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Apr, 19 2010

Switching to franchising

OBSERVING THE RISE AND FALL OF INDEPENDENT BUSINESSES, SOME EXISTING OWNERS WITH REQUISITE BUSINESS EXPERIENCE ARE NOW COMING FORWARD TO TURN THEIR BUSINESS INTO FRANCHISED ONE. EDUCATION BEING A VERY LARGE SECTOR IS ONE SUCH AREA WHERE MOST OF THE FRANCH

OBSERVING THE RISE AND FALL OF INDEPENDENT BUSINESSES, SOME EXISTING OWNERS WITH REQUISITE BUSINESS EXPERIENCE ARE NOW COMING FORWARD TO TURN THEIR BUSINESS INTO FRANCHISED ONE. EDUCATION BEING A VERY LARGE SECTOR IS ONE SUCH AREA WHERE MOST OF THE FRANCHISING IS HAPPENING.

TFW DELVES INTO DETAIL TO FIND OUT THE DIFFERENT CRITERIA FOR SELECTING THE RIGHT FRANCHISEE.

BEFORE efficaciously managing a centre's operation under the franchisor's name, it is obligatory and necessary to have hands-on experience in the field. When you take a step to convert your own business into a franchised one, you must endeavour to seek advice from the franchisees who are already into it and ask about the intricacies they confront while running the business. Advice from franchise lawyers and consultants will also be of great assistance to the existing owner who makes up his/her mind to collaborate with the franchisor.

Selecting franchisees

In a franchised business, the candidates are chosen on the basis of their experience and qualification in any vocation. From taking a franchise of a pre-school to high school, coaching centre or any finishing institute, the selection criteria of franchisees differs from the level of education to the type of franchise they choose to operate.  For instance, a pre-school franchisor may not require a highly experienced franchisee as they would prefer to enroll women who can either be housewives or working women with an educational qualification of NTT training, B.Ed or from any other profession.

On the contrary, Arun K Khetan, CEO & MD, New Age Knowledge Solutions Ltd, says, “We would expect to associate with people who have passion and understanding about the domain and with sufficient resources to carry the brand the way we expect it to be delivered.” Agreeing with him, Amol Arora, MD, Shemrock group of Schools, says, “There is no bar on the educational qualifications but, most of our franchisees are professionals in their field and they come from all walks of life. What we look for in them is dedication and passion for education.”

Every franchisor has different franchisee requirements which differ from the type of franchise category the aspiring franchisee falls into. Some franchisors prefer to select franchisees who are graduates, or who can merely invest in the venture, popularise the brand at the local level, who belong to specialised services sector and who can educate the students in his/her institute as well. For example, the franchisor of a coaching or a test preparation centre or any finishing school will probably like to select franchisees with an engineering background or graduates or with good job experience. Himanshu Jain, Vice President - Sales and marketing, iprof learning solutions India Pvt Ltd, adds, “We prefer at least a graduate, preferably a post graduate from a leading institution. The individual can be fresh out of college or an experienced individual preferably in the education sector.” For anyone who wants to get into business of beauty, Shahnaz Husain, Chairperson & MD, Shahnaz Husain Group of Companies, says, “The franchisee has to complete our beauty diploma course and an advanced course which is especially required for franchisees.”

According to Sharad Talwar, CEO, IndiaCan, “The most important requirement of franchisee includes  entrepreneurship ability, integrity of highest order and a thorough knowledge of the local business environment.” While, Avinash Gupta, President, Tally Solutions, prefers, “The franchisee should be a finance professional and he/she must have an experience in Tally.” Frameboxx expects from its prospective franchisee to be a graduate, have strong business acumen, good understanding of the industry, should be willing to devote full time efforts in the day-to-day operations of the centre and actively participate in training and evaluation programmes. “The franchisee must be a graduate, passion for education and ability to network at the local level with various stake holders,” updates Ninad Karpe, MD & CEO, Aptech Ltd.

According to some franchisors' perspective, on an on-going debate, though the franchisee's role is more likely to act as a business manager of the institute or a centre and to see the overall functioning of the franchised unit, however if he is qualified and willing to teach the students then he is considered be the part of the faculty. Giving his opinion on it, Sanjay Shivnani, CEO, Career Launcher adds, “More often than not he must be a MBA himself; must be willing to teach in the classroom himself; must have a genuine interest and passion in education.”

