Global franchising 2021-04-26

What are the Best Practices in the Global Franchise Industry

In an exclusive conversation with Franchise India, Albert Kong, CEO, Asiawide Franchise Consultants, shares his insights on best practices in the global franchise industry and the impact of Covid-19 on franchising.

By Content Writer
What are the Best Practices in the Global Franchise Industry

Franchising has been popular nationwide in various sectors like education, lifestyle clothing, and technology. But globally, franchising has witnessed ups and downs. There are various factors on how global franchising is successful.

In an exclusive conversation with Franchise India, Albert Kong, CEO, Asiawide Franchise Consultants, shares his insights on best practices in the global franchise industry and the impact of Covid-19 on franchising.

Current Scenario of Franchising in Singapore

The economic impact on Singapore has been deeper with global shocks. The ministry of trade and industry is downgraded. Outward-oriented sectors like manufacturing, wholesale, and transportation are affected by weak external demand and supply chain disruption. Businesses that could not operate offsite have been adversely affected due to the lockdown. Based on the estimates, the unemployment rate has grown to 3.3% in March 2020.

After the lockdown, the government in Singapore has helped micro, small and medium businesses that need to digitize, upgrade or use technology. It has also brought in the Smart Nation Initiative, where a foreign minister is appointed for the use of technology throughout the country.

Kong is of the opinion that this change from offline to online will not go away. In fact, they will co-exist. There are changes in the way consumer buys. Hyperlocal retail in some products is growing more than others.

There are two things around which the changes surround, Convenience and Experience. The interface comes after these two factors. Business formats that were primitive and could not meet these two factors would not survive. New formats are going to come. The retail industry will stay but the way it is going to be will change significantly.

Basics of Franchising

According to Kong, what is challenging for businesses during these times is cash flow and staying afloat. The government of Singapore is giving all possible support to save jobs and support businesses. It is supporting the businesses with Cash flow, Costs, and Credit.

The foundation for building a versatile franchise that can last and thrive depends on the Ps and C’s of marketing.

The P’s of marketing are:

Product/service - The product or service should consider PEST in a region i.e. political environment, economic environment, social environment, and technology.

Price - The price has to be concerning the target market.

Place - The place has to be right according to the product.

Promotion or marketing - There has to be a proper plan to communicate the product or service to the target market.

Packaging - The packaging has to be with the consumer’s requirement. It is the immediate impression of the brand to the consumer.

People - The people here include the spokesperson, stakeholders, etc. they have to be responsive and innovative.

Personnel - Another p is the personnel, the people who work for the company who constantly think of innovation and are adaptive.

The C’s of marketing are:

Concept - This means considering the brand track record, the USP of the brand, and checking if it’s replicable and has a long-term future.

Consumers - Considering how big the consumer base is and what is its spending power. Is the base replicable?

Cash – Is the venture profitable?

Country’s condition - Again this means checking with the PEST compatibility with the other country.

Contract - This means considering factors like protection of IP, degree of government control, etc.

Communication - Communicating the brand in different languages in different countries is an important aspect.

Common Mistakes in Franchising

The common mistakes while undertaking franchising are:

- Putting profits before passion

- Underestimating costs

- Inadequate research

- Not speaking to existing franchisees

- Expecting complete autonomy

- Failure to seek appropriate legal advise

- Trying to do more before the initial steps are settled

Kong highlights that adaptation is the key to an ever-changing mostly uncontrollable and frequently incomprehensible environment.

International Franchise Consultant

The role of international franchise consultants is to bring the brands overseas. There are a lot of credible consultants globally who have contributed to the success of franchising.

When a consultant understands the thorough theory that he is in, he will be able to understand what kind of opportunities can be exploited. The consultant also has to take care of choosing a good partner. If he is after commission, he will not be able to set franchise and the reputation of the brand goes down.

For a consultant, the quality of people in the network and a better track record works well. He also has to keep in mind, that the franchisee comes to the brand and the brand never goes to them. This works best for everyone. Franchising is a selection and not a sales function. It is very important to invest time in building systems and capabilities. There has to be a compelling reason why someone would invest in you versus putting in the time to push someone to invest in opportunities.

Future of Franchising

All savvy businessmen will find an opportunity even in a crisis. For example, dark kitchens have come up due to the pandemic and are doing very well. It allows low rent and still makes money. Things relating to cleanliness, safety, essentials have good scope. Kong suggests that the business models are now going to concentrate on simplicity, speed, immortality factor, digitization, trust, green consumerism, and globalization.

However, in India, there is a larger scope since it is an insecure society with a compulsion to do something. Indian micro-businesses are looking for opportunities in adversity. There are a lot of categories that have a low impact or positive impact of Covid on them.

 

Edited By: Vaishnavi Gupta

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