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Dec, 01 2008

Exit the cubicle And into the boss`s shoes

After having spent a number of years as an employee in an organisation, a lot of entrepreneurs are taking a break from the daily drudgery of working for someone else to realise their business dreams. What is it that attracts these former executives and em

After having worked as a senior executive in a major corporation, Manoj Sharma wanted his own business and could not settle for anything lesser than the calibre his last company offered. While contemplating on these lines, he hit upon the idea of taking his former company`s franchise. In his last company, where he worked for several years, he understood the product, the competency, the target customer and the service pattern. He could not imagine any better franchise business than the one his former company had to offer.

Fostering entrepreneurship among employees

The concept of former employees/executives taking up a franchise might not be new, as many companies in the West boast of this concept. Having worked with each other for a longer time period, the company and the employee know each others` strengths and weaknesses and know how to handle things. While some companies offer a part of their shares to loyal employees, the concept of giving your company`s franchise to the employees who are in a retiring stage is a concept fast catching up in the Indian corporates.

While the employer and employee enjoy each other`s working patterns in day-to-day working, the same can be enjoyed even when your employee bids you adieu, on retiring.

Talking about Bata`s Market Extension Programme (MEP) under which the franchise is granted to the company`s employees, Mahesh Arora, Manager Operations - MEP, Bata India informs, “As a policy, we have a case scheme under which the employee has to resign from service and is given an opportunity to open a Bata outlet.”

In this format, the franchisee earns commission on the sales in the range of 6 - 7 per cent. The cost of the outlet, hiring of employees and day-to-day running are all borne by the franchisee. This service is exclusively available only for Bata employees.

Started in September this year, the company has seen good results with the MEP programme and is continuing with this strategy to open its franchise stores. The company plans to open around 180 stores in another three years` time and most of them will be franchise run.

Executives – the new franchisees

Besides Bata, there are companies like Safexpress, Ferns `n` Petals and Top Careers & You where franchisees have been found from amongst executives.

A case in point is of Rajeev Aggarwal. Aggarwal`s stint with Ferns `n` Petals (FNP) spans 10 years till date. For four years, he worked as an employee and has been a franchisee with FNP for the past six years. While working as an FNP employee, his inclination towards being his own boss was so strong that he started thinking about starting his own business one day. He came across the idea of taking the same company`s franchise for which he had worked and also realised that though starting his own business was a good move, he could do justice by taking his ex-company`s franchise. In the words of Aggarwal, “As an employee, I felt that if I took up a franchise of FNP, I would have a bright future.”

“I took up the franchise with the loan with which I intended to start my own business, but now, after completing the sixth year of my franchise outlet, I am a millionaire and the owner of two franchise outlets of FNP.”

“My experience within the company had already helped me polish my working style and the ups and downs of the business had added experience to my portfolio. So, I felt that it was better to take up a business in which one has some experience and can think of getting some moral support from your franchisors, as I really got during my start up phase.”

Another such executive is Cyril Roy who has been associated with Top Careers & You (TCY) as the Business Development Manager and Centre Coordinator and bought the franchise of his ex-company in August 2007.

Talking about it Roy says, “While working with TCY, I got an opportunity to look at the business model not only from outside, but from the inside as well and realised its lucrative opportunity.”

Talking about how he manages operations, Roy says, “While working, I had taken care of administration, marketing, liaison, student enquiry, etc. As I was already aware of how a centre is run and aware of the day-to-day functioning of the centre, my employer was rest assured of operations being carried out well while granting me a franchise.”

While working as an employee, Roy didn`t have much cash with him, so he partnered with one of his relatives to start his venture. At present, he has 125 students enrolled at the centre. He is planning to start another centre soon.

He adds, “If you start your own venture, you have to work really hard. I work 14 hours a day because it`s my centre and it has paid dividends. While working on your own you are independent, you are the show runner.”

Taking charge

Rajat Mathur, an engineer and an MBA by profession was working with i-flex as a Business Analyst before taking the franchise of Cookieman. Talking about leaving his high-profile job to start his own business, Mathur says, “Becoming the franchisee gave me the opportunity to become an entrepreneur, as I wanted to do something on my own. I really enjoy spending time at the store and that is the key factor in running this successfully – you need to be passionately involved in running the business.”

Adding further he says, “As a franchisee, you work hard and it`s a different kind of excitement - for sure, you can`t experience the same feeling in a standard nine-to-five job. Franchising is an option if anyone aspires to manage a small-scale business.”

The advantage of being a franchisee is that you associate with a well known brand – and get a tried and tested business model that has already worked. The brand name is well-recognised and managerial processes such as product pricing, recruitment and marketing are well organised and in place. Thus, the risk involved in starting your own business is reduced to a minimum.

Advising aspiring entrepreneurs, Mathur says, “Those who don`t want to get entangled in the risk involved and hurdles to start an enterprise from nil, owning a franchise of an already recognised and stable brand is highly advisable. You get the support of the `parent` organisation while giving yourself the freedom of running your own enterprise – it`s like the best of both worlds!”

By taking a franchise, you become the owner-cum-manager of the franchise. The operational responsibility of running the outlet rests completely on you. You need to run the franchise in the best possible manner; the more efficiently you operate, the better your return. So, to a large extent, the dream of being the owner of an enterprise is fulfilled.

