Lite Bite Foods eyes 45 stores in three years

Lite Bite Foods, a quick service food chain, has earmarked Rs 100 crore to open around 45 stores in the next three years across the country. Promoted by Dabur vice-chairman Amit Burman, Lite Bite Foods currently has 40 stores and plans to add 10 outlets by this fiscal-end. “We have invested about Rs 40 crore and we will be investing around Rs 100 crore in the next 3 years,” said Amit Burman, chairman, Lite Bite Foods. 

Burman said the company has doubled the number of outlets in 2008, while its sales have increased three-fold last year. “Growth has been tremendous as we have doubled the amount of outlets and our sales turnover has grown by 3 times in the last year. The growth in the industry is around 25 per cent,” said Burman. 

Read More

V Mart Retail to franchise affordable fashionwear brand, V Gals

V Mart Retail Ltd, one of India’s growing value retailers, has now registered its presence in Arrah in Bihar and Ujjain in Madhya Pradesh. The size of its Arrah store is 10,000 square feet, where as that of its Ujjain is of more than 8,000 square ft. V Mart, at both the stores, is offering kirana products, ladies wear, kids wear, toys and games, men’s wear, footwear & luggage section, home furnishing, crockery and plastics goods etc to their customers.

V Mart retail is also all set to roll out its franchise format women centric “V Gals” stores in northern and western India. The V Gals stores will stock affordable designer clothing for women and accessories. The company has its own private labels, Charcoal, Cruxx, J-White, Groovy Kids manufactured in-house and quasi private labels sourced from other manufacturers. 

Read More

Indian restaurateur describes her entrepreneurial experience

Hit by the recession, an India restaurateur revamps from scratch.

When I moved to New York City from Calcutta, I wasn't planning a catering career. I had come to earn a master's degree in lighting design from Parsons the New School for Design. But as a foodie, I was dismayed by the city's Indian eateries: The good ones were pricey, while the more affordable restaurants served two-day-old curries.

It didn't take a genius to spot a market opportunity for good, low-priced Indian food. I focused on Indian-style sandwiches, which few restaurants were offering. After graduating, I took night classes in restaurant management. In late 2003 I partnered with a former classmate, Rupila Sethi, to open the Indian Bread Co., a cafe in Manhattan's Greenwich Village. We sold flat breads stuffed with fillings or rolled like wraps -- an adaptation of traditional Indian street food.

Business was good from day one, and we soon began to provide catering services. In fact, we catered the Republican National Convention in 2004. But by the end of that year, Rupila wanted to move on to other projects, so I bought her out. Sales rose for the next several years, and I even started negotiations to franchise the cafe concept.

Then the recession hit. Business slowed, and the franchising deal fell through. In February 2009 cafe sales fell 25% to $9,689, from $12,873 a year before. But even though I was losing money, I refused to give up on a proven concept.

Seeking investors, I pitched my cafe to contacts in the restaurant industry. I took on two equal partners: Surbhi Sahni, a pastry chef at Devi, a top Indian eatery in New York City; and Rajiv Tanwar, a lawyer and restaurateur. Surbhi contributed sweat equity, helping me revamp the kitchen and change the menus. Rajiv invested $75,000, which we used to fund improvements.

Read More

Jury Nails Francorp Founder on All Counts, Including Fraud

Don Boroian, president of Francorp, testifies in January about buying franchises from new franchisor creation Palm Tree Computers. source/YouTube

MIAMI – On Friday, October 9, just prior to midnight, a Miami jury reached a verdict in favor of five South Beach master franchisees on all nine counts against Donald Boroian and his Francorp  development firm. The claims included fraud, conspiracy, unfair and deceptive practices, negligent misrepresentation, and violations of state laws.  Robert Einhorn, Zarco Einhorn Salkowski & Brito, representing the franchisees said it was a total victory. “We are gratified that the jury held Donald Boroian and Francorp responsible for their deceptive and fraudulent business practices in this case.”

But the verdict could extend beyond those findings. Einhorn asserts that the jury’s decision sends a clear message to  Francorp and other franchise “packaging houses” that they will be held accountable for the preparation of false and misleading franchise documents for their clients, and that these franchising consultants cannot engage in the unauthorized practice of law. Although the unauthorized practice of law issue wasn’t a separate claim in the case, he said it was evidence that supported the negligence and the unfair and deceptive trade practices act claims.  He added, “So, there’s no official finding on it but it could be assumed that the jury concluded that by entering its verdict on everything claimed.”

In summarizing the litigation, Einhorn previously stated, "Don Boroian and his company completely stepped out of the role of being a franchise consultant to become his client's partner, her joint venturer and her legal counsel. They actively participated in a scheme to defraud my clients." South Beach’s principal, Carol (Meyers) Brothers, brought the concept to Francorp to develop its franchising program. Boroian first met Brothers in 1978, when she brought her first concept, Pop-In-Maid Service, to him, a company she later took into bankruptcy. 

Read More

DIL signs JV with Delhi International Airport (GMR Group) to roll out food retail chain

Devyani International Ltd (DIL), the Indian master franchisee of global food retail chains Pizza Hut, KFC and Costa Coffee, has reportedly entered into a joint venture (JV) with GMR Group to set up multiple food retail outlets at the Delhi International Airport.

DIL is also planning to set up food courts at Jaipur, Amritsar and Chandigarh airports, and has already put in tenders with the Airports Authority of India for the same. On an average, the investment on a food court of about 12,000 sq ft involves a cost of close to Rs 10 crore. 

Read More

A Short Inspirational Story: Its You

One  day  all the employees reached the office and they saw a big advice on the  door  on  which  it  was  written:  'Yesterday the person who has been hindering  your  growth  in this company passed away. We invite you to join the funeral in the room that has been prepared in the gym'. In  the  beginning,  they  all  got  sad  for  the  death  of  one of their colleagues,  but after a while they started getting curious to know who was that man who hindered the growth of his colleagues and the company itself.

The  more  people  reached  the  coffin, the more the excitement heated up. Everyone  thought: 'Who is this guy who was hindering my progress? Well, at least he died!'. One  by  one the thrilled employees got closer to the coffin, and when they looked  inside  it  they  suddenly became speechless. They stood nearby the coffin,  shocked and in silence, as if someone had touched the deepest part of their soul. There  was  a mirror inside the coffin: everyone who looked inside it could see himself.

