect as more people are converting to our stores.”
Fitzgerald expects Wireless Zone to have two more stores in metro Detroit by the end of the summer.
The chain started in Middletown, Conn. It moved through New England, down to Florida and now through Michigan, with the idea of continuing west.
In the world of cellular phone retail, where intricate rules govern service agreements, types of accessories that can be sold and placement of the carrier's logo, Gagnon said being part of a large pool of retailers gives him an advantage over being by himself.
As a small chain, he said, Verizon's rules prohibited him from using the company logo in front of his store. As part of the larger Wireless Zone, he can use it.
He also likes having Wireless Zone deal with Verizon on a day-to-day basis, leaving him to run his stores and train his staff.
Gagnon has always sold Verizon service, formerly selling Cellular One, then AirTouch Communications — both of which became consolidated under Verizon.
His six stores average $20,000 per month per store. In the past four months, some of his stores are up 80 percent in sales — something he attributes to being part of the franchise.
“At the heart of it, I'm focusing on managing and sales and letting them deal with all the corporate stuff,” he said.
Gagnon was a resource for Debbie Peterson, who signed a contract to convert her three Verizon stores to Wireless Zone, effective July 1. Her stores, previously under the name 2020 Wireless, are in Ann Arbor, Ypsilanti and Jackson.
“You wonder who Verizon is going to listen to when there is a problem,” she said. “The person in Ypsilanti with three stores or the company with 330.”
Fitzgerald said there has been a multiplier effect in most of the markets where Wireless Zone has a foothold, with scenarios such as those of Gagnon and Peterson: existing franchisees acting as a resource for potential franchisees.
The firm added 38 stores nationally in 2007, 60 in 2008 and is on pace for 100 this year, he said.
Growth of new franchises has to be balanced carefully, however, with the needs of Verizon, which has also been opening its own corporate-owned stores, called direct stores.
New York-based Verizon operates 55 stores in Michigan and 2,000 in the United States, said Michelle Gilbert, public relations manager for Verizon's Midwest regional office in Southfield.
That adds to the 114 “indirect” stores such as Wireless Zone's in Michigan and 5,000 in the United States.
A cellular phone retail franchise with an exclusive relationship to a carrier, such as the case with Wireless Zone, will find itself limited as markets and demands change, said Dave Timlin, CEO of Yakety Yak Wireless Inc., a cellular phone franchise company based in Newport Beach, Calif., with 30 stores in 13 states, including a store in South Lyon.
Yakety Yak offers both exclusive arrangements, under which a retailer can sell just one carrier, and non-exclusive arrangements, under which a retailer can sell multiple carriers.
“The only consistent in this business is that things change drastically, and they change monthly,” he said. “I mean no offense to Wireless Zone, but you really don't want all your eggs in one basket. You need the ability to adapt and do what's best for the customers and the market.”
Timlin said retailers who try to open single cellular phone stores will find themselves struggling quickly as technology and tastes change.
