franchising aspects Nov, 10 2010

Three Stages To Franchise Success

Franchising authenticates rapid and nationwide expansion of a business. Building a successful franchise company needs patience and perseverance. Franchise experts have identified three stages to develop a successful franchise business. Let us find out...

By Ramanjit Kaur
Feature Writer
Three Stages To Franchise Success

Franchising acts as a catalyst for the rapid development of a business. It has been almost a decade that Indian entrepreneurs via franchise route are not only expanding its brand’s presence and catering to the rising demands of the customers but also gaining recognition as a world-class organisation. The increasing acceptance and high success rate of this easily replicable business model makes it the most preferred choice for business expansion.

If you own a successful business, and considering expansion, franchising is the most viable option for you.

Franchisability factor

Before zeroing down on the franchise business model, an entrepreneur needs to check whether his business concept is franchisable or not. Here are the essential parameters that help in deciding the franchisability of a business:

  • Credibility: The credibility of a business is utmost important while opting the franchise model, which is based on proven track record and business philosophy. As Shahnaz Husain, Founder and CMD, The Shahnaz Husain Group says, “If the brand is well established and well positioned in the market, the franchisee can also be sure of the franchisor’s business.”
  • Uniqueness: A unique and refreshing business concept is always an added advantage as there are not many players in the market.
  • Simplicity: Your business values and operating procedures must be easily replicable. It will aid the franchisor to make his franchisees learn the same tactics and techniques in a limited period of time to run a franchise business successfully.
  • Profitability: Last but not the least, the most important aspect of a business is its profitability factor. It is the success of the business that keeps the franchisees with a franchising company for a longer time span.

Three stages of franchising

Having analysed the franchisability factor of a business the entrepreneur takes the business through three stages before finally establishing it as a successful franchise business. These three stages are: 

  • Getting started: Being new to franchising, the franchise owner needs to structure a business plan, prepare legal documents like Franchise Agreement, Operation Manuals and so on, develop and implement franchise strategies. He can take the help of a franchise consultant or franchise attorney and decide the franchise fee, royalty, legalities. The demands and expectations of the customers also need to be analysed. Franchising helps you penetrate into the various markets with support of local franchisees that are the store-house of local knowledge. In short, before getting started with a franchise concept, you need to do extensive pre-planning and homework before finalising.
  • Upgrading from brand to a corporate: Keep on up grading and innovating new products and services to remain ahead of your competitors. Keep your franchisees informed and updated about the recent developments in the industry. “Franchisees are the source of revenue to his/ her franchisors”, says Dawn Stallwood, Managing Director, Danetree Associates and Consultant Solicitor, Legal Services Consulting, UK, so the franchisors’ success depends upon the franchisees’ success. Franchisors need to take care of the franchisees goodwill by offering them every possible support and back-up. These are the pivotal duties of a franchisor for growing a business into a successful brand.
  • Building world class organisation: After successfullyestablishing the brand in India every entrepreneur aspires to build up a world class organisation. Like these days, franchising companies considers the IPO (Initial Public Offering) road to strengthen the market position of the brand, corporate purposes, expand the franchise business in new territories, clear present debts and improve debts to equity ratio, invest on marketing, advertising, training, etc of their franchisee business and provide exit funds to PE investors who have stakes in the franchisee's business. Thus, to achieve the status of a world-class organisation, a franchising company needs to stimulate creative thinking, encourage dialogue and introspection and promote understanding and new proceedings.

Thus, franchising being the most successful model of business expansion also needs extensive market research and deep understanding of business development. The three stages of franchising opportunities if followed strictly will promote good revenue growth.

Related: India Climbs The Luxury Ladder

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