Converting into franchise

There are a number of independent owners in the education and training sector, who have been running their institutes locally. Observing the growth of the franchising industry, many local pre-schools, local tutors are joining hands with established franchisors.

There are various reasons behind the rising willingness of independent business owners to turn their business into a franchised one. From day one, when the franchisee seals the deal with the franchisor, the franchisee is entitled to use the franchisor's name and his products and services in the specified territory or a geographical area. A franchise business typically operates the institute under a common brand name like all other franchisees and he/she receives a complete on-going support from the company to run the business under some rules and regulations. The franchisor gives requisite training and support to the franchisee in maintaining the standard at his/her centre by giving an identical brand experience and service to the end customer.

By positively providing its franchise to existing training centres, N. Subramanian, Country Head  Operations, Cadd Centre, says, “CADD Centre has a prescribed layout, colour scheme, minimum number of rooms and space. We try to commence the operations, if the setup is clean and conducive to learning. The franchisee is expected to make the recruitment and training immediately, invest in the required configuration of computers and software and commences operations. The benefits being that the centre commences almost immediately. We begin addressing our customers and the entrepreneur starts utilising his place effectively.” Supporting this, Arora states, “It is an easier task to give franchise to an existing owner as, they are equipped and experienced in running a school and understand the management better. Around 10 per cent of our existing franchisees fall under this category.”

On the other hand, “The benefits of extending our franchisee to an existing centre in the same field are ready availability of students right from the beginning, leveraging individual centre's popularity for our brand, ready availability of labs, faculty and other infrastructure and rapid expansion. At present, 30-40 per cent franchisees of AISECT would be under this category,” says Santosh Kumar Choubey, Chairman & Managing Director, AISECT Ltd.

Extending franchise or not

In the education and training sector, some franchisors are willing to extend their brand's franchise to independent local pre-school/test preparation, coaching and vocation education providers/owners since they have location, infrastructure and are well versed with the day-to-day operations of the centre. On giving their company's franchise to independent owners, Naveen Gupta, CEO & ED, Frameboxx Animation and Visual Effects Pvt. Ltd says, “We would be open to give a franchise to a college/institution catering to post Xth standard students.” Agreeing to extend his brand name to local owner,  Shivnani, says, “Yes we do. He/She has to adhere to the requirements of our franchise model. In all cases, he will have to shut down his own brand and pedagogy and adopt ours.”

In spite of giving franchise to existing local owners, some franchisors also prefer to grant their brand's franchise to existing franchise holders. On this, Aman Bansal, Manager  business development, Top Careers and You, admits, “Yes, we do extend franchise to existing pre-schools and coaching institutes. The benefit is that the learning curve is very small as the person is already a part of the system.” On the other hand, Deepanshu Khurana, CEO, i360 Staffing & Training Solutions, says, “We have also associated with some of the partners running established non competing brands and are open on future associations.”

Some existing business owners who enter into the franchise business have to make certain modifications in their institute to suit with the franchisor's requirements. On this, Choubey says, “The changes required from our end are in terms of matching infrastructure expectations, including our brand name in the centre display and following of our accounting standards.” According to Jain, “No changes need to be made by present pre-schools/coaching centre except that they need to identify 300 sq.ft of area with a dedicated space enabling conduction of doubt clearing video conferencing sessions via our own Virtual Private Network (VPN) from time-to-time.” Tally Solutions considers giving franchise to any institution having an I-T infrastructure in terms of hardware and licensed software.

Wrapping up

Partnering with the existing owners opens up new avenues for franchisors to work with a talented pool of people who understand the business and are familiar with the day-to-day operations of managing the business. At the same time, partnering with existing owners invite some clashes between them as they have their own way of running the centre. When exiting owners associate with a franchisor, they are constrained to comply with the strict guidelines as laid down by the franchisor which includes  matching the standards of the school/institute in terms exclusive branded space with infrastructure as specified by the franchisor, maintaining standard-isation, keeping a desired number of faculty and students, and making necessary changes in the layout and colour scheme of the institute.

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