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The franchise model is one of the most versatile and flexible business models.
“The franchise model is one of the most versatile and flexible business models. It is the most sought-after model in all categories from luxury goods retailing to distributing basic consumer goods. The franchise model helps build powerful ecosystems,” believes PepsiCo India Chairman & CEO Shiv Shivakumar. In a candid chat with The Franchising World, he explains how franchising model is making PepsiCo & the entire industry perfectly tuned.
A word on franchising
Franchising is a very important model. It cuts across all industries. I do not agree to the logic that franchising can't work in a particular industry, for me it would be very rare.
How has franchising model facilitated the entire F&B market in India?
If we talk about F&B, especially, QSR market is a complete franchise model. Franchising as a concept in India is picking up dramatically. Earlier, retail distribution was done via franchising, but, now the entire services industry, whether its education or salon, all are operating via the same. I believe the reason is more & more premium brands and QSR brands are entering the country.Franchising has become the order of the day & the model is here to stay.
PepsiCo too operates via the franchise model. What kind of investors are you looking at for your bottling plants as franchisees?
Presently we have six partners. Currently we are happy with the current system.
How do you correlate entrepreneurship & franchising?
In a franchise model, franchisee follows the execution part of the brand & the way brand is treated in the marketplace. He also puts his own capital. In this model, the entrepreneur carries the lesser of the risk compared to the brand. Whereas the brand is concerned, it carries lesser of the risk in terms of the assets on the ground.
As a leader, what strategies have you put in place for smooth operations at PepsiCo?
The key thing is you need strong brands, in order to meet the needs you need great people to execute. Strong brands are built on consumer insights. You need to invest in people all the time. An ongoing communication is required with people. One needs to build the trust of people in the institution. But, you need to do in a manner which is cost efficient, that you don't waste money & you are putting back every single rupee.
How do you prioritise, company or people?
Company comes first and then second comes the people. If you always make a decision based on that built up, you will always be on the right track & similarly we do it at PepsiCo.