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Oct, 22 2009

The perfect partner

There are many franchise opportunities for people with small budgets. A low-cost franchise business is suitable for those who do not have a small budget but also someone who wants to learn new skills and choose the right niche. TFW spoke with small busine

Every company has its own yardstick for selecting an ideal franchisee. While some emphasise on experience others focus on the latter’s financial capacity to set up a franchisee outlet. The criteria differs and depends on the industry to which they belong. The point to be noted here is that in a high-investment franchise business money becomes an important criteria for selecting the right franchisee. In India, where most people do not have enough resources to invest in a business, the financial capability criteria cuts short a large number of aspiring franchisees to start a business. Therefore, the selection process  for the right franchisee in a high-investment business becomes limited. In other words, the availability of dedicated entrepreneurs which the franchisor is seeking, may not be an option.

However, this could be a one-sided story. When TFW spoke with some of the entrepreneurs who had invested in low-investment businesses, found that their beliefs differed. Some said that the selection process was easier. Amit Barmecha, Head, Franchise Development, Re-feel said, “For low-cost investments a huge numbers of candidates may turn up, which makes it easier to find a suitable franchisee.” However, he added, “Actually it depends upon the product; if the product is good, it does not matter whether the investment is high or low. In both the cases, you can attract franchisees.” Agreeing with Barmecha, Sunjey Aggarwal, CEO, D.Newage School of Design, said, “It is easier to choose a person for a low-cost franchise as that is an affordable option for many. Our target is the middle-class people who constitute a large part of society,”

On the contrary, Saurabh, Head, Business Development, Sykes and Ray Equities said, “I believe that for a low-cost business, searching for an ideal franchisee is a difficult task. People who have lesser money and opt for low-cost businesses are a perfect fit. Typically, these are working people who are either engaged in a small-time business or employed in an organisation. They are salaried people who want a certain fixed amount of money at the end of every month and would not like to take risk in any business. So, we get lesser response from this category,” he argued.

Some of the franchisors have equated the level of difficulty in finding a suitable franchisee, whether high-cost or low-cost business, as same. “Getting a franchisee for a low-cost or a high-cost business is equally difficult. Anyone who has money and is already running a business, would find that a franchisor of any category is not willing to give a franchisee to him,” said Pawan Gadia, Vice President, Ferns ‘n’ Petals.

Freshers preferred

With the economic slowdown already easing up, many aspiring businessmen would like to career in the franchising sector. Young entrepreneurs should take up a franchisee of a well known brand. Apart from the capital, everything else would be provided by the franchisor in helping him to run the outlet successfully. There is good news for aspiring entrepreneurs; many franchisors are willing to hire franchisees who are new.

“We do not give importance to an experienced person. We train our franchisees to sell  flowers and run the business successfully. We would aid them with trained manpower for a couple of months,” added Gadia.

“Fresher businesspersons will be best for our business. This model has a different dynamics; with the right training, it would be very easy to mould the new franchisees as per our norms,” said Barmecha.

Adding to it, Amitava Banerjee of Big Mo’s said, “New businessman will always bring in newer prospects. You can mould their ideas according to your own.”

Danny Devasi, Manager, Franchise Development of Kairali Health Spa said, “As freshers display a unique zeal and enthusiasm, they would be my first preference, 50 per cent of our franchisees are freshers.”

“I will take fresher businesspersons as my third option for an ideal franchisee of D.Newage School of Design. They are very enthusiastic and passionate to build their career,” said Aggarwal, adding, “They could be unaware about the ethics of business. But, as we belong to education industry, where ethics and responsibility are the prime concerns, we have to train and teach our new franchisees on these aspects of business too.”

Sykes and Ray give equal importance to a fresher or an experienced professional. “Both of them top my priority list. Risk and profit run parallel to each other and freshers are well aware about this fact, unlike salaried people who want to get salary at the end of every month,” said Saurabh.

Freshers vis-à-vis experienced

Like any other industry, franchising industry too gives importance to the experience of a person. Experience of a franchisee from the same background added value to his/her eligibility.

“In terms of D.Newage School of Design, first preference would be given to experienced teachers,” said Aggarwal, adding, “As they are into the education business, they have the knowledge to run the business. As far as making profit is concerned, we would teach them the manoeuvres,” he added.

“They would be among our top priorities. As they are experienced professionals, they have prior knowledge of trading and are aware about the working of the stock broking business,” said Saurabh.

