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Dec, 07 2010

How satisfied are your franchisees?

FRANCHISEE satisfaction is a powerful concept in franchising. While positive levels of franchisee satisfaction contribute to network growth and development, poor satisfaction levels have the potential to destroy value and send a franchise system into a sl

FRANCHISEE satisfaction is a powerful concept in franchising. While positive levels of franchisee satisfaction contribute to network growth and development, poor satisfaction levels have the potential to destroy value and send a franchise system into a slippery downward spiral. Franchisee Satisfaction Index (FSI) independently and impartially intends to calibrate the satisfaction levels of franchisees of international brands, which will enable both the franchisor and franchisee to sustain future profitable relationships. The study aims to facilitate the franchisors in realising the need gap in their franchise systems and align resource towards a better future for the business.

The survey sample

The survey sample consisted of franchisees of international brands from four major categories, food and beverages, fashion and lifestyle, health and beauty and education. Across geographies, 30 education franchisees were interviewed over 30 different parameters. The interviews were targeted to gauge the attitudes and perceptions of franchisees. The franchisees surveyed were moderately /medium-aged. The franchise systems were on an average three to five-year-old.


The franchisees were apprehensive in taking up the franchise of a debutant or a less established brand. Majority of them (35 per cent) termed it as the rationale behind taking up the present franchise. Around 26 per cent said they took it because of better business model and 21 per cent believed that they would get a better customer response when it is an international chain. Only 18 per cent believed international brands to be more reliable, which imply that contrary to the perceived notion, the Indian franchisees are at par with the international ones.

The franchisees were fairly content with their franchise systems. They gave a rating of 3.5 on a scale of 5 to the quality of initial training. A rating of 4 on a scale of 5 to the ongoing training pointed towards the constant support that the franchisees get from their franchisors. The pre-opening support (3.5) and the technical support (3.5) were also rated fairly well. Communication between the franchisees and operational support given to the franchisees were not found up to the mark and got a rating of 3. Franchisees were disappointed with the new product developed or new services introduced by their franchisors.

Majority of the franchisees (67 per cent) said that establishing a brand in the city was not difficult, indicating the acceptability of international formats and chains in India and only few (33 per cent) agreed that they faced problems. As opposed to the common notion, most of the franchisees (58 per cent) did not believe that international brands were exorbitantly priced and were of the opinion that it is not difficult to sell them. The franchisees were asked if interacting with company officials was difficult and if lack of cooperation was a stumbling block, to which majority (83 per cent) disagreed.

There is a clear indication that people are not much aware of the international brands prior to their opening in their city, even if it is an established brand. Most of the franchisees (80 per cent) agreed to the same.

Areas that need improvement

Though most of the franchisees were extremely satisfied with the franchisors and the franchise systems, the survey tried to explore the need gap between the franchisee-franchisor to identify the crucial areas which could be worked upon. Most franchisees surveyed (27 per cent) believed that hiring/training the staff could be an area where the franchisors could enhance their support to the franchisees.

It was also observed that marketing, including advertising and PR (23 per cent), was an area where the franchisors could improve their systems. Few also felt a need gap in the region of operations (18 per cent), finance/accounting (11 per cent), sales (11 per cent), customer service (11 per cent).

Success quotient

Most of the franchisees were optimistic about the success of their franchise units. Majority (47 per cent) believed that their venture would do better in the coming times. An almost equal number (40 per cent) believed that their unit was doing extremely well and very few (13 per cent) believed their endeavour to be moderately successful. In spite of certain displeasures that the franchisees feel in the area of new products and services, the franchisees were satisfied with their units, pleased with the system and contented with their franchisors. As many as 93 per cent of the franchisees said they will recommend their brands to the prospective investors.

Based on the inferences, we can safely say that it is important for the franchisee and the brand owner to remain coherent while conducting business, which is the only way for a win-win situation.

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