Israeli retail fashion group Fox-Wizel Ltd. (TASE: FOX) , controlled by Harel Wizel, has signed agreements for becoming the franchise holder for the Nike sports brand in 14 European countries, in which it will set up dozens of stores. The agreements were signed through Fox's Retailers subsidiary, in which it has a 90% holding. Fox estimated its investment in these activities at NIS 110 million in the first three years.
Some of this activity will be through a company being founded by Retailers; the rest will be through a joint company in which it will hold a 51% controlling interest in partnership with Foot Locker.
Fox's connection with Foot Locker, which began when the latter first entered Israel nearly three years ago, is now becoming closer. As far as is known, this is the first time that Foot Locker has entered invested in its franchise holder and allowed it to take responsibility for management.
Fox's relations with Nike are also becoming closer. Nike opened the door to Fox three years ago to become the first franchise holder operating with it on two different continents. The current step means that this is now being extended to a third continent.
Fox previously reported its negotiations with Foot Locker on operating stores under the Foot Locker brand in a number of European countries.
Retailer signed the first agreement through a fully-owned Dutch subsidiary founded for the purpose - Retailers Holland. This company is obtaining a franchise to operate Nike stores in Hamburg, Germany, Denmark, Sweden, Norway, and Finland.
The agreement will be for the longer of two possible scenarios: five years with an automatic five-year extension, or an end period of each agreement with respect to a store. Fox says that an agreement will be signed for each store. During the first three years for the store, the agreement period will also be five years, with a five-year extension period. For stores opened later than three years after the date of the agreement, the agreement period will be seven years for each agreement.
The stores to be operated by Retailers Holland will be both stores purchased from existing franchise holders and new stores. Fox adds that at this stage, Retailers Holland is slated to buy a store in Hamburg from an existing franchise holder in early March 2020.
According to Fox, Retailers Holland "will finance its activity from its own resources or from additional resources, if necessary." Fox estimates the cost of the investment and the investment in working capital at NIS 65 million.
A second investment signed by Nike and a new Dutch company owned by Retailers (51%) and the Foot Locker group (49%) concerns the operation of Nike stores in Belgium, the Netherlands, Austria, the Czech Republic, Hungary, Croatia, Slovenia, and Slovakia.
Published by Globes, Israel business news - en.globes.co.il - on February 5, 2020
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