There  was  also  a  sign  next to the mirror that said: 'There is only one person who is capable to set limits to your growth: it is YOU. You  are  the only person who can revolutionize your life. You are the only person who can influence your happiness, your realization and your success. You are the only person who can help yourself.

Read More

RE/MAX Franchise expands network in South India

RE/MAX, a US-based international property brokerage chain, is expanding its franchise network in the South India. It has firmed up a master regional franchise for Tamil Nadu (excluding Chennai, for which it finalised a franchisee in June 2009, as reported previously by Way2Franchise.com) and will soon expand into Andhra Pradesh, Goa and Gujarat.

According to Mr Sam Chopra, Director, RE/MAX India, and part of a group that operates the Indian master franchise, since its launch in April 2009. RE/MAX has tied up with regional franchisees in seven States representing 32 regions for RE/MAX. In the South it has expanded into Karnataka, Kerala and Tamil Nadu.

The RE/MAX Franchise is present in over 74 countries and 7,000 offices and aims to introduce a degree of professionalism and accountability into the business of real estate brokerage which is dominated by the unorganised sector. The key feature on which it builds its network is that, unlike the typical brokerage business, the major share of a commission in a property deal is left to the ground level associate rather than the top man.

Read More

Franchise Mart Shop Guwahati Unveiled to Serve North-East Region

With one more Franchise Mart Shop in Guwahati Franchise Mart India has added one more channel partner in its successful network.

Franchise Mart India Pvt Ltd is has taken one more successful step in strengthening its arm by inaugurating the “Franchise Mart Shop Guwahati.” With the “Franchise Mart Shop Guwahati” now Franchise Mart has added one more Channel Partner in its Successful Network. Franchise Mart is a franchisee chain of franchise brokers across India.

In the presence of COO of Franchise Mart Mr.Falgun Angadia and Expansion Head Mr. Pankaj Kumar, Mr. Rajesh Goswami- the Channel Partner inaugurated “Franchise Mart Shop Guwahati” On 23rd September. Opened at Waheb Complex, Zoo Tinali Road, “Franchise Mart Shop Guwahati” is ready to serve the Entrepreneurs and Business aspirants of Aasam.

Mr. Rajesh Goswami- the owner of Franchise Mart Shop said, “Guwahati is known as the gateway to the North-East region and considered as one of the major cities in eastern India. With Franchise Mart Shop Guwahati, Franchise Mart will try to enhance the Business Opportunities in this region. The major economic activities here are trade and commerce, transportation and services. As Guwahati is the most important trade hub in NER (North East Region) Franchise Mart Shop will definitely help the businessmen to find appropriate franchise for themselves.”

Read More

Franchise Mart Shop Guwahati Unveiled to Serve North-East Region

With one more Franchise Mart Shop in Guwahati Franchise Mart India has added one more channel partner in its successful network.

Franchise Mart India Pvt Ltd is has taken one more successful step in strengthening its arm by inaugurating the “Franchise Mart Shop Guwahati.” With the “Franchise Mart Shop Guwahati” now Franchise Mart has added one more Channel Partner in its Successful Network. Franchise Mart is a franchisee chain of franchise brokers across India.

In the presence of COO of Franchise Mart Mr.Falgun Angadia and Expansion Head Mr. Pankaj Kumar, Mr. Rajesh Goswami- the Channel Partner inaugurated “Franchise Mart Shop Guwahati” On 23rd September. Opened at Waheb Complex, Zoo Tinali Road, “Franchise Mart Shop Guwahati” is ready to serve the Entrepreneurs and Business aspirants of Aasam.

Mr. Rajesh Goswami- the owner of Franchise Mart Shop said, “Guwahati is known as the gateway to the North-East region and considered as one of the major cities in eastern India. With Franchise Mart Shop Guwahati, Franchise Mart will try to enhance the Business Opportunities in this region. The major economic activities here are trade and commerce, transportation and services. As Guwahati is the most important trade hub in NER (North East Region) Franchise Mart Shop will definitely help the businessmen to find appropriate franchise for themselves.”

Read More

Raymond Franchise to mark 500 by Oct. 17th 2009, Diwali

The Raymond Franchise is all set to expand by increasing its total outlet stores to more than 500 by October 2009. The company will open around 70 new stores prior to Diwali this year. All these outlets will be opened through the franchise route in smaller towns across the country. The 70 franchised stores will be opened in the class IV and V towns of Punjab, Haryana, Rajasthan, Orissa, Madya Pradesh, Gujarat and also in a few towns of South India. Anirudh Deshmukh, President, Retail and FMCG Raymond said, “Raymond has always given preference to open outlets in smaller towns where the population is less than five lakh and it will carry on its tradition. We already have around 100 outlets in the smaller towns.” 

Read More

Brand Gandhi lives by licensing to luxury brands

Mahatma Gandhi, a prolific writer, may not have ever used a Mont Blanc to write any of his soul- stirring words, nor did he flaunt any branded item of daily use even when he was a successful lawyer in South Africa, but that hasn't stopped him from becoming one of the most respected brands in the country, 140 years after he was born this day in the then princely state of Porbandar.

Mont Blanc, the Swiss luxury brand, unveiled a limited edition of 241 pens in Mumbai earlier this week to commemorate Gandhi's 241- milelong Dandi March against the punitive salt tax in 1930. The pen, which has an 18- carat gold nib plated with rhodium, is priced at Rs 14 lakh (USD 28,000). The company has also rolled out the ' Mahatma Gandhi 3000' pen ( priced at Rs 1.5 lakh to Rs 1.7 lakh i.e. USD 3000 to USD 3400) with sterling silver mountings on its cap and the cone.

" We must learn to accept that Mont Blanc is not associated with being frugal as Bapu was. Still, they have felt the need to salute his image," says Tushar Gandhi, the Mahatma's great grandson. Mont Blanc, though, is not the first big brand that has wanted to get linked with the Mahatma. Says Tushar Gandhi, " One of the most surprising cases was the campaign the makers of the Audi car had conceived of, exclusively for Spain, where they had wanted to license Bapu's image. I asked them how they would justify the use of Bapu's image in that campaign. They replied it was the ' long- lasting untarnished image of Mahatma Gandhi' that they wanted Audi to be identified with." But the campaign got shelved mid- way for some undisclosed reason.

