Franchising is not just a model for growth, it is a way for retailers to survive in today’s economy. It is a business relationship in which the franchisor (the owner of the business providing the product or service) assigns to independent people (the franchisees) the right to market and distribute the franchisor’s goods or service, and to use the business name for a fixed period of time.
Most brick-and-mortar stores take to the franchising model to expand and diversify. But, while a franchise is a fantastic platform for reaching out to Tier II and III cities, towns or even villages, retailers are generally faced with the challenge of reassuring customers that their user experience will be unhindered.
They take on the venture of picking out the right technology, right product and right infrastructure for franchise stores along with imparting the same grade of training to staff and ensuring the same service quality.
Seamless Backend Functionality
The quality of the brand, and brand equity of the retailer need to be immaculate in every franchise. Retailers need to manage multiple brands and franchises to ensure their customers are happy.
Director, C S Trade Link, Vijay Dugar says, “Invest heavily in the backend of the business since the people who run the business essentially drive the goal of the brand. For us, we have separate operation managers in all stores and a visual merchandiser who looks after hygiene and amenities. Then there is an official who ensures that the supply chain logistics work seamlessly. We have also hired an official to train staff so they can generate new ideas, they are aware of new products in the store, essentially making sure they are on the same platform as the management.”
Embracing Technology in a Franchise Model
Technical Director KPMG India, Debjit Chakroborty says, “Just like branding, technology is also very important, so manning a franchisee with the right technology is critical – for both front end sales, and back end processes and inventory.”
Director SencoGold, Suvankar Sen adds, “We have invested in ERPs, and Microsoft AX – both implemented in all our franchises as well as flagship stores. When we started off 13-14 years ago, our core focus was on franchising because we wanted to reach out to customers. We focused on Tier II and Tier III cities, we concentrated on product first and then moved on to branding.”
“When we select a franchise, we take two factors into account – first, that there be returns on our investment and second that we get respect. We also use technology to control our inventory – see what is selling and what isn’t. We conduct audits and send in mystery shoppers so that outside products are not sold in our shops,” he says.
E-commerce To Boost Branches
Manning a franchise with the same technology that is available at headquarters is a very challenging task. There is usually resistance from employees but it needs to be successfully implemented nonetheless. Most retailers feel the need to marry e-commerce to the franchise model.
MD Skipper Furnishings, Tanay Agarwal, says, “We merge e-commerce with flagship and franchise stores. E-commerce is a means to boosting franchise business. Our e-commerce model provides consumers with our products but the fulfillment is done by the franchise, not the head office. This is a way for franchises to survive and for the company to take them forward.”
He says that touch and feel will always be paramount to his home furnishings business, and that e-commerce is just a way of providing support to his brick-and-mortar business.
Creating Brand Aspiration
He says any Indian brand giving an ROI of more than 20-25 per cent per year will easily find investors and people interested in buying and running a franchise.
Brands need to find skilled manpower in Tier II & III cities, especially because service is very important in smaller cities and towns.
Says Kohinoor Mondal, who runs a Jawed Habib’s Hair and Beauty Salon franchise in West Bengal, “Jawed Habib is a pure service selling organisation. We don’t sell any products. I’ve seen Jawed work and what I’ve realized is that he first builds the backend – the manpower, the team – and then starts the frontend functioning of a franchise.”
Jawed Habib’s model was simple – move to smaller Tier II & III cities and capitalize on his name popularity. Aspiring designers, hair stylists and beauticians all flocked to work in Jawed Habib salons, willing to learn styling techniques and also understand how to run a salon.
Jawed’s team trained people – housewives, entrepreneurs, aspiring beauticians – looked for partners, taught them how to successfully and seamlessly run a franchise and then encourage them to take one.
A Business Operation
Franchising is not a business itself, but a way of doing business. It is essentially a marketing concept – an innovative method of distributing goods and services.
This continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organising training, merchandising and management in return for a consideration from the franchisee, has become extremely successful in the Indian retail scenario.