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Mar, 01 2008

Same stores hallmark of franchising

In today`s world of tough competition a company has to devise effective ways to stimulate sales and boost visibility of the brand. There are several ways of doing this. One of them is through franchising. Opening of identical stores is another to achieve

Retail brands are an important ingredient of everyday life. They have become an integral and unavoidable component of our day-to-day lives. Earlier the retail set-up was unorganised and mostly companies operated through multi-branded outlets. Gradually as the market started getting organised, companies started preferring opening exclusive stores for their brands. Subsequently, having gained prominence they wanted to expand their presence across the nation. At this juncture, franchising came into being. The concept of opening identical stores is a set format for franchising as consistency is of primary importance in a franchise business. Likewise, uniformity is a key factor in the franchise recipe for success. Today, any product whether it falls in the category of FMCG, apparels, shoes, F&B, consumer durables, ice creams, mobiles or flower dealers, goes for identical stores as its modus operandi.

Trade Dress

The ambience of an outlet is an important element to be kept in mind, as after the quality of the product it is the shopping experience that brings the customers back. Also, identical stores improve their visibility to a great extent. A customer can find a store that has a distinctive look more effortlessly than a store of usual facade, even while he or she is on the move. The acquaintance we have with these stores extends well beyond their names to include the symbols, logos, designs, interiors, outlook, colours, textures, décor and so forth which make up the `look` and `feel` of the outlets. This is referred to as Trade Dress. It points to a combination of measurable details on both the outside and the inside of the retail store which tells the customer, often in subliminal ways, that he or she is in familiar territory and can expect goods and services of a quality consistent with that he or she has received on prior occasions. Trade dress gives the customer a feeling of familiarity when he or she sees the store at a distance and when the store is entered. Sanjay Coutinho, COO South Asia, Baskin Robbins opines, “Most of the brands, which are recognised Internationally, have adopted the concept of Identical Stores so to appeal to the masses and give a common experience to their customers.”

An individual`s understanding should be identical between stores. Conversely, trade dress has no formal registration requirements and receives legal protection simply by being distinctive and recognisable.

Things affecting appearance

The look of the store comprises of the right balance of colour, lighting, furniture, music, fixtures, display and other minute details. All these things complete the look of the store. To begin with, colour of a store reflects the essence of a brand. Bright and vibrant colours appeal more to customers. The floorings may include marbles, tiles, wooden floorings and vinyl floorings and in addition to this a particular carpet colour may also be used. Furniture is the most important of essential equipments in any store. This may include a particular style of chairs and tables with upholstery for the same, stands, shelves and racks. Partitions may also be similar in some cases depending on the space available. Accessories give finishing touches to the store hence they too are imperative. Uniforms of the employees bring about an element of uniformity and professionalism, which puts across a fine impact on the mind of customers. Lighting has the ability to attract customers` attention and direct them to the products. At the entrances of stores, in trial rooms or on shelves, effective lighting can spur the customers` mind into buying. Trial rooms form an essential element of apparel stores. Attractive trial rooms also cater to a brand`s image. In restaurants, seating arrangement is also done very purposefully to create a suitable milieu. For jewellery stores, mirrors are given significance, as when people try ornaments they need to perceive whether it suits them or not. All these are kept similar in all the outlets to create the ambience people recognise the brand for.

Setting up of store

The opening up of the first store by any brand is a task in itself. It requires hard core effort to finalise the logo of the brand, the slogan, the colour scheme, the flooring, the designing, planning, furniture and what not.Once a single store comes into existence, it becomes easier to set up other stores on similar lines. Elaborating on the constituents of a store, Ashish Kirpal Pandit, CEO, Fortis Health World Ltd says, “Planning, detailing, documenting, strict implementation and standardisation are the key constituents in setting up a store.” The concept of identical stores has a lot of significance in case of franchising because the franchisee not only gets the right to use the brand name but also the entire set up from finding the right location to setting up of the store and from training of the staff to the strategy of successfully running the store. Authenticating the significance of identical stores in franchising Robby

Gulri, Area Development Manager, Subway says, “It is easy to set up standardised stores as things are standardised. Size does not matter in this case as only the quantities go up. The equipment pretty much stays the same in a bigger or smaller location.”