Talking about the returns as a businessman, Mathur says, “The success of the business depends on the franchisee and apart from the royalty cost and additional fees charged for services such as advertising and so on, depending on the contract, the remaining amount is the profit of the franchisee. There is therefore a direct correlation between the effort you put in and the return you get.”

Creating franchisees of executives

With many companies targeting former executives to start their franchise, the quality of franchisees is improving day-by-day with more entrepreneurs, with a keen desire to have a business of their own, willing to partner with a brand.

Talking about the benefits a former executive comes with, Aditya Afzulpurkar, COO, Brainworks – A Kangaroo Kids Initiative says, “Typically, these executives use their experience in MNCs/large Indian corporates to innovate/ improve the franchise. While this does not imply that a franchisee from a different background cannot do the same, in this case, there is a greater probability of the executive bringing some learning from large marketing MNCs into our business, which can eventually only benefit us.”

Brainworks plans to expand rapidly through franchising and is targeting nearly 60 - 70 new franchises in 2009, all over India. Brainworks looks for candidates with a genuine interest in the education sector, who can share the company`s vision of providing quality preschool education and day-care services in India.

To this, Sanjay Coutinho, COO, Baskin Robbins says, “We will surely like to partner with people who have the necessary background and are looking to start their business.”

Most executives, typically, bring to the table several qualities that are useful as a franchisee. These are:

  • Exposure to best practices in various functional areas (marketing/finance/administration) in large corporates
  • Ability to understand the importance of systems/processes even in a small setup (based on his/her experience in the corporate world)

A lot of Indian companies actually prefer targeting former or current employees to start a franchise, as they consider these candidates more capable of building the model and sharing the passion of creating something.

Franchising gives boost

With the many lay-offs, a lot of bankers and IT professionals are finding themselves jobless, owing to the slowdown. Such trained professionals can look at starting a business on their own which will help them succeed. With a lot of employees quitting their corporate jobs to start off their own ventures, it gives a start to a fresh breed of entrepreneurs in the Indian franchise fraternity. These former executives, who have been freed off from corporates, aspire to achieve something and are at the peak with their entrepreneurial bent.

While starting your own venture, you can never be too sure of what will succeed and what won`t. In franchising, the trials and errors have already been made by the franchisor and you have a tried and tested model.

If someone can teach an aspiring entrepreneur what products to sell, how to get the right mix, how to market the product, attract customers and generate profits and hand hold him throughout the business, the business has a much better chance to succeed. And that`s exactly what franchising does.

Roy adds, “Being an entrepreneur is better than being an employee. In the first, you are working for somebody and making him succeed, while in the latter, you are doing things for yourself. You are fully responsible for your decisions.”

While being an employee, you have certain ideas but are afraid to voice your opinion or at times, those opinions might not be given any due being an employee. You get a chance to do things for yourself the way you like in your own venture.

Talking about the freedom one gets in a franchise business, Mathur says, “Franchisees have the authority to run the franchise in a specific area, including promoting the products, managing sales and expenditures, making decisions on hiring, etc.”

Franchising offers people a mix of management responsibility and business security.

Tapping the ideal aspirant

In normal times, it would have been tough to get such franchisees, but owing to the current market situation, as more and more Indians are looking at starting their own business, the profile of a franchise candidate has improved. Experts say, that looking at the market conditions, this is the best time to get the desired franchisees.

Increasing unemployment leads to an increase in franchising as these experienced and knowledgeable candidates take control of their life. Rising layoffs and fear of unemployment will lead these executives towards franchising. A franchisor can take advantage of the present situation as there is opportunity in this adverse situation, as they can get a large pool of candidates who can be ideal franchisees.

When the going gets tough, the tough get going

While working as an employee, there would be a time when stagnation will build in and you will ask where shall I go now, because you are playing a role in somebody else`s success. And you will feel the brunt when the heat is turned on.

With dismissals and pay offs in the corporate sector, it`s better to get control of your work life. But not every employee can start his own venture, as it takes guts and daring to do so. The decision to move out of his comfort level and start a venture of his own is quite hard for an employee. The temperament of an employee and an entrepreneur is different. Taking a franchise is a good proposition for a person who wants to start his own business.

But most salaried people are not open to change. You get a salary and are not responsible for each and everything involved in the running of the business. You get your cheque at the end of the month.

Franchising can help you can make the best of these worst times. However, certain points need to be borne in mind before donning the entrepreneurial hat. Having worked for somebody for years, it would take you some time to get into an entrepreneurial mould. You would be the master and would have to lead everything on your own, which is a challenge in itself.

Afzulpurkar advises, “I think the ability to adapt and be flexible is the key. In the corporate world, you have a whole support system readily available in terms of people with expertise in HR, legal, administration, finance, marketing, etc. As an entrepreneur, in the early stages, you often have to dabble in all these areas while you set up that whole support system yourself. Also, as an entrepreneur, your stakes are higher as you are typically dealing with your own money (not some one else`s money!)”

Winding up

India Inc. is moving towards the new kind of franchisees available, which is proof of the growing entrepreneurial spirit of Indians. There have been cases where a former employee has gone out of his way and offered to take up a franchise, with his employer being his franchisor. On the other hand, there are cases where a company on its own has rewarded the service of its employee by granting him franchise rights of its store. And there are others who have left high-potential job to get into business. It all marks a salute to the spirit of entrepreneurship which is sweeping the Indian terrain. In the future, the trend that is expected is of employees not getting the pink slip, but moving out with grace and starting their own business.

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