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Apr, 19 2010

Franchisee Satisfaction Index

Franchisee is the end customer for a franchisor and his success as well as satisfaction is a significant enabler for the success of a franchise system. The franchising world surveys education franchisees over the franchisee satisfaction Index to explore

Franchisee is the end customer for a franchisor and his success as well as satisfaction is a significant enabler for the success of a franchise system. The franchising world surveys education franchisees over the franchisee satisfaction Index to explore

EDUCATION remains the business of the nobles and an investment by the wise.  Education concepts have mass appeal and diverse acceptability which enables easy replication. Education, a moderate investment franchise opportunity remains the most successful and highly franchised sector. Education franchising has over the past decade seen many local education entrepreneurs evolving and emerging into large education brands across education categories

Education Franchisee Satisfaction Index (FSI) study independently and impartially intends to celibate the satisfaction levels of education franchisees which will enable both the franchisee and the franchisor sustain future profitable relationships. The study aims to facilitate the franchisor to realize the need gap in their franchise systems and align resource towards a better future for the business.

Franchisee satisfaction index (FSI)

Franchisee satisfaction index is a measure of franchisees satisfaction from the present franchise systems as well as an indicator for the level of optimism for future prospects. The index constitutes four indicators; Franchise System Indicator, Marketing Support Indicator, Training Support Indicator and Franchise Confidence Indicator. It is a comprehensive rating scale through which franchisees rate their franchisor as well as his franchise infrastructure on a five-point scale over 30 different parameters.

Franchise System Indicator: This includes indicatives of satisfaction for operational aspects of the franchise system including, pre-opening support, operational support, technical support, new product development

Marketing Support Indicator: This involves marketing and promotional support received by the franchisee from the franchisor which included national as well as regional marketing. It also calibrates the satisfaction levels on local marketing activities and in store marketing as well.

Training Support Indicator: This is an indicator of the training resources invested by the franchisor. It indicates the extent of content of franchisee from the initial as well as ongoing training employed to its staff by the franchisor.

Franchisee Confidence Indicator: This gives an indication of how satisfied the franchisees have been from the profitability so far and the future profit expectations.

The survey

The survey sample consisted of education franchisees from three major categories i.e. Basic Education, Skill Training, and Coaching classes and tutorials. Across geographies, 75 education franchisees where interviewed over 30 different parameters to calibrate their satisfaction from the education franchise systems. The interviews were also targeted to gauge the maturity of the present education systems. The franchise surveyed were moderately/ medium aged. The coaching franchise systems surveyed were on an average five-year-old whereas basic education franchisee systems were aged between 3.5 years. The skill training franchise systems surveyed were more than six years old. The profile of education franchisees has been a mixed one with people both with (54%) or without (46%) education backgrounds venturing into education entrepreneurship. It was observed that on an average an education franchise took one to three years to become profitable.

Education Franchisee Satisfaction Index (FSI)

Education franchisees are fairly content with their franchise infrastructure. Education franchisees rated their franchisors a 3.7 over the FSI scale. Franchisee Confidence Indicators (4) as well as Training Support Indicators (4) were rated fairly while, marketing support indicator (3.1) and Franchise system indicator (3.7) still seek improvement.

Franchise System Indicator

Franchisees rating a very positive 3.7 for educational franchise systems indicating that the sector is living up to its reputation of being one of the most mature franchise systems. Operational efficiencies are very crucial for healthy franchising. Education franchisees seem to be very happy with the support they receive from their franchisor. Franchisees seem to be fairly satisfied with pre opening support involving location/site selection, interiors, guidance over major and minor errand involved in center opening.

Marketing Support Indicator

The franchisees were dissatisfied up to a large extent over the marketing support that they receive from the brand owners. Education concepts largely seek a typical marketing plan, though franchisees were quite satisfied with the national promotional resources (3.5 on a scale of 5). However, most of the franchisees seek regional level marketing activities. Education franchisees surveyed recommended a region specific marketing plan to ensure adequate visibility of the concept as well as the brand. This though has been observed otherwise also in case of franchised education concepts as centers located in the locations where the brand is stronger perform well. Franchisors hence must pay heed to these signs and must restructure their marketing plan to make their franchise network grow profitably. Ajay, an education franchisee voices, “Marketing support is essential. Strong presence of centres in the region is essential to develop brand dominance.” Sonam Agarwal feels proud to be associated with his skill training education suggests, “Franchisors must establish strategic tie-ups at both national as well as international level which could be profitably exploited at regional and local level. As the education franchisees voices unanimously for greater marketing as well as promotional inputs franchisors must ensure the same.

