PD House to franchise its business

The company recorded first-quarter sales of Bt60 million, down 14.29 per cent from Bt70 million in the same period of last year. As a result, the company feels it must adopt a new business model if full-year sales are to keep pace with last year's Bt270 million.

Sithiporn said for a fee of Bt400,000, the company would provide training and set up small and medium-sized contractors in their own home-building business.

Investors wanting to be its franchisees must spend between Bt2 million and Bt2.5 million. This will cover the entrance and operating fees, cash flow and interior-design office.

The company estimates it will have four franchisees this year, increasing to between 30 and 37 in 2013, or up to 74 per cent of 50 branches expected that year, said Sithiporn, adding that franchisees would be both in Bangkok and upcountry.

PD House now has 12 branches throughout the Kingdom.

Sithiporn said while demand for construction of detached houses in Bangkok dropped more than 50 per cent year on year in the first quarter, it remained at almost the same level upcountry, especially in Hua Hin, Rayong, Khon Kaen, Chon Buri, Nakhon Ratchasima and Nakhon Pathom. As a result, the company's total first-quarter sales were down only 14 per cent year on year.

"We cannot estimate whether this year's total sales will keep pace with last year or drop, but we'll try to maintain them the best we can with our franchise business and by offering more promotions to our customers," he said.

The company has earmarked Bt11 million this year for advertising, up 22.22 per cent from Bt9 million last year. About 10 per cent of total sales will be used as a promotional budget to help sales reach this year's target of between Bt270 million or Bt300 million. This will keep its net margin at about 8 per cent this year, better than 2.5 per cent last year, when the company had to pay higher costs for construction materials, Sithiporn said.