Read More

Canadian PreSchool, Maple Bear Expands in Indian Subcontinent, Bangladesh

Maple Bear is a Canadian franchise school. The curriculum has been developed by Canadian Education Centre Network, which was set up with the support of the Government of Canada to promote Canadian education internationally. With its headquarter based in Vancouver, Canada, Maple Bear has global operations in Bangladesh, Brazil, China, France, India, Morocco, South Korea, Turkey, Vietnam. The Program Developers of Maple Bear are experts in education. They have won several awards from the Canadian government. Mr. Rodney Briggs is the President of Maple Bear; while Mr. Gerald Macleod is the Vice President. 

Maple Bear started its operation in Dhaka in 2007. Maple Bear is the only Canadian franchise school in Bangladesh. In Bangladesh, First Step Research Centre Limited is the franchisee. This company has board members from Bangladesh and UK. The board members are accomplished individuals in the corporate sectors of both the countries. 

The faculty have been trained by Master Trainers to be able to implement Maple Bear's curriculum. Teachers have the option of sharing their views, ideas among different centres all over the world. Canadian education is one of the best in the world. 

Read More

Thai franchise, Smart Shop 108 opens in Dimapur, Nagaland 

Dimapur, September 30: One of Thailand’s most successful companies, Smart Shop 108 (p) limited, with franchise partner Holika Sema, opened its first convenience chain store in Dimapur today. The company, having 1,000 outlets in Thailand alone, has six other stores in India and plans to expand.

The newly opened Smart Shop 108 located at KE complex at Nagarjan junction in Dimapur. An array of food stuff stacked on shelves at the new Thai franchise. 

Read More

The Flipside of Social Media: YouTube prank forces Domino's Pizza franchise to close

You would have probably heard a lot of people extolling several benefits of Social Media Marketing, here is an example, of how a simple prank led to the downfall of a Dominos Franchisee. 

The owner of a North Carolina Domino's Pizza franchise that gained worldwide notoriety after two employees posted several gross videos on YouTube lost so much business because of the prank that he had to close up shop. The franchise in Conover, N.C., shut its doors last week, according to the local Hickory Daily Record. "My business was off 58 percent because of YouTube," owner Kevin Hendren told the paper.

Back on April 13, five video clips showing a Domino's Pizza employee performing unsavory acts with food showed up on YouTube. The videos, shot and posted by a second employee, became Internet sensations. Bloggers uncovered the identities of the employees, Kristy Hammonds, 31, and Michael Setzer, 32, who were arrested and charged with felony food tampering. Meanwhile, using social media tools, Domino's officials tried fighting the fire with fire by posting their own YouTube video denouncing the acts.

Read More

Restaurateur Anjan Chatterjee is expanding his restaurant network, Speciality Restaaurants and betting on the franchise route. But it will be a tough plan to pull off

When you can choose from an array of reading glasses, ask the maitre d’ for a shawl to keep the cold off or get a bassinet for your baby, you know you have come to a restaurant that is different. This is what makes adman Anjan Chatterjee’s Mainland China food chain thrive among a loyal, growing customer base.

 

You expect Chatterjee to understand customer tastes. His ad agency (founded in 1985, it handles clients like Emami and Cello Pens) has taught him to pay attention to details in his restaurant business. Over the past 15 years, he has tried to offer fine-dining experience with food offered at much lower prices than the star hotels.

 

Anjan Chatterjee plans on expanding his restaurant network from 52 to 100 and also plans an IPO

Chatterjee has 52 restaurants (spread across eight brands including Mainland China, Sigree and Oh! Calcutta) across 11 cities including three abroad — Beijing, London and Dhaka. Now he wants to spread to tier-II towns and in some ways be a pan-Indian fine-dining restaurant chain.

 

Chatterjee’s company Speciality Restaurants Pvt. Ltd. (SRPL) and SAIF Partners (Softbank Asia Infrastructure Fund), an investor in SRPL, are busy scripting the new plan. They are looking at a listing on the stock market next year. It depends on the number of acquisitions. They want to expand the chain to 100 restaurants before the initial public offering. What makes them sure they are ready?

 

SRPL models itself on P.F. Chang’s China Bistro, a chain of 189 Chinese restaurants in 39 states in the US. That is the scale it wants to achieve. “The key difference between India and the US is that there are dozens of chains [there] that have scaled to over a hundred locations,” says Ravi Adusumalli, general partner at SAIF. “In India, we believe that SRPL will be the first to reach this landmark. Is India ready for 200 Chinese fine-dining restaurants? Probably not. But 200 across four-five brands? Yes.”

 

SAIF Partners backs Chatterjee’s aggressive strategy. It had bought a 20 percent stake in SRPL for Rs. 90 crore in December 2007 valuing the business at Rs. 450 crore. “Most other chains expand to around five or six outlets and then fail to scale, but SRPL has potential to be the first fine-dining chain to have over 100 outlets. They have demonstrated the ability to scale with the right processes in place,” says Adusumalli.

 

One thing is sure. Chatterjee’s task is difficult. Think about it. There are hardly any pan-Indian restaurant chains, forget fine-dining. The only company to have done it at any sizeable level is Blue Foods through Copper Chimney, Noodle Bar and Spaghetti Kitchen. The impediments are many. The Indian taste palette varies across regions. Restaurants find it hard to get good real estate. And because the restaurant mortality rate is high, finances to scale up operations is very hard to get.

 

Add to Taste
That’s not stopping Chatterjee because SRPL has reached a saturation point in the metros and needs to expand. It is aiming for Chandigarh, Ludhiana, Jaipur, Mangalore and Kochi for the next expansion wave. Not all the growth will be organic. Chatterjee is also looking to dilute 10-15 percent of stake in his company to raise funds to acquire a south Indian restaurant chain and an Italian restaurant chain. And to open new restaurants in tier-II towns, he is planning to use the franchise route, where he will provide the cooking methodology and train the staff while the franchisee will bring the space and the investments. Depending on the location, SRPL will take between 11 and 13 percent from the revenue as commission. So if everything goes well, Chatterjee will be looking at 100 restaurants across 10 brands by the year end. That would mean his turnover would almost double from the Rs. 150 crore as on March 31, 2009.

 

Franchising is difficult in the food business. “Fifty percent of franchisees in India do not match up to the standards of the brands. They begin to cut corners, it could be anything from cutlery to substandard ingredients,” says Nitin Deshmukh, private equity head, Kotak Mahindra.

