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Sep, 10 2010

FRANCHISE FRAGRANCE

SETTING up a florist business can pull in profits for the franchisees as they add beauty and colour to the business in many ways.

SETTING up a florist business can pull in profits for the franchisees as they add beauty and colour to the business in many ways. To get started with it, the franchisee needs to focus on the points mentioned below.

Business potential

As per industry experts, “The total natural flower business in India covers 60 per cent of the floriculture market, artificial flowers contributes 30 per cent of the total turnover and 10 per cent is taken up by dry flowers.” Given this growth rate, the floral industry is nowadays turning to be a fruitful business opportunity for investors.

Loopholes

Retailing of flower bouquets with limited designs by roadside vendors is a thing of the past. Organised players like Ferns N Petals and Florista had bring in the revolution of selling flowers through exclusive shops and kiosks. Comparing with international flower industry, flower retailing in India is at its nascent stage. There are limited players in the organised flower industry. Being a low investment business model, flower industry also provides a good opportunity to franchisees.

Franchisability

Before taking a step forward into flower retail business, the franchisee must have required knowledge of the horticulture industry, creating distinctive flower designs and must know about the right process of managing cut-flowers. For opening a flower retail shop, the franchisee must study the area where he/she plans to open the store, identify his target customers, speak to the existing florists in the area and ask them about the challenges they faced and how had they overcome them. More than being creative at flower designing, one needs to focus on selling the products, employing knowledgeable staff, deciding on effective promotional strategies and identify the competitors in the area.

In case of franchised business, the franchisees are chosen on the basis of their educational qualification and experience in the industry. On this, Pawan Gadia, Vice-President, Ferns N Petals, adds, “We support our franchisees with the help of trained karigars and staff for the outlets. If a franchisee wants to hire his people, we give training to the new staff to maintain the uniformity.”

Talking on the same aspect, Smriti Dalvi, MD and CEO, Florista India, informs, “The most crucial manpower, the trained artists who make the floral arrangements, is supplied by Florista. The delivery staff is hired locally but trained by Florista on site. Typically you would need two artists, three delivery boys while starting up.”

The franchised business ensures better sales on a day-to-day basis as compared to owned business. In case of Ferns N Petals, although the average sale depends on the location of the outlet. But on an average, the sale done by a shop is approx Rs 50,000-60,000 a day. On expanding their footprint, Gadia, says, “We are planning to open 50 shops by the end of next financial year.” As per Florista, after one year of operations, for a A class town, one can reach up to an average of Rs 10,000 - 15,000 each day which includes sales from walk-in customers, sales over phone, corporate orders, and orders transferred from Florista's call centre. Over and above this, corporate events or wedding orders can easily give the franchisee a billing ranging from Rs 25,000 to 2 lakh per event. Looking at their growth, Dalvi says, “We are looking ahead to open 300 shops by 2010.”

Considered as a low investment business, FNP franchisee requires an average of Rs 1 lakh as a working capital. Whereas, a Florista franchisee would need an investment of Rs 1.5 to 2 lakh. The franchisee can make profit margin of almost 30 per cent on the products. For instance, the franchisee can make profit of 200-300 per cent on fresh flowers while on other products is in between 100-200 per cent.

Financial viability

Prior to selection of space, the franchisee is required to take permits and licenses from the higher authorities. Clarifying in detail on it, Dalvi says, “However, depending on state to state, the local municipal requirements under Shop and Establishments Act need to be adhered to. Also, one has to register for and pay state-specific VAT or other applicable taxes on the goods.” Before jumping into franchise business, check out the pros and cons of starting with independent and franchising business. Starting your own business may seem easy at first but it requires a lot of groundwork, patience, time and money to get returns on time.

He/she has to focus on providing good services to the customers and organising the effective marketing strategies to popularise the brand.  In franchised business, as the brand is already famous so the franchisee has an advantage over the independent owner to receive good returns on investment. As per Dalvi, “It takes a lot of time, money and efforts to build and develop a brand, build systems and processes for a branded florist shop. By taking up a franchise, you have the advantage of getting the entire know-how, readymade systems and processes to start the business. Also the ongoing support of marketing/new products/innovations that you get from the parent company helps you to grow your business.”

For controlling the store operations efficaciously, the franchisor gives proper training and support to the franchisee. For example, Florista gives a complete training to its franchisee on in-store operations, management, products, services and order management software.

Gadia feels, “While opening a new FNP outlet, location is a major aspect that has to be considered. High-visibility areas such as a shopping mall, plaza or downtown location are usually preferred as the outlet should be in high foot fall area to generate good revenue. To recover the initial investments, it may take six to eight months.” While in case of Florista, the initial capex can be recovered in eight to 12  months.

Exit option

Although the business presents a viable opportunity to the franchisees, sometimes it happens that franchisee does not reaches the break-even point on time. In case, you feel like switching the business then you must speak to the franchisor regarding terminating the agreement.

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