Models for store designing

There are mainly two options for designing the store. The first one is designing the outlet by the owner while the second is appointing a design firm for carrying out the work. When the company decides to carry out the designing itself it will decide on everything and create their first store. Keeping in mind the fact that they would want similar  outlets to be opened by their franchisees they may appoint local dealers across the country to make available exactly the same equipments for all the stores. An example would be Subway and Ferns n Petals who have their own in house teams for designing all of their outlets. If the company appoints a design firm the work gets easier for them. They may discuss their requirements with the designers and leave the rest up to them. Then when the drafts are prepared by the designers and approved by the clients, the remaining is for the designing firm to handle. They then give the contract to the designers for designing the same outlets for all of their franchisees. Fortis Health World had their first designs made from a reputed firm and later they carried out the designing on their own. .Nagaraja R, Director-design, Four Dimensions India Pvt. Ltd says, “Designing and detailing of the store should be done in flexible and modular way. Production of the fixtures and fittings should be made easier by giving attention to all the details. This helps the installation team which fits the fixtures at the site. All the fixtures can be centrally manufactured or can be decentralized focusing on three or four places where it is geographically supportive.” The design firms work in collaboration with the franchisor and the franchisee to maintain uniformity of colours, fonts and designs that consolidate the identity of the franchise.

Franchisor, the designer

The franchisor is the one who decides on the design and look of the outlet. Some franchisors may impose design or appearance standards to ensure customers receive the same quality of goods and services in each outlet. Some require periodic renovations or seasonal design changes. Franchisees have to work within the parameters of the system set by the franchisors in case they want to make any changes. Sometimes the degree of uniformity is exceedingly strict which means everything has to be in exactly the same place in every store. With relevance to the exteriors and interiors of the franchise store, the franchisor may call for compliance with its projected preferences and standard of quality for uniformity of the brand image but the franchisor is outlawed from forcing the franchisee to purchase from a selected dealer.

Maintaining identical look

Once the patent store is made, all other stores are replicated on the same facsimile and draft. It does call for endeavour to maintain the aspect of similarity for all the stores be it within the country or in the overseas market. All the companies work on their own patterns for designing.

For instance, Subway does not own any stores. All its locations are franchised. The process of building is identical for all the outlets. Its in-house design team at its headquarters in Milford designs the layouts for the stores after taking inputs from the local development agents. All equipment and furniture is made available to franchisees from Subway`s approved vendors. There is a coordinator in their regional office who coordinates with vendors on franchisees` behalf and makes sure the orders are processed properly and goods are shipped in time. The franchise fee does not include the cost of store designing and the amount varies from location to location.

Ferns n Petals have an in house team too that personally takes care of all aspects of opening identical outlets. The expert team provides a complete design for the interiors. Apart from this the equipments and accessories and the facility of getting them are taken care by the team at the head office. And the cost of the interior varies from Rs 650 to Rs700 per sq. ft. Apart from this the cost of the first merchandise, which includes flowers as well as the accessories, varies from Rs one lakh to 1.5 lakh. The final touch is then given with the set-up of music system, A/C and computer system which may cost around Rs 1 lakh.

For the second type, we can take the example of Fortis. A renowned firm has created the initial design for Fortis Health World Limited (FHWL).A panel of architects does the subsequent alterations based on location. The franchisee is not at all involved in the setup. It is setup by FHWL and the final keys are handed over to him. The total project cost is shared with the franchisee, which includes store setup, stock and other miscellaneous expenses. Yum, on the other hand, approves the design for each store through an in house team. The company has on board well established architects and designers who are periodically updated with the latest design standards. They work in coordination with various service consultants.

