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Jan, 06 2018

CONVERSION FRANCHISE BRINGS PROFIT FOR ALL

Conversion franchise is the latest trend that is helping businesses do a profitable turnaround

CONVERSION FRANCHISE BRINGS PROFIT FOR ALL

What happens when a small independent business owner is approached by – or discovers that - a franchisor is keen to convert his mom and pop store into its own franchise unit? Well, conversion franchising - which allows an independent business to convert its name, brand, trademark and operating system into a franchisee of a successful brand - is a scenario that seems to be playing out more and more in recent years.

One of the biggest benefits of the model is that it provides the franchisor with a team of experienced business owners who will be self motivated to grow their own business for the personal rewards that it offers. The customer service, in this case, usually improves as the franchisee is more likely to go the extra mile.

Besides, the franchisee not only takes responsibility for the sales, but also takes all the administration and employment hassles away from franchisor. The franchisee shouldn’t need much training and support because they already get the business model. 

Growing conversion

Many franchises are using some degree of conversion franchising to grow in areas like retail, FMCG, real estate, travel agencies, hotel and motel businesses, etc.

For instance, Drishtee Foundation (DF) is an epitome of a successful conversion franchising model. Started in the year 2000, the company decided to work as an NGO in 2003. “Then, with the passage of time, we inspired the who’s who of the business world, including Nestle, ITC, DS Group, HP, RBI, etc. We have now established a supply chain of RRPs (rural retail points) which are kirana (FMCG) stores,” informs Satyan Mishra, co-founder of Drishtee Foundation.

DF acts as an intermediary between the government and rural India, connecting 1,800 villages in its franchise network. As a part of its model, DF has established kiosk banking customer service points in close collaboration with the State Bank of India and Bank of Baroda. “We have more than 1,800 village franchisees in banking where we bring entrepreneurs, banks and government agencies together,” Mishra states.

Interestingly, the holiday and travel industry often takes the help of conversion franchising to expand its business. One such example is of Sterling Holiday Resorts Limited (SHRL), a part of Thomas Cook, which has tied up with a number of other smaller holiday companies like Nature Trails. Ramesh Ramanathan, Managing Director, Sterling Holiday Resorts (India) Ltd, says, “SRHL has not only refurbished the earlier properties but has brought in many new ones.”

Working on the model of conversion franchising, SRHL plans to acquire businesses in areas like Mount Abu, Panchgani and Coorg.

Gaurav Marya, Chairman, Franchise India, says, “In the coming 4-5 years we would face the challenge of manpower as any large economy would have. Human talent would become highly priced, as it will be highly sought after. We have to become people-efficient businesses. Franchising globally has helped achieve better return on time and therefore investment for business owners. This then is surely the path to take.”

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