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franchising aspects 2010-12-01

Think Before You Leap into Franchising Business

Franchising may be the best route if you want to expand quickly but know some quick facts of the business before taking that plunge.

By CEO, SCGA
Think Before You Leap into Franchising Business

Brands want to expand at the cost of smaller entrepreneurs who cannot afford to create their own brand. In recent times, its importance and popularity has increased and it has penetrated all business segments be it FMCG, Apparels, Pre School, Saloon or Footwear etc. Everyone is out to capitalize on their so called BRAND. If I open 10 stores in my name, I can also become a Franchise BRAND. But it is not that simple. BRAND is not just a name; it’s about what it does to its CUSTOMERS.

Entrepreneurs are investing heavily in expanding quickly. Accordingly, they may plan their first store in Month 1 and next 10 stores in next 10 months and so on or maybe much sooner depending on the urgency or capital strength.

You will make two quick observations while visiting Malls and Retailers:

  • Cost of Survival i.e achieving Break Even is difficult for many of them.
  • Hardly any Differentiation between two BRANDS in any segments.

While the small brands crumble under the weight of the above, big brands, on the other hand, enjoy the advantage of calling the shots. For e.g. Pantaloon Group, due to their sheer size can negotiate rental the way they want. Gitanjali is not paying any rental as they have profit share or revenue share plan with the real estate owners.  So, if you see, not all share the same advantage like the two.

I am a regular visitor of a Mall in Mumbai in western suburb. Unfortunately most businesses are not doing well here, not even the food court even though it is situated in one of the highly populated western suburbs. I have also seen many big brands closing down their shops here.  30 to 40 per cent mall space is still empty even after 5 years of its commencement which people are buying for office purpose. The situation is worse in Ahmedabad, which I visited a few times in the last few months. Here, Malls are either failing or are for sale, closed down or witnessing a change of use.

And what applies to Malls applies to retailers as well, whether in Malls or somewhere else. Unless your operating cost is low, customer acquisition is low cost and quick; no retailer or franchisor will survive. They will fall down far quicker. We have seen Subhiksha and Vishal stores fail. Though, the ownership model of the two may be different. But if the business model can’t survive then investor hardly matters. So, when franchising fails, there is failure of one big and many small companies.

You will observe that getting franchisee entrepreneurs is easier. This can be done with many excel sheet working and passion of entrepreneurs. But the biggest challenge lies in keeping them passionate and making them earn. Even IPL franchisee is finding it difficult to survive though we are cricket loving country of plus 100 bn and IPL as a game is a successful BRAND. This is the first challenge: Financial viability.

The second challenge is also worrisome. It has part bearing in the above. Viability largely relates to the BRAND customer is buying. I hardly see any clear distinction between two Indian Brands in any particular segment. Entrepreneurs are in so much hurry to expand that their drawing board work is half baked. Their focus on BRAND means logo, stationery, sign board, uniform of employees etc. etc. Nothing really impresses the CUSTOMER.

How many entrepreneurs have their customer touch points handy? How many of them have designed exactly what will happen to customers at each of the touch points? How many have elements of surprise for customers in their business processes? How many have powerful customer focused feedback system? How many proactively talk to customer about their experience and expectation from the brand and whether it was fulfilled or not?

We see lot many advertisement about franchise offers but hardly any story of franchise companies of their innovativeness or the way they treat their customers, employees. No stories worth telling and that mean COMMODATISED brands.

Take for example, McDonalds. Now, tell me, how many burger makers do we see around us???? NONE. And why so many sandwich and pizza makers but no burger makers?? Just two cafes: Baristas and CCDs? Even brands like Nestle and Amul is going steadily on their retail expansion plans.

Post IPO debacle of mid 90s, many merchant bankers have gone out of business. This overnight rush of expansion through franchising without proper system, business processes, feasibility, market research, man power, training will lead us to one more debacle. Here eco system of entrepreneurship will take a hit, both at franchise level and franchisee level.

