TESCO AIMS FRANCHISES

Philip Clarke is currently Tesco's international and IT director and
will replace Sir Terry Leahy in March. Photograph: PA

By TESSA THORNILY IN SEOUL, SOUTH KOREA
Last updated at 9:00 AM on 13th September 2010

Tesco's new boss Philip Clarke is planning to spend more than a third of his working time overseas as he ramps up the supermarket giant's international business. 

In his first full interview since being appointed to take over from Sir Terry Leahy, Clarke also said he would roll out Tesco franchises abroad 'a bit like McDonald's' by striking deals with small shop owners. 

'It's not a question of where franchised stores will work, but where wouldn't they work,' he said.

Clarke, 50, has worked his entire career at Tesco and will take the reins at Britain's biggest supermarket next March. He currently runs the company's Asian and European operations, and intends to continue focusing on Tesco's international business when he takes the helm. 

Speaking of the time he intends to spend abroad, he said: 'I'd have thought from next year it will be 80 to 90 nights a year. 

'Richard Brasher will be running the UK business. He won't want me clod hopping around. I won't be crowding all over his new patch.'

In Korea, Tesco's second-most important market after the UK, Clarke has already had some success with a trial of 18 franchised small stores, similar in format to Tesco Express, across the capital Seoul. 

Following complaints that Tesco is driving local independent grocers out of business, Clarke is offering small store-owners the chance to become part of Tesco. 

'We have such an obligation to the communities we serve,' he said. 

'The advantage of franchised stores is that they are less capital intensive for us and the franchisees get a nice new place. 

'It's a bit like McDonald's, once we have fitted them out you can't tell the difference between a franchised store and an Express' 

The 'win-win' agreement guarantees franchisees' initial investment and should smooth the path for future negotiations with the Korean government  -  vital for the chain's longer-term expansion plans. 

Tesco's Korean operations with £4.2bn of annual sales generating £300m of profits, are referred to as 'our second engine' by the chain's British executives. 

Now Tesco is hoping to replicate the franchise operations in other markets which may include China, where it plans to open 40million square feet of retail space within five years  -  more than it has built up in the UK in the 90 years since it was founded.