A Baskin Robbins store is opened after a rigorous screening process of the site and the franchisee. The project work begins at the site, which normally takes 20-25 days to complete. No design firm has been hired to design their outlets. They have an In House Projects Team, which monitors the project work nationally. They also have approved vendors and contractors to carry out project work, which ensures that all the Baskin Robbins stores follow the same interiors and equipments. The appointed vendors of machinery supply all the equipments directly to the franchisee. Baskin Robbins ensures that the machinery delivered is as per standards and is delivered within the required time frame.

Role of identical stores

Brand positioning is one of the main concerns for the franchisors. For this reason companies wish to have identical stores for their brand because it is an easier way to popularise the brand across the country. As people know of the brand and its patent it helps to increase the market for the product in that particular area. So it acts as the best marketing tool for the companies at the cost borne by the franchisees. Vikaas Gutgutia, MD, Ferns n Petals, says,“Identical franchise stores are the best advertising arms of any company. Looking at the store and recognising the company is the best a company can expect.” When people find a brand or outlet seen before it is easier for them to relate to it. Thus another benefit is instant brand recognition.

Vinod Mahboobani,Vice President Business Development, Yum! Restaurants India, highlighting the point says, “Similar stores helps to stick to a defined Capex, standard guidelines can quickly be cascaded to different franchisee partners, better rates can be negotiated through standardised materials and equipments and in case of relocation of the store, the standard equipment and furniture etc. can be easily recycled.” Having identical stores brings about homogeny and stability. Gulri opines, “In a franchise concept we want to stress consistency as we want to give the customer the same experience every time. Also, identical stores help build brand identity and image.”

Agreeing on the view Gutgutia further adds,“Identical outlets has really helped Ferns n Petals to grow as with more number of identical stores the quality is maintained, there is more visibility of the brand and a client can get the same quality of flowers anywhere across India or rather say across the globe.” Convenience to the customer holds great significance. Opening of identical stores conveys their message clearly to the customers and facilitates the building of the brand amongst the masses. According to Pandit, “Currently the opening up of `Identical franchise stores` ensures that there is brand salience across locations and stores and the customer is agnostic to whether he is being served by a franchisee or company owned store. This also ensures that highest quality standards are maintained all across as now these stores portray a single face of the company.” Opening of identical stores at maximum number of places augments brand awareness amongst the populace, hence bringing more people to the stores. Now that people have recognised the brand in addition to their previous knowledge of the trademark, it may persuade them to buy the product. This is referred to as impulse buying and brings an enhancement to the sales of the product.

Gutgutia articulates, “The concept of building of identical stores is achieved by inheriting the international trends. It has been achieved to give service to all our clients from all over the country by being physically present where the customer can just drop in and pick up the flowers of his or her own choice.”

The darker side

Though the concept has many advantages but there are some disadvantages too. People get so much used to seeing a particular brand in a particular way that if a franchisor designs his store differently people may not be able to relate to it and start thinking of it as an imitated product. In this case, the franchisor will be at a great loss. Also having too many identical stores may bring in the element of monotony for the customers, who might wish that the company did something new and exciting for attracting buyers. Pandit disagrees here and says, “It does not bring in monotony but ensures brand loyalty and a certain degree of a comfort feeling to a customer who has shopped at similar stores before.” Gutgutia further emphasising on the same says, “I don`t think there is any disadvantage of opening identical outlets to a company as long as the product is maintained.” Whereas Mahboobani says, “As the trade area is characteristic of a typical customer profile, having identical brand look does not fit with different trade areas. Hence there is a need to define two or three variations to cater from a city centre to suburban situation. Identical stores can get outdated quickly so it is important to be ahead of the competition and be futuristic by setting up design trends rather than following them.” Further Coutinho opines, “While some people may argue that identical stores bring in a lot of monotony, but the fact remains that every customer wants to get a similar feeling whenever he is visits a store of the same brand.”

As the franchisee belongs to a string process with a well-known and reputable brand, customers will have confidence and reliance in its business even if the store is new. This is one of the greatest achievements of having an identical franchise store, which is beneficial for the franchisor, franchisee and the customer. In today`s fast moving world when people are hard pressed for time and want the best buy for their money in the shortest possible time, identical stores are the best option available provided the franchisor is imaginative enough to keep up with changing times and trends.

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