 

What if the franchisees don’t match up to SRPL standards? “We are taking the franchise -owned, company-operated route. The brand’s essence is not diluted. Manpower, full training, quality standards and brand standards, everything goes through us,” counters Chatterjee.

 

Not everyone is convinced. One of the best fine dining restaurants in India, Indigo, just celebrated its 10th anniversary this April. The number of branches it has so far: Three and all are in Mumbai. “I don’t know whether Anjan is making the right decision. But franchising doesn’t work for a fine-dining restaurant. And that has been a problem all over the world. Big chefs have lent their names to restaurants and they have all closed down,” says Rahul Akerkar, managing director of deGustibus Hotels, which owns the Indigo brand.

 

However, Chatterjee’s strategy receives a thumbs up from Vikram Bakshi, managing director and joint venture partner for McDonald’s India. “The commitment (to a franchise ) has to be 100 percent; you cannot treat the business as another business in the portfolio. This existing situation demands that we need to sift the committed entrepreneurs from wannabes; which clearly requires a refocus on education on franchising. Hence, our learning so far clearly indicates that company-operated model delivers, as the focus is long-term.”

Undercooked A major reason no Indian sit-down restaurant player has scaled up is a lack of processes. The ability to deliver is limited. “In the mid-level to fine-dining restaurant business, you need a system delivered operation. Right now, people don’t have that in place,” says Akerkar.   And SRPL requires very strong systems. For instance, a lot of ingredients and all the sauces for Mainland China are imported. All the fish for Oh! Calcutta outlets are flown in from Kolkata. When these brands go into the mini-metros, will they be able to continue to deliver? Chatterjee believes so. “We started off expanding slowly. In 1999-2000, we did three [restaurants]. Then it was four a year and then five. Now we are trying for 18. We have the experience and the processes are stream-lined. We just have to continue to do the same on a larger scale.”   A restaurant is only as good as its people. Even if one chef or a small team of cooks leaves, the quality of a restaurant could suffer. Employee turnover is quite high in this business. SRPL has opened a catering institute to combat this problem: Mainland Institute of Oriental Catering at Salt Lake, Kolkata, to train and re-train employees according to its specifications. The institute has 250 students. And the place supplies staff to all his restaurants. The training is important for the staff as their appraisals are linked to how well they perform during their training sessions.   Image: Malay Karmarkar Apart from processes, fine-dining restaurants have to deliver an experience rather than just a meal. “If a restaurant can make Rs. 800 on an average bill, then the margins can be 20-25 percent, else they drop to 10-15 percent. Also, very few locations in India are both lunch as well as dinner places. So a restaurant has to make its money from one dining occasion,” says Milind Kothare, CEO, mKons Consulting, a hospitality consulting company.   Till last year, getting high bill values was not that difficult. With the slowdown this year, one of the first things people cut down is eating out. Chatterjee says most visitors to his restaurants have kept coming, though there has been a drop in the corporate business. “Last year, there was madness on corporate tables. In one table, there were five imported wine bottles. The man has got equity, he thinks it’s not my money, it’s the fund’s money, so udao. That mindlessness has stopped,” he laughs.   Getting Them to Pay Each patron at a Mainland China outlet in Mumbai pays Rs. 425 on an average. This sort of billing enables most of SRPL’s restaurants break even within six to eight months, Rajesh Mohta, general manager for finance and accounts, says. And 80-85 percent of the current restaurants are profitable. Will tier-II towns pay that kind of money? Indigo’s Akerkar thinks so. “There’s ce rtainly money in tier-II cities. There’s a lot of potential waiting to be tapped. Anjan will have prime mover advantage and if he can maintain his superior quality over time, there’s no reason for him to beat existing restaurants,” he says.   Chatterjee adds, “They will pay for quality. Of course we may have to adjust tastes. But we have done that in metros as well. If we serve slightly thick rice, they say what the ****, we are paying so much money and this! Indians like basmati rice. Basmati ka fried rice, you just can’t change.”   Chatterjee looks for opportunities everywhere. And he tells interesting stories. Sigree, the north Indian chain, actually serves pre-partition era dishes. He picked them up from Gafur miya, a chef in Lahore, when he had gone there for a cricket match. He got the recipe for dab chingri, a dish from Bangladesh, for Oh! Calcutta. “I met a 78-year-old lady in Chittagong, Bangladesh for the recipe. One of the finest moments of my life. This lady at home, someone’s granny, extremely difficult to deal with but she chatted with me and made some dab chingri for me. And it was very important for me. Because after her the recipe will be extinct. No book writes it,” he says.   Years ago, Chatterjee’s Situations Advertising had come up with the Aaya naya Ujala, chaar boondon wala jingle to make the clothes whitener a household name. At the time Ujala was competing with Reckitt and Coleman’s established Robin Blue. This time Chatterjee has the first mover advantage. He has to replicate his successful model when others are standing still. This has the makings of a very yummy story.

WHAT MAKES A SUCCESSFUL FRANCHISEE?
- Dhawal Shah and Dheeraj Gupta

The success of operations of the franchisor lies more in selection of a suitable franchisee apart from a tried tested and proven system, feasible business plan, sufficient profit centres, and motivated employees. We shall discuss the traits that make a franchisee successful.

The characteristics that make an individual, a successful franchisee are that they are prepared to follow the franchisor's tried and tested system, are self motivated, prepared to work full time in the business, capable of managing people and ofcourse a good leader.

Successful franchisees are able to handle high stress levels. Initially, in a franchise venture the factor that determines the success and failure of the venture is the amount of dedication, determination and commitment of the franchisee. If the franchisee just believes in the franchisor and keeps investing his time and passion in the business, he is more likely to be successful.

Belief in the system: Entrepreneurs have an almost irrepressible need to reinvent the wheel based on their incredible optimism and confidence in their ability to figure out how things should be best done to maximize results. Successful franchisees, on the other hand are looking for operating proven systems. They don't want to have to start from the grassroots and try to discover the best way to do a particular thing. They want a proven system that tells them the best way to do anything associated with their line of business. They are willing to learn from others to avoid making mistakes, so they can be more successful more quickly. Being patient is important. Some stores take a little while before they turn profitable. Buying a franchisee is not a license to make money minus the hard work.

