franchising aspects Nov, 04 2009

Wholesale brand building

Franchisors may have a tough time expanding their business through the franchise route. They have to be cautious while selecting franchisees as the reputation of their business may crumple due to careless franchisees. The best available option for a franc

By Abha Garyali
Sub Editor
Wholesale brand building

Many established franchisors appoint an Area Developer (AD) in a particular territory to make it easier for them to expand into the area. Area Developer is a person responsible for expanding the business of the franchisor in the assigned territory. Some of his duties include:

  • Recruiting new franchisees
  • Assisting the franchise owners in finding locations
  • Negotiating leases for the locations
  • Supporting the franchise owners with construction and opening of the outlet
  • Providing franchise owners with ongoing operational and marketing support and ensuring that franchisees are in compliance with franchisor rules and policies.

Area development is quite similar to multi-unit franchising. The only difference is that this type of franchising involves a greater number of units encompassing a larger territorial area which gives them better opportunities for raising brand awareness in the area.Informing about the difference Subhrabaran Chakraborty, Field Consultant, Eastern India, Subway Systems said, “An area developer is always working for the growth of the brand in terms of exploring the entire market but the multi-units owner may not do so always. Multi-unit owners will concentrate more towards their own profitability.”

The area developer has the responsibility of opening a pre-determined number of outlets in a certain territory. He enjoys a lot of benefits along with the responsibilities. Once the franchise is operational and running in the territory, the franchise fees and royalties may be negotiated further for the area developer.

Why opt for an AD?

Many of you must be wondering why opt for an area developer when it is easy to search for suitable franchisees oneself. Localised support, faster response time, creating new brand awareness and cracking tough markets are a few reasons due to which franchise organisations approach area developers to help expand their businesses. Chakraborty explained, “Area developer is a person who is much more familiar and educated about that particular area for which he is working. It is not always possible for the franchisor to know every corner of the world and develop their business there. Appointing an area developer who belongs to a particular area can provide the franchisor with better conditions to develop that particular market.”  Moreover as the area developers are usually required to put some of their own money into the franchise therefore they have a vested interest in creating successful units under them and try their best to expand the franchisor’s business successfully. Many big brands opt for area developers as the way of expansion. Subway is one of the most popular categories in India.

Training for AD

Area developer enjoys a lot of power as well as benefits but also has to undergo rigorous training as compared to a franchisee.  Chakraborty said, “In our system it is mandatory that an area developer has to complete a 15 days training program at the head quarters.  Besides this there are other training programs which are specially made for the area developers.” He added, “In addition if required the company also appoints a mentor for the area developer to guide till he gets equipped with all the necessary training and tools.”

Area developer has to open a number of franchise units in the given area. However if he fails to open the pre-determined number of outlets, the franchisor has the right to take away the territory from him. Therefore the franchisor enjoys a win-win situation by appointing an area developer as mostly all the pressure for expansion rests on an area developer.

Related: Bitter failure can lead to sweet success

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