Training Support Indicator

Education is a human resource centric business. Concepts which in involve rendering educational services depend upon the teachers and trainers immensely. When franchised, most of the education systems in India work of the hub-and-spoke model of training the franchisee workforce which means franchisors centrally ensure training which would eventually guarantee the quality of service provided to the end consumers. Franchisees were largely happy with the training resources provided by education franchisors. A very good rating (4.2) is an indicator that the ongoing training is ensured by the parent brand owner. Similarly a satisfied rating of 3.8 ensured initial hand holding is too ensured by education franchisors. Franchisees are convinced that quality of service is crucial to become a successful franchisor. Vasanth, a basic education franchisee shares, “Education franchisees must first focus on quality, profits follows afterwards.”

Franchisee Confidence Indicator

Franchisees surveyed believed that it takes about 3-5 years for basic education franchise system to turn profitable where as skill training and a coaching franchise system turns profitable in an average 1-3 years. Franchisees were convinced that education concept yield profitable return Naveen Saraf a coaching centre franchisee says, “It has been a good experience, achieved more than break even from the first year itself. Education franchisees were visibly optimistic about the future prospects expected from franchise business. Atul Jain another franchisees says, “Being an education franchisee really paid him off and resulted good returns on his time, money and efforts.” The franchisees are really looking forward for greater profits in the next fiscal year and the confidence is strong which ensures the expected growth. Majority of education entrepreneurs like Gaurav Aggarwal are of the view that education franchising is the best tool to scale up quality in education.

Rakhi a former teacher shares her success story, “I never thought of doing my venture on such a large scale but franchise opportunity gave me the scope to grow and it helped me immensely as association with a franchise brand helped my school to differentiate from the competition.”

Scope for Improvement (SFI)

A keen observation is that most of the franchisees who participated in the survey had huge respect for education as a business venture. As some like Deepak Salve who says, “I feel very satisfied as an education franchisee. It's not only a business but rather a community service. I feel proud to be an education entrepreneur and serve the community.”

S.C Bagla, a franchisee of a leading CAT preparation coaching concepts shares his experience. “The core value of my franchisor includes service orientation and a 'really believe it and do it' attitude. My franchisor encourage entrepreneurship and transparency in the system and also provides support to the franchisee`s innovative ideas.” He further shares the formula for a great franchisee-franchisor relationship, “Franchisors should be great listeners. The intention of both franchisor as well as franchisee should be noble and should not be only oriented towards short term profits. People with education related industry background are best suited as education franchisees.”

Education franchise is a recession-free industry and has a lot of future potential. As far as Indian consumer behaviour is concerned we believe in investing in education thus scaling up education concepts will always yield profitable results. Sustaining mutually beneficial franchise relations is however challenging. The survey tried to explore the need gap between the franchisee-franchisor to identify the crucial areas which could be worked upon to facilitate the evolution of healthy franchise systems. Most education franchisees surveyed (48%) believed that local as well as regional marketing was one area which had the most scope for improvement (SFI). Another 24% of the sample believed that hiring as well as training was another area which had a significant SFI . It was also observed that franchisors could improve their systems in the area of finance and accounting (5%), operations (8%), sales (5%) and customer service (9%).

Vijay, a franchisee recommends, “Franchisor should involve franchisee in new product development as per local taste and preferences. Franchisee requires regular cash flow, as he needs a sound working capital. Franchisors must improve their systems ensure the same.”

Education Franchisee Wish list

Increased effort on national and regional marketing (43%) tops the list of the services that education franchisees expected for the year 2010. Next comes greater local marketing material (18%) support input, including inside centre/store promotional material. Vendor discounts and promotional schemes are also included in the franchisees wish list. As Seema a housewife-turned-pre-school franchisee puts it, “An education franchisee needs full support right from the beginning, like a mother gives support till the time child is self reliant, a franchisee should also be held and given support on a constant basis.”

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