Franchise shape an ideal business opportunity for wellness industry: Experts view

The era of beauty and wellness services is swiftly heading towards organised technological upgradation, going towards generalisation, where, mid-ranged service providers are becoming a threat for luxury.

Slated to touch Rs 1 trillion mark by 2015 end, the overall industry is growing between 25-30 per cent, signalling to turn a significant game changer industry.

With approximately 3,900 franchise brands in India and roughly 1,050 franchise brands making foray into franchising every year, the world of franchising will definitely offer good Franchise Business opportunities in India and better prospects to numerous brands in 2015.

With growing aspirations of the consumers towards their favourite brands, franchising is coming forward as an ideal business proposition. Each franchisor has a different set of expectations from the franchisee, as, the wellness business has multiple services and formats with diverse criteria.

What franchisors want?

Worth mentioning here is the  VLCC Group that serves as an umbrella for many brands – VLCC Slimming, Beauty and Fitness, VLCC Personal Care, VLCC Natural Sciences, VLCC Institute of Beauty and Nutrition, VLCC Day Spa and VLCC Beauty Zone—and seeks professionals as franchise partners.

“The success of a service business lies in leadership and demonstrating excellent people skills. So as a leader a franchisee is expected to lead from front. While a growth-oriented attitude is important, we do not encourage people who look at this as merely an investment, but those who are passionate about the industry and about making a difference in people’s lives. Also, we have witnessed that efficiency and results are better where owners are running the franchisee units themselves,” said Sandeep Ahuja, Managing Director, VLCC Group.

Similarly, beauty industry veteran, Shahnaz Husain, who is also known as the pioneer of franchising in wellness industry, noted, “The franchisee has to instil confidence in us of having the dedication and the ability to maintain the expected standards and conform to the vision of a successful brand name. We have refresher courses and we provide enough product information on new products and innovations. Apart from financial stability, we ensure that the franchisee has a commitment to excellence and spirit of enterprise.”

Franchisee's requirement
Significantly, franchising business not only emphasises on the franchisor’s need, but, it also seeks and addresses franchisee’s requirements equally.

Other than investment and intent, the franchisor and franchisee must agree on the business format and contract credentials that include the franchise fees or royalty which varies from Rs 3 lakh, 10 lakh, 20 lakh and more, depending upon the brand’s popularity and quality standards.

It takes six months to one year for a salon to break even and there on another year to run profitably. Taking this into account, the minimum years of agreement vary from 3-5 years and are easily renewable based on the franchisor-franchisee relationship.

Opportunities on offer
The biggest advantage of getting into a franchise system in wellness space is that, you can effectively counter the biggest hurdle of the industry which is recruiting trained and skilled staff.

The parameters set-up by the franchisor help to maintain the service standards C K Kumaravel, Co-founder and CEO, Naturals salon, who is also known as the Franchise King in the wellness space.

“After setting up six branches, we realised we could not run any more salons on our own. We wanted to share our success and profit margin with other entrepreneurs and decided to expand by taking the franchising route,” shared Kumaravel.

At present, Naturals not only franchise rapidly in India, but it only offer its franchise to women entrepreneurs by con-investing with its franchisee in a 50-50 partnership, making them self reliant and empowered.

Voicing over the factors that altered the face of beauty business in India, Kumaravel said, “Media awareness, rise in easily disposable income of the youth leading to an increased spend on lifestyle and grooming, and lastly replicable business models, like Naturals, which have established prominence of franchising beauty salons as successful businesses.”

Meanwhile, The Scissor Man and leading franchisor Jawed Habib strongly believe that franchising makes more sense when franchisors want to duplicate and brand their concept, and also save an enormous investment in opening a company-owned centre.

“We help the franchisee in many ways like location identification, retail space availability through corporate tie-ups with supermarkets, rent negotiation, pre-launch marketing activities, interior designing support, assistance in loan procurement, manpower requirement, billing software, and tools and equipment/products selection. Moreover, we provide briefing on salon management, business know-how, staff management, product stock management, customer complaint handling and cash management,” admitted Habib.

Conclusion
According to KPMG India estimates, franchisees in the customer service area are expected to form around 55 per cent of total estimated Franchisees in 2017. Franchising in Health and Wellness sub-segment is expected to grow to almost 6 times the current penetration.

To learn tit-bits of franchising, join 13th International Franchise & Retail show, on 18-19 October, 2015 at Pragati Maidan, New Delhi.