The expansion of business is the first thought that comes to the entrepreneur’s mind who has established and made it decent in whatever field he/she has started his/her operations. Business can be expanded either by opening up a company-owned outlet or by offering franchisees. It is recommended to the businessman starting to franchise for the expansion.
Franchising eradicates many ground-level problems that the company would face once it decides to open its outlet at various locations. These problems would be – the hassle of getting loans sanctioned, finding a suitable place, understanding the locality’s consumer base, and maintaining and running the outlet. The offering franchisee would be a one-stop solution to all the problems that may arise, such as taking care of the financial aspects, and you will get royalties on the revenue for letting them use your brand name. And owning outlets in far-off places and countries is another headache and hard to manage smoothly.
Thus, it would be wiser and more rewarding to franchise for the expansion of the business. And this blog post would help those starting entrepreneurs on how to start franchising.
Initial Planning –
The franchisor must be fully prepared to offer franchisees in terms of proper planning, understanding of the nitty-gritty of the franchise trade, and the critical aspects of their own company, which would be their selling point. A wiser thing for any new business would be to start offering the franchise in the same vicinity, where people and consumers are acquainted with the brand name and the quality of offerings.
If a North-Indian brand would directly leap into the South-Indian market, it is possible to face losses and hard to gain customer trust and appreciation. It is smart to understand that every business is not suited to every place. There needs to be local flavor added for better appeal among the people. The products are services must cater to the demands and requirements of the specific region of the outlet.
For example, McDonald’s does not offer beef products in India to not hurt religious sentiments. Thus, a proper understanding of the locale in which the business has to operate must be present, and following that, the business strategy must be tweaked a bit to suit the location.
Location Planning –
Once the region where the business is expected to be established is decided, the next important step is to select a prime and suitable location to open the outlet. The franchisor must issue guidelines to the franchisees about what kind of space and area would be best for their business to grow and flourish – would it be a shopping mall? Or, would it be some high street? Or, it can be near residential places? Once the location is decided and conveyed, the franchisee has to select the best suitable location possible. Furthermore, the franchisor can demand the nature of the property that the franchisee owns, for example – rented, leased, or privately owned.
Investment Sought –
The franchisor must make clear announcements about the investment required to open an outlet of the business, which is also the first on the franchisees’ list of requirements. The range of the investment sought from the franchisor can be anything depending on the brand’s popularity, the expected return on investment that the brand can offer, the level of training that they would need to provide, and the set-up cost of machines and other equipment. It can range from a few thousand to a few crores.
Training Franchisee –
The franchisor must make clear announcements about the investment required to open an outlet of the business, which is also the first on the franchisees’ list of requirements. The range of the investment sought from the franchisor can be anything depending on the brand’s popularity, the expected return on investment that the brand can offer, the level of training that they would need to provide, and the set-up cost of machines and other equipment. It can range from a few thousand to a few crores.
An essential aspect for a franchisor to keep intact the brand name after franchising is to provide proper training so that the service and the product offerings are of the same quality in the company-owned outlet as well as the franchisees. Thus, the franchisor must be clear-headed about the kind of training they want to impart and send the best trainers on the job. For example, for a food franchisee, ingredients, and cooking process, techniques must be trained and followed carefully. Thus, secret recipes must be shared to maintain the delicacies and the quality of the foods.
Appointing Managers –
The franchisors should appoint managers at franchisee outlets to smoothen out the process of monitoring, managing, and maintaining the franchisee’s standards and keeping the Brand name clean. It is hard for the franchisor to keep track of every franchisee and its operating standards. Managers would act as the oil of the relationship between the franchisor and franchisee. Good managers would bridge the gap and flourish the collaboration as a good franchisee is like a business partner.
In the end, it all boils down to the partner you choose, i.e., the franchisee for your business expansion plan, and then the planning takes itself from there once the man you collaborated with is like-minded and passionate.
Karan Makan
Technology Engineer and Entrepreneur. Currently working with International Brands and helping them scale their products Globally through different ventures. He owns Multiple Food Brands and is on a continuous spree to acquire many more businesses in the coming years. With over 10 years of experience and strong background in Brand Acquisition, Karan Makan is soon poised to be a Brand in the coming years.
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