ComputerLand Corp is to get out of the franchise business to concentrate on company-owned outlets, selling about half its total current business to El Segundo, California-based Merisel Inc. Merisel has a letter of intent to buy ComputerLand’s franchise and distribution division for up to $110m. The deal will give Merisel captive retail outlets for the products it distributes. Terms and conditions have not been finalised, but the deal is expected to be completed before the end of the year. Underlining the poor quality of earnings in the franchise and distribution business, Merisel will be paying $110m for business expected to reach over $1,000m for the year to September 30. The initial cash payment at closing will be $60m, and Merisel gets the rights to the ComputerLand name in the US. ComputerLand will temporarily retain the rights to use the name for a limited period and will eventually change its US name; it will continue to own the rights to the ComputerLand name internationally. Merisel will also become the preferred supplier of software and hardware products under a volume purchase agreement to ComputerLand and ComputerLand will continue to provide Merisel’s new unit with buying, distribution, systems and other services for the franchisees. ComputerLand had $2,040m sales last fiscal, and is up 25% so far this year.