Contribution to the network: Successful franchisees that have completely gelled in the system, start contributing in terms of ideas and innovation to get ahead of the competition. As franchising in India is still at a nascent stage, the no. of national players are few. And they face competition from different regional players in different markets. Often, the franchisee is best able to determine as to how he can get the better of the market and along with the strong back-end support of the franchisor can achieve strong results.
Support and Training: Successful franchisees always ask in doubt, they are always looking at ways in which they can increase efficiency and profitability of the business. Franchisees make a considerable investment in the business in terms of time and money; they often have their life savings at stake and hence cannot risk straying away from a set system standards. They constantly ask advice of the franchisor support staff and other successful franchisees and follow the advice

Effective Interpersonal Skills: The most successful franchisees have extremely effective interpersonal and leadership skills. These skills help them create value, enable loyalty and establish trust in the minds of their employees and consumers.

And of course, a franchisee must choose the right company to partner with. Success as a franchisee not only lies in having the discussed qualities but also in selecting the right co. The prospect should evaluate atleast twenty five opportunities, before finalising a particular franchise opportunity. This would ensure that he has paid attention to several details, which may not necessarily be brought to the attention of the franchisee. They are hundreds of opportunities available. He should seek professional counsel from lawyers, chartered accountants and existing franchisees before investing in a franchise to avoid making expensive mistakes.

Dhawal Shah is the Dy. Executive Officer of Franchising Association of India. He can be contacted at fai@vsnl.net and Dheeraj Gupta is the Director at Jumbo King Restaurants Pvt. Ltd. he can be contacted at dheeraj@jumboking.biz

Future of Franchising in India

Franchising is an entrepreneurial alliance. Much like a commercial business partnership wherein the franchisor provides the brand name, manufacturing / service delivery process and access to the system and the franchisee provides the capital and forms the front end of the delivery system. Franchising is based on sound principles of excellent and consistent quality that is associated with a brand name.

Currently, In India not many innovative franchise concepts are available. In this subcontinent people prefer to save some cash rather than go for quality service. This is because people fear to take the risk of deviating from the conventional idea of the concept of business and adopt franchising as a method of business.

Franchising, today contributes roughly about 1% of the total retailing activity in India. This is no doubt a very grim picture for the franchising community. When carefully observed behind this gloomy image India has a very big opportunity. With the internationalization of franchising and emergence of new technology, it is a dynamic method of doing business. It is in keeping with the liberal philosophy according to which without freedom, the human spirit languishes and the economy stagnates. With the issue of global governance, there seems to be a growing trend of drinking water being supplied as a commodity with a profit motive. Though the issue of global governance and water is debatable as the same can be conceived as commodification of water, the possibility cannot be denied that the future may involve corporatization of water and provide opportunities of franchising! As Asian and world economies, grow with the ever increasing

Populations and the move toward free market economies, new franchise concepts will come on the scene and the solid, well-managed existing Franchise companies will continue to grow. The well-known practice of Latin America is of getting a government franchise for a particular business.

Economic development is the precursor to social development. The vital component of a progressive economy is the number of entrepreneurs. Franchising clearly offers aspiring,
New business owners the best possible chance of succeeding with the least risk. The major advantage is that the system, the means for distributing goods and or services, has been developed, tested, and associated with the trademark. Within two to three decades or less, franchising in India and most parts of the world shall comprise over 50% of the retail economy, and will employ millions of people and will enable hundreds of thousands to realize their dream of successful business ownership. Programs exist that are designed for low-income individuals aspiring to be entrepreneurs to provide franchise opportunities.

In around mid 2006, India’s GDP (on a Purchasing Power Parity basis) is going to cross the magical figure of USD 3300. After crossing this figure what can be expected is a sudden growth in demand of consumer durables, mobile phones, better utilities and everything that is needed for a better standard of living.

The hotel industry is at the forefront. Brands that dominate the Indian hospitality marketplace. Chain affiliation is the key word. A chain can be effective if its components adhere to brand standards. Customer satisfaction at one member hotel is directly proportional to customer preference for the brand. Networking and teamwork are the positive characteristics associated with success in this field.

Therefore, an environment conducive to franchising seems to be developing. There is a move toward better protection of franchisee rights and over time, this should push more franchisors towards structuring their Relationships with their franchisees in a totally win-win manner. It is a common perception that the current regulatory framework affords little opportunity to small business franchisees to obtain redressal in the event of conflict with the franchisor. The power equation is generally in the favour of the franchisor. The attorney of the franchisor who drafts the agreement could err by overemphasizing the rights of the franchisor and magnifying the obligations of the franchisee. Progressive attorneys now seem to have realized that there should be no room for ambiguity in the agreements. Vague agreements written in bad language underplaying rights of the franchisee can be rejected. This encourages a review of outdated agreements. The best franchisee support structures are provided by franchisors to protect them. The mutual goal is success for both parties. The franchisor contributes his brand, products, mode of operation, system, and marketing. The franchisor also sets the rules, guidelines, and product quality to be followed by all of its franchisees. The expertise of the franchisor and the hard work of the franchisee translate into a strong partnership.

The growth of franchising is inevitable, because of the inescapable logic of the underlying concept. Business owners realize the importance of finding ways of reaching out and creating a distinctive brand image with respect to customers. This synergy creates competitive strength. Franchising to reiterate is a WIN-WIN-WIN. The Franchisor wins by having a presence, whereas the franchisee wins by owning a profitable business and the society wins at large by having superior products and services.

Franchising in this century will be highly influenced by Technology and Internet. Technology improvements, notably in telecommunications, computers and the Internet, are having a major influence on franchised businesses. Technological developments including the Internet are having a significant impact on franchising. The Internet is still moderately new, yet it is rapidly shifting the business environment, changing the way we process information, network and carry out business activities. Several franchised businesses are in the pursuit to be on-line, and to consider an appropriate Internet Marketing and Advertising Strategy

They are looking to make the most of the opportunities this new technology provides (reduced costs, rapid expansion, increased sales), whilst simultaneously attempting to protect themselves from a new class of competitors (e.g., new, often global competitors) accompanying it.
The Internet is threatening the survival of retailers. Brick and mortar travel agents are almost extinct. Consumer centric E-commerce sites are mushrooming the virtual market. Many franchisors have already taken the initiative towards building their brand on-line by establishing and updating a web site. Most provide information to the market for end users of products/services, as well as the market for franchisees and investors. In addition, some franchisees are establishing their own sites

In this era of co-operative competition, Franchisors today are collaborating with competitors and complementary product/service providers to explore co-marketing and other strategic synergetic opportunities. The development of the Internet is also responsible for a new range of challenges to the franchise relationship. While the Internet provides a wonderful opportunity to build sales globally, there are a number of issues between franchisors and franchisees that need be resolved.

