For the second time in the past week, Sears Holdings Corp. (SHLD) is turning to outsiders to help expand its business as the company said Thursday it is allowing franchisees to open Sears Auto Centers.

Sears said it is offering auto dealers that recently lost their new-car franchises a new use for their space: Sears Auto Centers offering parts and services; over-the-counter merchandise; and previously owned vehicle sales.

The franchises will have the same products and services available at about 850 company-owned Sears Auto Centers, including DieHard batteries. They will offer similar services as other auto-repair chains such as Pep Boys-Manny Moe & Jack (PBY), Meineke Car Care Centers Inc. and Monro Muffler Brake Inc. (MNRO).

In some cases, Sears Auto Center franchises will be allowed to carry other Sears products, such as Craftsman tools, said Bill Jackson, senior vice president of Sears Holdings Corp. and president of Sears Authorized Independent Auto Centers LLC. Sears will help line up financing for car purchases, and it hopes eventually to offer Sears-backed warranties on the vehicles, Jackson said in an interview.

Last week, Sears's brand-management business announced a trademark licensing deal with a manufacturer of battery accessories to sell DieHard brand battery chargers, jump starters and other accessories to outside retailers. That agreement with Schumacher Electric Corp. didn't include DieHard batteries themselves.

While the two deals are unrelated and structured very differently, they show the company is going in new directions.

"The retail landscape has changed, with new concepts and opportunities," said Guenther Trieb, president of brands at Sears, last week. "We need to explore alternative distribution than we have."

As for expanding the company's sales of other well-known brands such as Kenmore appliances, Craftsman tools and Lands' End apparel, Trieb said. "We are not ruling anything in or anything out. For all our own brands we are looking at ways to increase their value."

Sears should move carefully, analysts said. The retailer should look to sell in areas of "very low cannibalization" with existing Sears stores, said Michael Dart, senior partner in the retail practice of Kurt Salmon Associates.

The retailer will broaden its brand recognition, but could lose store customers and sales, by putting the merchandise in other channels, Dart said. "These products draw people to Sears."

Department-store sales at Sears' namesake stores have continued to struggle, despite strong brand names in Craftsman, Kenmore and other products. Sears will report its fiscal fourth-quarter results Tuesday.

The first auto center franchise, in East Windsor, N.J., is targeting an April 1 opening, and Jackson said Sears has several other new centers in the works. "We're looking right now, initially, for 20," he said. "Once we define the model and get it to work perfectly, we think it could be hundreds.

"Sears has got a great auto business today," he said, declining to offer specific financial details. "This was a great opportunity to expand our model."

Franchisees must pay an initial fee of $30,000 for the franchise and $3,000 a month in brand license fees for the first year and $2,000 monthly thereafter. A service license fee of 2% of prior year revenue is charged after the first year, and franchisees contribute 3% of net revenue to a marketing fund to support national advertising and activities.

Several thousand auto dealerships in the U.S. have lost their franchises as auto makers have consolidated amid efforts to become profitable.

"There is a lot of very good talent in rejected Jeep, Chrysler, Dodge, Saturn, Pontiac and Saab dealers that already have the facilities in place, the manpower and years of experience to help Sears sell their products," said Bruce Coleman, president of the Coleman Auto Group dealership in East Windsor, N.J., and a partner in what will be the first Sears Auto Center franchise.

Coleman Auto Group will turn its former Chrysler and Jeep store into the Sears Auto Center, converting the former new-car showroom into a shop selling Sears auto accessories, rooftop carriers, battery chargers and other items.

Shares in Sears closed down 92 cents, or 0.97%, at $94.40. The stock has more than doubled in value in the past year.

-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145; maryellen.lloyd@dowjones.com

(Karen Talley and Nathan Becker contributed to this article.)
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