The 2GIS cartographic service controlled by Sberbank began to buy out regional points of its franchisees. Previously, the company developed its own branches only in millionaires, now its network has replenished with twenty smaller cities. The revision of the strategy could be influenced by the arrival of a large investor, but a pandemic could also be the driver of the process, which negatively affected the business of the franchisee, experts say.
Kommersant discovered in the SPARK-Interfax database that the 2GIS service began to be bought by legal entities of its franchisees in the regions of Russia. Since the beginning of May, the head legal entity of the company Dublgis LLC has acquired 2GIS.Yug LLC, Dublgis-Kemerovo LLC, Dublgis-Irkutsk LLC, etc. The former owner of 2GIS.Yug, Boris Levin, did not respond to Kommersant’s request … It was not possible to contact representatives of other companies.
In the Forbes rating of “30 Most Profitable Franchises-2020”, 2GIS ranks second. According to the rating, the company launched the franchise in 2004; at the end of 2020, it had 87 points. 2GIS partners are engaged in updating data on the map of their city and receive exclusive rights to sell advertising in it. Franchisees pay a lump-sum fee and royalties as a percentage of the proceeds.
Before, according to him, 2GIS had branches mainly in cities with a population of one million: Moscow, St. Petersburg, Novosibirsk, Yekaterinburg. “We offered large franchisees to buy out their business, and by the spring the number of own branches of 2GIS was replenished with two dozen players,” added Kirill Kukartsev. According to him, we are talking about offices in Vladivostok, Krasnodar, Sochi, Irkutsk, Tyumen, etc. “Regional teams continue their work,” he assured, noting that 2GIS continues to attract franchisees.
2 GIS founded in 1999 by Alexander and Dmitry Sysoev. In August 2020, Sberbank consolidated 72% of the company’s shares, the founders and management retained 25%, another 3% from O2O Holding, a joint venture between Sberbank and Mail.ru Group. According to its own data, 2GIS operates in more than 700 cities in 11 countries, its audience in May amounted to 55 million users. For comparison: the audience of Yandex.Maps is 50 million users per month, excluding Yandex.Navigator. Revenue of Dublgis LLC in 2020 reached 4.26 billion rubles, net profit – 238.55 million rubles.
2GIS will deal with real estate
Franchising is used when there are no resources or time for development at their own expense, says Anna Rozhdestvenskaya, an expert at Franshiza.ru. But when a large investor enters the business, the strategy is often revised in favor of its own branch network, she explains. “The reason for the buyout can be the end of the contract or poor performance of the partner,” adds Anna Rozhdestvenskaya. It is difficult to estimate the value of each transaction, they often occur at a price much lower than the market price and, in fact, the franchisee has no choice, the expert sums up.
“Without centralization, the marketing capabilities of the service are difficult to use effectively, especially since there is a SberMarketing company in the ecosystem,” he adds.
According to the expert, in 2020, amid the crisis and increased competition with Yandex services, some franchisees felt “not very good”, which encouraged them to sell their business. A.Partners founder Alexei Soloviev believes that 2GIS wants to consolidate financial flows in this way and thereby increase the capitalization of the parent company: “In the first case, the franchisee accepts money and pays royalties, in the second, the company receives the money and pays a commission to the partner. The second option is more profitable. “