One key question is who can develop what? It appears most franchisors want to control Internet developments centrally, and do not want franchisees starting their own web sites. There are exceptions, however with others believing multiple sites help build brand awareness. However franchising is synonymous with uniformity and ensuring uniform websites would call for a different set of rules.

Another question involves who bears the expense for setting up the website? In addition, critical to this is yet another - how are profits distributed? These are particularly pertinent issues given the company's web site may compete for customers in the franchisees territory. Some franchisors want to keep profits for themselves, claiming that while the web site may take some sales, the increased awareness it provides to local franchisees far outweighs this. Franchisees argue however, that such web sites cannibalize sales and diminish the value of the franchise.
Technology and Internet has led to a whole new set of franchised businesses. An Internet company, World Sites assists small and medium businesses establish affordable websites and a wide range of other services. It would be difficult to imagine such unique concepts without the role of technology. Overseas, the number of Internet related businesses has been growing consistently, the same trend can be expected in India, in the coming years.

Franchising in Niche Markets
Niche markets are developing around a new set of consumers. These consumers are small in number and look at specific services. Eg. Senior Care services are popular globally, however they have not yet penetrated in India. These consumers are over 55 years of age, and affluent and they are now looking at enriching their lives by being involved in their hobbies, they would not want to be involved in trivial day-to-day activities.

As a consequence, more franchised businesses are developing marketing campaigns specifically for them. Some have gone further and added new products and services. In yet a further illustration of the importance of this segment, whole new franchise concepts are emerging. Further growth in these areas seems inevitable. Such franchise business flourishes here by catering to a few, but very profitable consumers.

Competition, Franchisors face competition in every segment, and it is going to intensify. Also indicative of the potential for increased competition are the plans of strong overseas franchise systems. Most international franchise companies are bullish on the potential of franchising in India and are willing to invest for a long-term basis. Many seek additional growth and believe their home markets to be nearing saturation. Further, many in fact need growth, in order to satisfy analysts following their stock.

Mergers and Acquisitions
M & A activity in mature markets like US and Canada is rampant. In India, M & A would happen when the markets develop and when growth seems difficult.

Large well-known systems have often purchased both individual and groups of offices, in areas they aren't represented to build market coverage more quickly, then franchised them later.

To conclude, the future trends involving franchised businesses are varied. The local franchising industry can expect a colorful future. On the one hand, franchisors and franchisees have some exciting possibilities to pursue, while on the other, there is a range of new threats to contend with. In my view, the future brings increased complexity to the role of franchise system management. This complexity will also lead to growth and further penetration of this amazing WIN-WIN PARTNERSHIP. Franchise strategists will have more options and to consider and at least some of these will require specialists skills to evaluate, progress and prosper in this rapidly changing evolving market.

Dhawal Shah, Dy. Executive Officer of Franchising Association of India. Dhawal Shah is described as a franchise enthusiast. He has always been intrigued by the power of franchising. Based in Mumbai, he constantly reads and writes on franchising and its enormous potential in India. He can be contacted at dhawal@mail.com

The Benefits of a franchised business vis-a-vis a Standalone

Starting up a new venture can be a risky affair. You can painstakingly explore and research your market, time the set up to perfection, open your business where demand is high, outdo the competition, offer the best range of products and services available, advertise in the right places and still your business can fail. In fact global Small Business Statistics indicate that one half of new businesses close within the first 3 years of trading. When describing exactly what a franchise is, the important thought is “the right to do business in a prescribed manner.”

Recently, franchising has been enjoying more acceptability vis-à-vis an independent business.
There are inherent benefits in the franchising system, which make them more competitive in the market place. Apart, from the inbuilt benefits in franchising You can be your own boss, you're operating under a trademark that has instant brand recognition, and the failure rate for franchises is lower than it is for mom and pop businesses."

As we further analyze these two different ways of being in business we are confronted with a dilemma. Both have its positives as well as their downsides.

The Success Factor / Risk
Risk is a critical factor affecting any business plan. It has to be evaluated. This age is characterised by massive competition. It is no surprise, therefore, that entrepreneurs who want to run their own businesses but also keep their exposure to risk to a minimum often choose to buy into a business which has already proved to be commercially viable.

Franchised businesses are more likely to succeed that many other startups because they have a proven track record and have established and effective processes in place.

Training and Support
By buying a franchise in such a firm, the new business owner can get a head start in the market, benefiting from the experience, support, market presence, buying power, research and innovation of the host business (franchisor). He does not have to reinvent the wheel and discover the various problems he will encounter while running his business. He does not have to spend precious time and time in trial-and-error way of learning.

Access to an Established System / Successful Business Formula
The franchisor will have put processes in place that act as a map showing the franchisee the route to business success. This business formula will have been tried and tested and should be clearly defined.

The real difference between franchises and independents businesses is not what they do but how they do it.

Aspiring entrepreneurs choosing to become franchisees certainly expect to improve their chances of survival during the turbulent early years of business startup and operation.

Only 10% of new businesses reach the 10th year of business operations, whereas 90% of the franchise operations are successful. This success rate can be attributed to the Established and Proven System.

Economies of scale
Being a franchisee also enables you to operate in a larger business arena than you would be able to if you were a standalone firm. This wider commercial environment means that you can benefit from economies of scale and better business deals and it may enable you to recruit higher-skilled staff and offer better employment benefits.

Franchisees contribute towards a common advertising fund, which enables them to spend on important medias. This expenditure would not be possible had it been for a standalone.

Alignment with a franchisor parent company offers the franchisee managerial assistance, access to financial capital, and access to markets

THE DIFFERENCE
In the beginning, a prospective independent business owner chooses a name, then an identification scheme for the company vehicle, letterhead and business cards. A yellow page ad that complements a marketing plan is developed, and a sales procedure to communicate a positive message to the buying public is created. In addition, a decision must be made as to the cleaning procedure the company will deliver to its customers before the machinery and cleaning solutions are purchased to support that decision.

