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Franchise trends 2018-03-26

Uncomplicated and straightforward models in franchising paves faster growth for start ups

Today many start-ups are moving towards adopting uncomplicated and straightforward models to make things easier for their franchisees. Let’s know more about it.

By Feature Writer
Uncomplicated and straightforward models in franchising paves faster growth for start ups

Franchising being the top choice by brands to expand in India has given immense success to both franchisors and franchisees. These days, many business models like Pay as you Grow franchise business model is getting quite popular.  Many start-ups are now opting for easier, uncomplicated and simple models to make things better for their franchisees. E- Waste is another stream where an entrepreneur can start his own waste collection centre in no hassles. We tell you how the start ups are benefitting their partners with easiest of rules, great business models and what paybacks are attached to it.

So, you must have heard of Pay as you go business model in the web terminology but now Pay as you Grow is a model that is fast flourishing in the franchise arena too. In a web-based business, the pay as you go model is usually connected with a software as a service provider. This model bills for outsourced services by a transaction, time in use, peak period, or some other subscription metric and is delivered over the Internet. Similarly, in franchising under Pay as you grow model, payments are divided only when the milestones are achieved by the franchisee. In most cases, the company giving franchise rights charges a considerable amount of money as an upfront payment from the franchisee even before the start of operations (initial capex), which proves to be a deterrent for many promising entrepreneurs.

Laundry brand, DhobiLite having more than 6 years of experience in laundry sector offers entry ticket to the franchisees with a very small fee where subsequent payouts are based on Pay-as-you-grow model. The brand has been able to bring gross profit margin at 38% which gives enough room of profitability for franchisee and franchisor. Small entry ticket and a low royalty fee of 8% gives the franchise owner a flexibility to utilize the funds for marketing which helps in scaling the business faster. In DhobiLite’s business model even a Master Franchise (franchise serving a region of about 15 km radius) can start operations by investing 25% of the capex and further investments are made from the revenue generated.

Other perks for franchisees

  • Low entry costs: Pay-as-you-grow franchise model attracts franchisees and it is an excellent way to promote new entrepreneurs.
  • Less licensing fees: If we talk of DhobiLite, the licensing fee is very less and the main focus is on finding individuals who can grow fast via this model and the company.
  • No royalty fee: Abhishek Kumar, Co-Founder, DhobiLite says: ‘We charge a royalty fee but if we look at it from a holistic point of view, effectively we are charging nothing because by using our software a laundry can increase its efficiency by 22%, therefore 8% royalty fee is a portion of improved efficiency.’

Franchising in E-waste

Started in 2016, e-Waste company, NAMO E-Waste is also following a simple franchise model. Namo E-Waste collects all kind of electronic waste and recycles them into different usable products. The company has presence in 12 states in India and plans to expand in 20 other states and union territories soon. Through these base points, Namo has been able to reach out to 70% of the e-waste generated in the country. E-Waste is one of the fastest growing waste streams. It provides ample opportunity to Namo franchisees to establish in the market through franchises. Namo E-waste offers Recycling Business Opportunity to run own waste collection business.

If someone is looking for a Recycling Business Opportunity or to run own waste collection business, he has to pay a yearly subscription fee of Rs 7 Lakh. This is an initial franchise fee which grants the license to run a business under Namo e-Waste Management. The renewal fee would be 20% of the initial investment per year. Namo currently operates from Delhi and has entered franchise business with three new franchisees in Nasik, Raipur and Bangalore. These franchisees would be responsible for collecting e-waste from their cities and then dispense them to the main plant in Delhi.

The company is aiming to spread its wings in the Indian region by offering training and expertise to informal traders.  The company firmly believes that franchise model in E-waste management requires low investment and gives good returns. Due to the rapid rise in the rate of e-waste generation the e-waste market is booming.   Akshay Jain- Founder, Namo E-waste Pvt. Ltd tells us: ‘We are making our business model more flexible so that every entrepreneur can associate with us easily and work towards the proper e-waste management in our country. We aim to provide green alternatives for today's electronic assets management dilemma and promote policy changes that benefit the environment, health, and economy through safe disposal and recycling of electronic goods. As a debut, we have opened three franchise outlets and plan to open at least 50 in next 5 years.’

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