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Business tips 2015-11-17

What mistakes in franchising can lead to brand failure?

By Rashi Mathur, TFW Bureau Feature Writer

Clarks has been one of the most successful global franchising brands in footwear arena. Mark Darmanin, Vice President- Retail Development Asia Pacific, throws light on what all needs to be avoided in franchising.

1. Recruiting the wrong franchisees
If you are breaking into a new market the type of franchisees you could attract are entrepreneurs, mavericks and risk takers and although they may get your business off the ground they ultimately are not the type of people you want long term as they want to do things there way and follow their rules.

2. The lust for expansion
The lust for expansion by both the franchisor and franchisee could see the undoing of the brand. The franchisor could sign up the wrong franchisee, not being careful enough on new store or site openings, being over ambitious on targets, signing up to the wrong deals. The franchisee could also be over ambitious and sign up to new commitments and does not have a healthy cash flow or the infrastructure in place to support the expansion. Managing a business with 10 stores is different to managing a business with 2.

3. Not having regular financial updates
Having an open and trusting dialogue between both businesses is essential to understanding the financial health of the franchise business.

4. Not listening to the franchisee
There needs to be a balance between what any global brand would expect and what the local needs are telling you. Adjusting the range and assortment based on local customs, trends, festivals and weather.

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