All businesses are Franchisable; Perhaps just not Franchise ready!

Organized retailing in India is going through a transition phase where new concepts are joining the Franchising bandwagon. This article gives you an insight into what it takes to be a successful franchisor.

Ease of expansion enticing newer concepts to try hands at Franchising!

Franchising is an easy & fast way to expand a business. It gives brand owner a new lease of life with quick access to newer markets & customers. The franchise brings in local market intelligence & also absorbs the risk in the business be it operational or financial. Typically, it is estimated that 30% of franchise fee collected is spent back on acquiring the franchisee itself, so what will it take to retain a franchisee who is so invaluable to the brand?

But is your brand really ready for Franchising?

Any business can be built on two pillars: First - Intellectual Property & second - Infrastructure. While the former helps to create a unique concept the latter helps to drive the cost advantage over competition. 

Considering these two pillars, any business can be broadly be classified into 3 categories

• Niche Concepts: High on IP / low on infrastructure; A
• Mass concepts: Common service / product but works well with cost advantage; B
• Ideal concepts: strong IP coupled with a suitable infrastructure; C

One size does not fit all!

A franchise ready concept needs to be financially sustainable & also sufficiently rewarding to ensure an acceptable RoI. Category C is ready to Franchise while A & B needs to modify the current business setup to make it Franchise ready & so the statement goes “All businesses are Franchisable; but not all are Franchise ready!” 

While An “A” needs to add complementary services/products, a “B” needs to arrive at a facility size & product mix that offers optimum throughput. 

Besides these, other key indicators for Franchising could be

• Have you run a successful business for at least one year?
• Is it profitable?
• Can you produce audited accounts?
• Have you proven your concept? Will it survive in the long term?
• Can your business be replicated and easily taught?
• Can you offer a business that is interesting and one the owner would be proud to own?
• Can you demonstrate a commitment to long term success?
• Can you offer leadership, strong management, motivation, and support?
• Can you offer a franchise at a cost that is good value for money and can provide a decent return on investment in the short to medium term and a good living for its owner?
• Have you got the money to fund your franchising and have you the patience to see it through, realising that franchising is a slow process and it could take several years to make it a success?
• Finally, ask yourself this question: If you were looking to buy a franchise yourself, would you be interested in this one? If the answer is yes, you are probably ready to franchise.

But keep in mind, even the best-laid plans will result in failure if the underlying business is not ready for prime time. If you’re considering franchising, take a step back…and ask yourself, “Am I ready?

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