On the other hand, a prospective franchise owner investigates the various franchises available. When the choice is made and the franchise is purchased, a complete business system is delivered. The patented equipment and proprietary cleaning solutions are only a small part of the package. Business cards, letterhead, truck signage, advertising pieces, technical/management/sales manuals, customer invoices, and business software may also be part of the initial delivery. Lack of Independence / Freedom

A Franchised Business is may not be suitable for maverick entrepreneurs. Franchised operations call for uniformity, they do not encourage system-wide creativity and innovation, as it may lead to differing products and services. Freedom is severely curtailed.

The contractual obligation binds the franchisee to follow the stipulated guidelines as documented in the Operations Manual. If you value your independence, buying a franchise is probably not for you.Agreements vary from business to business but many franchisors will only allow you to sell the products that they approve and normally supply. You may have no flexibility to modify your product range or service to suit your market.
Suffice it to say that an independent business offers freedom of choice, but the franchise offers the security of working with a known product or service and the guidance of the franchisor.

Greater Investment / Less Profitable
Franchise operations are no doubt, larger scale, better capitalized young firms, however in certain industries especially consultancy services, the independent business startups are found to be more profitable and their survival prospects are better than those of franchises. As a franchisee is bound to pay royalties and make regular contributions to the Advertising Fund.

Buying a franchise can be expensive. You will probably be required to pay an upfront fee to buy into the franchise as well as pay royalties on sales or management fees. You will probably be required to buy all your supplies and raw materials from the franchisor or his favoured supplier, even if it is not the cheapest supplier available. All these fees are on top of your usual operating costs.

Dhawal Shah, Dy. Executive Officer of Franchising Association of India. Dhawal Shah is described as a franchise enthusiast. He has always been intrigued by the power of franchising. Based in Mumbai, he constantly reads and writes on franchising and its enormous potential in India. He can be contacted at dhawal@mail.com

Before you start Franchising

Developing a franchise module requires a great investment of time and money in brand building, training, advertising, expert guidance etc. So if you have decided to get venture into franchising here are some guidelines.

The Prospective Franchisee: An important aspect of developing a franchised business is the identification of franchisees. The franchisor should realise the necessity of developing a methodology to predetermine some method for choosing perspective franchisees. The franchisor should not just focus on individuals with adequate capital but also on those that possess the moral character to be strong franchisees, as the initial franchisees play a pivotal role in the long term success of the chain.

Prospective franchisees will see the franchise as a much more credible and attractive proposition if it is affiliated with a credible non-profit worthy institution like Confederation of Indian Industries, Franchising Association of India etc. Mr. C. Y. Pal, President, Franchising Association of India adds that as franchising being at a nascent stage and the markets currently unregulated, there are several cos. which may not function in the most transparent manner, and thus, such associations are of great value.

Before designing the functional components of the franchise, the service being franchised must be clearly defined. What is the product / service? How will it be delivered? To whom and by whom? And under what circumstances will it be delivered? All aspects of franchise operations should be field tested and optimised before expanding the network. Franchise managers need to remember that franchising is, by definition, a mechanism for rapidly expanding a proven business model. The entire franchise system is at risk of failing if its business model is flawed. The franchisor should have atleast 2 – 3 successfully running, company owned outlets in different localities. The only way to prove the viability of the model is to test it. Before franchising a service, the service delivery model and all its functional components must be developed and tested to ensure that they can be operated feasibly and that, taken together, they bring about the desired result. Only then should franchise expansion occur. The company owned outlets are live examples for the franchisee to visualise the role they would be playing.

Initial buy-in and endorsement of key franchisees lends credibility to the franchise chain and facilitates its growth. Involving franchisees in the initial design phase of the franchise is key to obtaining their buy-in. Franchisees also provide invaluable inputs. Franchise managers should ensure that they identify and consult with their franchisees from the outset and that they involve them in key design issues. It is also important to obtain the endorsement of a locally recognized and well-respected institution. Franchisees need to be consulted and convinced before decisions are made. Decisions cannot be forced upon them.

Clear guidelines should be given covering all aspects of service delivery. These guidelines help both the franchisee and the franchisor understand precisely what it is that they are marketing to their customers, i.e. what consumers can expect from franchisees. Only after defining the product should components of the franchise, such as training and evaluation, be developed.

A fully functional and reliable Management Information System must be in place before implementing the franchise so that data can be recorded accurately from the beginning of the project and proper monitoring and evaluation can occur. The MIS should be designed to adapt to changing data requirements over time. Reasonably reliable data are essential to evaluate a program and its effects. While the need for a sound data system seems obvious, experience has shown that it can be very difficult to achieve. The system must be based on a thorough needs assessment and must respond to the development and use of well-designed paper records and data models at appropriate decision points in the program’s life.

Additionally, program staff must understand and have confidence in the MIS. If they do not, they will create their own independent systems for record keeping. Reliability problems with MIS may result in training, sales and finance staff maintaining different, overlapping data systems (in addition to the MIS). Not only is this inefficient, but it also results in conflicting information that is difficult for program managers to interpret and manage. The importance of reliable and coherent MIS data cannot be overstated: information is the basis of the feedback loop that allows the franchisor to monitor franchisee performance and thus maintain appropriate control of the franchise.

Data also provide the basis for evaluation, which is critical to assessing and improving the services franchisees provide. Finally, the MIS must perform a variety of different functions efficiently, such as tracking sales and quality of service, and still yield systematically consistent results. Gradually, new parameters to the MIS can be added to improve measures of quality, keep track of changes in providers.

The franchise agreement is a legal document that clearly stipulates the roles and responsibilities of franchisor and franchisee and that outlines the mechanisms used to enforce contractual compliance is necessary. A strong contractual agreement should be balanced with the need to make the alliance more appealing. It should also stipulate the duration (generally 10 to 20 years) of the franchise agreement. Because of the complexity of these documents, it is recommended that the start-up franchisor find a lawyer who has had experience in the franchising field.

A strong franchise support team large enough to cover franchisees adequately and with appropriate frequency is necessary to offer on-going training, follow up and support and also control the quality of the service provided.

This can prove to be one of the most beneficial features of the network.
Having company executives follow-up with franchisees is clearly an important contributor to the franchise module’s success. But the training course is only the beginning of a very long process . providers need to feel comfortable with their work and stay motivated over the long run. This is exactly what this system accomplishes. During site visits, the monitoring team give franchisees the opportunity to ask questions and discuss concerns. As this team has personally recruited and trained the franchisees, the comfort level with these franchisees is high.

