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01.11.2017 of The Marker

The next generation of franchising

The next generation of franchising

Israeli money transfer giant GMT teams up with the global MoneyGram to create a vast network of 260 franchises, available almost anywhere between The Tel-Aviv Metropolitan Area and Eilat.

CEO Noam Shalev explains how it works.

The world we live in is changing rapidly, primarily due to new technologies being developed. This new tech also creates opportunities in the remittance sector, and allows for faster, easier-to-use, and more accessible means for transferring money.

GMT, the largest remittances company in Israel, has a widespread reach throughout the whole country thanks to roughly 260 independent currency services providers who act as their franchisees. These businesses, in return, get a set of advanced financial services, including money transfer services, which they can then offer their clients.

The advantages that these businesses enjoy thanks to their partnership with GMT are increased transaction volumes, a wider scope of services they can offer their clients, and of course – commissions earned through remittance transactions. When talking about the Israeli remittance market, we’re talking about thousands of daily transactions performed by citizens of Israel, former immigrants, tourists, and foreign workers. The purposes of each transfer naturally vary, and these include, among others: salary transfers by foreign workers, money transfers to relatives abroad (children that may be on a trip), payment for services abroad (tourism and medical expenses), and payments for a relative’s tuition fees who may be studying overseas.

MoneyGram has made a strategic partnership with GMT and made significant investments in technological development, which eventually were converted into growth. Despite MoneyGram’s expansion of their digital solutions and services, one of their core differences from other international remittance companies is their network of agents, which includes over 350,000 service points in over 200 countries and territories worldwide.

Noam Shalev, CEO of GMT, explains the relationship between their headquarters in Ramat Ha-Hayal, Tel-Aviv and their agents across the country: “The clerks at the branches are granted access to GMT’s secure and advanced computer system. Through this system, they perform money transfers for their clients, as well as manager their ongoing balances with us. When a client who wishes to transfer money a destination in another country enters the agent’s shop, the agent simply logs into GMT’s system through their computer, and easily performs the transaction for the client. Within a few minutes, the cash will already be on the other side of the ocean, awaiting withdrawal.

“It’s a win-win model. The shops know the customers and their ongoing dealings. They’re the ‘field operators’, I guess you could say. And then there’s GMT, who provide TFC with advanced tech and professional service in everything that’s related to remittances, which allows TFC’s branches to provide their customers with better services, at better prices”.

What are the feedbacks you get from your various franchises?
“The number of our franchises constantly increases every year, which I think shows the overall satisfaction of the franchisees from the service they are getting. We have quite a lot of case of currency services providers that used to work with competing remittance services who eventually began working with us instead, because they think that our service is better. So, overall, I can say that we are satisfied with our relationship with our franchisees”.

How is your methodology better than that of the competition?
“Why, we’re talking about probably the most important parameters for the client, and those are the price, and the widespread availability abroad. GMT specializes in destinations where we’ve identified additional difficulties. For those destinations, the price paid by the sender is significantly lower than they would’ve paid at Western Union, for example, and the service is a lot quicker. That, combined with the sense of integrity and security one has when working with a large company, allows us to ensure costumer retention. Thanks to these things, it’s not uncommon to see the same client perform dozens of remittances a year only using our service points. For me, the relationship with the costumer is one of the most important things in our line of work. It’s a bond which we solidify, among other things, through our quick and efficient costumer service, which may be contacted using a multitude of methods: phone, WhatsApp, Facebook messages, you name it”.

What are GMT’s advantages?
“First and foremost – technological innovation. We stand at the forefront of innovation in our field, and soon, we will launch additional services that will increase the user’s experience furthermore. Our service is carefully tailored to meet the needs of the end-clients, and along with our reliability and quick response times, we can say without a doubt that we are one of the leading companies of this sector in Israel”.

Over the last few years, the Israeli government had decided to intervene in this field, and through the Ministry of Finance, enforce regulation of currency services. With the currency services sector finally being stabilized and recognized as a leading sector in the Israeli market with significant turnovers each year, the legislative authorities have decided to step it up and passed the Law on Supervision of Financial Services, which’s first part deals with credit & loan provides, and is being brought to effect as we speak. Noam Shalev tells us how their franchising methodology complies with the new regulations in everything related to money transfers. “GMT is spearheading the industry in everything that’s related to compliance and fraud prevention. Our company conducts itself based on the strictest standards of the Israeli regulation and beyond, as we are also supervised by international organizations, which are subject to even stricter regulation than that of Israel”.

What are GMT’s plans regarding new franchises, and how do you encourage our current ones?
“As long as there are place where we have no representation, we will always be happy to welcome more franchises aboard. For cities and towns in which we already have a franchise, or several, we decide per case. As for existing franchises, we organize competitions between franchises each year. The winners receive incentives for meeting yearly goals. We also award bonuses and awards to our agents and franchisees, organize social events, and arrange deals for our end costumers”.

A victory for both sides
Adv. Ido Melin of Zilberberg-Melin Law Firm, who serves as legal counsel to TFC – a company that operates 8 money transfer shops in Israel and specializes in consultation to providers of currency services and credit services tells about the relationship between Avi Rosen’s money transfer business and GMT:

“It’s a win-win model. The shops know the customers and their ongoing dealings. They’re the ‘field operators’, I guess you could say. And then there’s GMT, who provide TFC with advanced tech and professional service in everything that’s related to remittances, which allows TFC’s branches to provide their customers with better services, at better prices”.

What are the advantages and disadvantages of this methodology?
“The obvious advantages are, of course, improvement in the field of remittances, quick service, and affordable prices. As for disadvantages, I can’t say I can come up with any, as the service that TFC gets for their end-clients as well is of very high quality, and very quick – almost personal”.

Would the new regulations affect the branches and the franchising method?
“I think that the new regulations will actually empower franchising. With the new requirement for a minimal private capital along with other tough requirements, the existence of a centralized system makes it easier for the branches and shops, as the franchising company is a well-organized one, with strict compliance procedures. I’d say this can make it easier for the smaller shops to meet the new requirements. Perhaps with time, we will see groups of smaller shop unite into large companies”.

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