Any franchise company MUST focus their energy on key and clear differentiators from customer perspectives. They MUST have stories of their brand to tell. They must have TALK OF THE TOWN offerings. The way they do their business should deserve media and customer attention. Starbucks have number of stories about the way they have treated their customers. They share it extensively. Author duo of book “The Experience Economy”, say, “Work is Theatre and Every Business a Stage.”

In the business of staging an experience, how many of you have put your best foot forward? High infrastructure cost is making companies go Franchise business route to expand. However, remember, if your franchisee is losing money then the day when even your company will start losing money is not far. The only way to survive is to create delightful, memorable, remarkable, talk of the town experience for the customers. How different are you with your nearest competitor and with all other players in your industry? Unless you have this answer, Do Not Enter The Business. Do you think business media will report about you (of course without you paying or buying them) ? Do you think your customers will refer you to their known circle of influence & why?

Answer these without any prejudice and then think of the next step for your business. Long live franchising model but not without answering the last two questions.

Comment
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ALOK PATWARI : 18, Aug 2010 at 09:09 AM
pls send me ur complete franchise proposal. C.A. Alok Patwari
Arti Gupta : 19, Aug 2010 at 01:19 AM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know. Arti
senthil kumar : 23, Aug 2010 at 10:16 PM
pls ffoward your franchise details
pradeep kumar : 25, Aug 2010 at 06:28 AM
hi i would like to know the details to start franchise what would be the requirments for this, plz let me know. thank you pradeep
vikas madaan : 25, Aug 2010 at 09:25 AM
i want to know about criteria for franchise and investmenet well i am interested in that.c u
robin : 27, Aug 2010 at 04:51 AM
hi i would like to know the details to start franchise what would be the requirements for this, Thanks Robin
kiritkumar shah. : 28, Aug 2010 at 04:33 AM
I am intresting for frenchises for the gujarar state, Let me know more about the produts.
A K Sajeev : 29, Aug 2010 at 05:04 AM
WOuld like to know about franchise opportunities
vinod sharma : 29, Aug 2010 at 07:45 AM
hi i would like to know the details to start franchise what would be the requirments for this, plz let me know. thanks vinod sharma
bhavesh : 31, Aug 2010 at 05:41 AM
please forward me franchisee details.
Malik : 31, Aug 2010 at 12:15 PM
Hello, can you please send me some more details about your company and item, Malik
kunal : 01, Sep 2010 at 03:04 AM
hi i would like to know the details to start franchise what would be the requirements for candy franchise
Rohit : 05, Sep 2010 at 10:53 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know.
kameshwar : 12, Sep 2010 at 06:10 AM
I want to know the details of franchise. pls contact.
Zubair : 18, Sep 2010 at 01:33 AM
Hi, Would like to know more details for franchising. Please contact.
Harpreet Singh : 18, Sep 2010 at 06:27 AM
hi i would like to know the details to start franchise what would be the requirments for this, plz let me know. thanks.... Harpreet
Harpreet Singh : 18, Sep 2010 at 06:42 AM
Hi I would like to open a franchise in delhi please send me the details like the area and the investment amount required.....thanks ..harpreet
harpreet singh : 19, Sep 2010 at 10:26 AM
Hi i would like to open a franchise outlet in delhi.....please mail the details regarding franchise thanks...
SHRAWAN : 20, Sep 2010 at 01:42 AM
SHAL BE GRATEFUL IF COMPLETE DETAILS OF THE REQUIREMENT ARE SENT AS TO SHOP AREA, INFRASTRUCTURE, INVESTMENT, BREAKEVEN, ROI, MANPOWER ETC.
AFZAL : 06, Nov 2010 at 12:30 AM
hi....i would like to know,how sucessfull chocolate business in malls & avg sales of sweet world in differnet malls of India through kiosk?
