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Sep, 02 2015

How do franchisors evaluate a franchisee?

Getting a franchisee on board is not a cakewalk. The relationship between a franchisor and a franchisee is not the same as an employer and employee relationship. What all a franchisor must keep in mind prior getting in a franchise relationship.

The reason why a company looks for a franchisee can be different and therefore the parameters on which they are evaluated also differ. Broadly, we can describe the companies which look for partners in following heads-

  • International Brands (looking for India launch)  With the current SBRT norms (Single Brand Retail Trading) being strict on sourcing lot of international brands look at franchising/JV as preferred route for business operations in the country.
  • International brands ( having an existing India wholesale business)  These brands look at franchising as a method to expand reach in tier II & III towns.  The model is to try and control ops as much as possible and work on a buy and sell model with partners
  • Indian Brands  Indian brands have considerable flexibility in opening their own stores and typically their need for franchisees is either for financing their operations or for expansion to new markets or for actually using the critical skills of partners for overall brand benefit.

For me (and most of good companies), a franchisee is a very important cog of the wheel as it is he who is actually the front face of the company. The actual 'moment of truth' for the end consumer. Hence, the franchisee has to be an 'equal' partner and not a mere investor.

There are three classic qualities which I look into:-

  • Entrepreneurship spirit  Go getter and not someone who doesn't looks at RoI as a business model
  • Passion  Passion for the brand at the similar levels as any brand person
  •  Operationally strong  Operationally strong and building on the brand strengths to take it forward.

Any budding entrepreneur needs to inculcate these habits and he should work on them to build on the business and do well.          

IM Bangalore alumni, Kavindra heads Pepe Jeans India with the designation of CEO and MD. He was also the President and Co-founder of In his career stints, he has also been the Commercial Director for United Colors Of Benetton and Vice President- Retail for Tommy Hilfiger.


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