Apart from businessmen who are new, Gadia of Ferns ‘n’ Petals, also prefers experienced persons. There are some franchisors who are not interested in taking experienced persons as franchisees. Like Gadia, Devasi has also given equal importance to freshers as well as experienced persons in that field. He said, “As they are already into business, it would be easier for them to have an edge over others.”

“Experienced persons like to run their business according to their own preferences and in their own way. It is not easy to mould them as per your concept and design,” said Barmecha. Adding to it, Banerjee said, “They have their own ideas. It is extremely difficult to make them see the way you look at it. They are not malleable.”

Housewives

Franchising could be a good option for housewives too, who neither have any source of income, nor good contacts or ample knowledge of manufacturing, marketing or store- designing.

“A housewife can open an outlet with us. If she has dynamic entrepreneurial skills, opening an outlet with Re-feel could be a good option for her,” said Barmecha. “Managing a house is not an easy task. Housewives have all the ingredients of a good manager. But, they need help. So, I would take them as my third option while selecting an ideal franchisee,” said Banerjee.

However, according to Saurabh, very few housewives, especially in India, aspire to become businesswomen. “Very few Indian women are likely to do business and put their efforts in to it. This would be their second income, just to keep themselves occupied, and it would not be done with any kind of aspirations or commitments.”

Dnads and Ferns ‘n’ Petals have also denied giving any preference to housewives. “It requires a lot of hard work and dedication towards business. But, as housewives have other family responsibilities, it could become very difficult for them,” said Aggarwal.

Pawan said ‘no’ to housewives. He argues, “This is a business in which you can make huge profits. It requires involvement of a serious person, who could be serious towards the business. So, we do not consider housewives as ideal franchisee for our business.”

Retired personnel

If an aspiring franchisee is a retired person from the banking sector, Sykes and Ray Equities welcomes him. “There are a lot of bank employees who have taken voluntary retirement at the age of 45 and have joined us and other brokerages too,” said Saurabh. Excluding these people, other retired personnel from service sector, who could be categorised under the age of 55-60 years, are not in the preference list of Sykes and Ray. “If you are in the age of retirement, i.e. between 55-60 years, you are not looking at stress. You are looking at something easy, simple and nothing to take back home. But, as our business requires a lot of risk and stress, we do not like to give our franchise to a retired person,” said Saurabh.

Adding to it, Barmecha said, “As retired persons cannot put in the same efforts as the younger generation, it would be a little tougher for them.”

Retired persons can also make money after the age of 55 by taking a franchise in food and beverages sector. They are among the top preferences of Big Mo’s. Banerjee, Aggarwal and Devasi have kept retired persons in the second position.

Apart from new businessmen, Banerjee shows interest towards retired persons from the service sector. “Retired persons from the service sector would be my second choice. They are more dedicated and give their best shot,” said Banerjee. “Although some of them may have their own ideas and might be difficult to handle, but once you convince them they are open to your ideas,” he asserted.

Even Dnads has appreciated the value of retired persons. It has also kept them in second position in terms of preference for an ideal franchisee. “Retired persons from service background could be a good option. As experience counts, they could be good managers. But as far as other aspects of business like execution and marketing are concerned, we would like to go for younger people,” said Aggarwal.

“The retired have ample time and can pool in ample amount for such a unique venture,” added Devasi.

Ignoring other factors, there are some franchisors who are ready to offer their franchise to anyone from the above categories if she/he has the right attitude. “Most importantly, we want to ensure that our franchisees are in sync with the systems of hygiene and quality control that were established with a lot of effort and pain,” said Vrinda Rajgarhia of Sweet World.

Talking about the selection process of an ideal franchisee for her company, she added, “We would go for a prospective franchisee who is committed, as commitment and drive would be the most important criterion for us. We can teach someone the operational part of running a candy business but if the person has not got the right attitude it would not be possible to teach them.”

Other requirements

Apart from these, there are some business skills that are sought after by every franchisor in selecting a franchisee for his company. “I would be observing his enthusiasm, which is the most important component, to become a successful professional,” said Banerjee.

More than anything else it is important as to how much time you can invest in the business. If the franchisee is taking the outlet for earning profits, then obviously he will spend his time in business, and this would give him growth, but, if the person is taking a franchise and hiring a manager to run the same, then the business can become stagnant after two years,” said Gadia.

Saurabh added, “Other criteria for an ideal franchisee are, he/she should be at least 12th pass, with a decent financial background and with basic knowledge of market and industry.” Barmecha added, “A person should at least be a graduate, having ample money to invest and with good business skills.”

The contender should have the basic skills of a successful entrepreneur, like goal-driven, customer-focused, market strategist, team leader, techno-savvy, cheerful, persistent and resolute.

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