hardik shah : 22, Nov 2010 at 07:13 AM
Hi i am very much interested for the franchise kindly send me some more details
Dipti : 25, Nov 2010 at 05:32 AM
plz send me the required details of the franchise. thank you.
neeraj kumar : 25, Feb 2011 at 10:22 AM
Please send me full details of your perposal for franchise for jammu Rajouri and punch
Debashis Baral : 01, Apr 2011 at 06:49 AM
Dear Sir/Madam, I am a franchchiser of ANMOL biscute and PEPSI in 4 places of orissa, so i would like to take your franchise for the same areas as soon as possible . So kindly let me know how can i start it .
kanupriya : 04, Apr 2011 at 04:06 AM
pls send me details about the brand, average sae, ROI, invsstment for Udaipur in Rajasthan
mahesh : 23, Jun 2011 at 10:32 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know
vijay : 24, Aug 2011 at 02:14 PM
Hi I would like to know the detils of franchise what would be cost and area reuired plz tell me
heamanth : 24, Aug 2011 at 11:28 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know.
nishesh : 09, Nov 2011 at 10:19 PM
i am interested to know the details about the franchise.please let me k now the concerned person who i can be contacted for a detailed conversation.
vaibhav : 19, Feb 2012 at 02:32 AM
interested in this franchise plz mail me details \r\n
Veerendra : 22, Aug 2012 at 04:22 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know
Rakesh : 27, Sep 2013 at 12:37 PM
I want to take franchise in Jamshedpur, Jharkhand, India. Kindly provide me the details
Amrit : 23, Oct 2013 at 03:28 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know.
rakesh : 17, Jan 2014 at 06:19 PM
i am interested in franchise for jamshedpur,jharkhand.please provide me the details.
heamanth : 21, Jan 2014 at 12:26 PM
am interested in franchise for vijayawada please provide me the details.
arun kumar : 26, Jan 2014 at 11:55 AM
Dear Sir,pls provide the detailed information.Thanks
Nimesh Kachalia : 11, Feb 2014 at 12:46 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know. It would be for Mumbai.
shiv naresh soni : 14, Feb 2014 at 02:13 PM
pls send me ur complete franchise proposal
Umesh Karkera : 22, Feb 2014 at 12:18 PM
Please Forward me franchisee details.
SHARAT MALHOTRA : 24, Mar 2014 at 10:55 PM
Your franchise looks appealing to me and having recently returned from USA I feel that since I have been in the food and beverage industry for ever I will be happy to own one of these franchises. Pls send me details. My place of interest is MUMBAI
SHARAT MALHOTRA : 24, Mar 2014 at 10:58 PM
Your franchise looks appealing to me and having recently returned from USA I feel that since I have been in the food and beverage industry for ever I will be happy to own one of these franchises. Pls send me details. My place of interest is MUMBAI
Ashwajith rao m : 11, Jul 2014 at 08:18 PM
i am very much interested in chocolate business...
yatin jani : 18, Oct 2014 at 06:06 PM
Pls send me your completle frenchise deatail. thanks
ARNAB SADHUKHAN : 04, Oct 2014 at 03:40 PM
I want to know the franchisee details...I am interested.
Mrs.Rupasree Roy : 20, Oct 2014 at 06:05 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know. Regards Rupasree Roy
Mrs.Rupasree Roy : 20, Oct 2014 at 06:05 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know. Regards Rupasree Roy
kadhir samuna : 07, Aug 2015 at 10:24 AM
pls send me ur complete franchise proposal.
Anil kumar : 24, Sep 2015 at 03:54 PM
Hi iam intrested in this business plz send me complete details of franchise
virath choudhary : 15, Oct 2015 at 10:57 PM
Hello pls send me your complete franchise proposal.
anil kumar : 03, Dec 2015 at 12:08 PM
Hi I would like to know the details to start a franchise what would be the cost and the area required, please let me know.
mehul : 25, Dec 2015 at 02:45 PM
Hi I would like to know the details to start franchise, what would be the cost and the area required, please let me know
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