This team helps franchisees maintain their motivation and boost their morale when their business volume is not high. Finally, a strong monitoring and support team is required to ensure that franchisees adhere to the specified norms and maintain appropriate records.

A quality training program is crucial for the success of the chain. To the extent possible, the training program should be developed in-house so that the franchisor has direct control over the quality and scheduling of training. In-house training development would no doubt be an added expense, but it pays off in the long run. It is well worth as compared to the benefits of having greater control over the quality and scheduling of training.

The process of creating training programs involves identifying training needs; developing training curricula to address identified needs; writing a trainer preparation course; recruiting and training master trainers who would be responsible for developing new trainers. The thoroughness and effectiveness of the training program is an evolving one.

The franchisor also needs to prepare a formal and comprehensive evaluation of these training programs. The program should be evaluated by the trainer (whether it is effective with the audience) and also by the franchisee (if some aspects are overemphasized / not taken care of)

Financial feasibility should be thoroughly assessed. In addition, before franchising, it is important to determine, through the development of pro forma financial statements, the feasibility of the entire operation. The proper franchisor cash flow statement should illustrate to the franchisor and possible investors the actual start up costs and returns that the franchisor will incur. Most franchisors will incur a loss during the first and second years. Many franchisors hope to overcome this loss during the second or third year or operations. The proper pro forma cash flow and balance sheet should give a proper picture and illustrate the financial hopes of the organisation.

A franchisee is convinced about a particular franchise opportunity, if it is lucrative (in consideration with his investment). One of the most important aspects of developing a franchising program is taking the proper steps to develop a Business Plan. The franchisor should ensure that the franchisee fee charged is just right. If the free he is charging is low (his brand will be perceived to be a weak one) and if high then it may shy away prospects. The royalty being charged should be nominal, so that the franchisees view it as a viable and lucrative proposition.

McDonalds is synonymous with successful franchising, for the fundamental reason that it allowed its franchisees to prosper first and then due to strong evangelism, more franchisees were convinced to join McDonalds and simultaneously, McD benefited from the economies of scale.

To the extent possible, community-based activities should be incorporated into strategies to create demand. These activities should involve the franchisees. For maximum leverage these initiatives should be related to the product / service provided. It should benefit your target audience. More in-depth information (pertinent to its service) should be disseminated, so as to create future demand for services. The franchisor should try to reach more potential clients through direct public contact.

Care should be taken to provide ongoing motivation to franchisees. While involvement in the franchisee’s operations would benefit franchisors economically (through increased clientele) other incentives must be built in to the partnership to keep franchisees motivated (especially in times when business is low) when they do not see immediate or clear economic rewards.

The franchisor needs to be able to properly identify the target market, the product being offered, and the advertising program which will be used in the franchising units. Additionally, many franchisors strive to develop a proper franchisee profile which delineates the characteristics of the franchisees whom they seek as partners in the franchising business. A manager profile is often also developed which franchisees may then use to screen or hire prospective managers for the organisation. It should also be noted that different form letters, paragraphs, and packages should be developed by the marketing people before the franchise is actually up and operating.

CONCLUSION
The franchising program is an evolving one, and a successful franchising organisation should be flexible and continuously fine-tune and refine its module and address the various challenges arising with respect to legal, financial, sales, administrative, and marketing areas. Franchising is a vibrant and exciting opportunity for businesspeople that desire to expand their operations through this method of doing through this method of doing business. Franchising is the wave of the future.

Dhawal Shah, Dy. Executive Officer of Franchising Association of India. Dhawal Shah is described as a franchise enthusiast. He has always been intrigued by the power of franchising. Based in Mumbai, he constantly reads and writes on franchising and its enormous potential in India. He can be contacted at dhawal@mail.com

The potential of International Franchising in India

The Indian economy grew by 6-7% in the 2005, thanks to continued reforms The middle class has never had it so good, with plenty of options and credit available in abundance at a competitive rate. There has been a change in mindset; a flamboyant generation is gradually replacing the debt-cautious.

Banks have identified India as the fastest growing retail market. Banks and financial institutions have disbursed loans of over Rs. 100,000 crore (USD 20 Billion).
Franchised operations are becoming more popular in geographically vast and culturally diverse nations like India, as franchising helps to overcome the difficulties posed by having a chain of company owned outlets.

The earliest franchises date back to the Middle Ages when the Catholic Church granted them to tax collectors, who retained a percentage of the money they collected and turned the rest over to the Church. Current franchise operations as we know them are not very old. The boom in franchising did not take place until after the World War II and it has not abated this.

The Franchising Industry received a fillip in during the 1990s due to the opening up of the economy. Since, then, sales from franchised business have grown at an average rate of 20 – 30% compared to an economic growth rate of 6-8%

Today, International franchising in India is one of the most exciting areas in the franchise industry. TODAY, GLOBETROTTERS ARE MORE LIKELY TO DO THEIR SHOPPING IN FRANCHISED STORES. GLOBAL FRANCHISE ORGANISATIONS LIKE PIZZA HUT, MARKS AND SPENCER, MCDONALDS, SUBWAY, HP, HOLIDAY INN, MEDICINE SHOPPE, MARRYBROWN, DOMINOS, GOLD’S GYM, KODAK, KENTUCKY FRIED CHICKEN ARE BULLISH ON THE POTENTIAL OF FRANCHISING IN INDIA and have started their franchise operations. It is advisable for international companies wishing to make a presence in India , to divide India into different zones and appoint master franchisees for each of them or they can also opt for a national master franchisee

India is a self-governing and competitive territory for doing business. Franchise companies enjoy economies in scale. India also has a vibrant, vigorous and vivacious media, a pool of high skilled and technologically sophisticated labour, an independent and impartial judiciary and a robust legal infrastructure. Based on the successful companies that have enjoyed financial gain since the silent franchise boom during the 1990s, the future of franchising is positive.

We, at Franchising Association of India (http://www.fai.co.in/) predict that the introduction and penetration of new technology will create new opportunities for franchises. Mergers and Acquisitions will increase as larger franchisers take over smaller ones. These factors combined with the low rate of franchise failure and considerable return on everybody’s investment, have made franchising a major force in the Indian economy at this point.

Dhawal Shah is a franchise enthusiast based in Mumbai, he is presently the Dy. Executive Officer of Franchising Association of India (http://www.fai.co.in/) he regularly studies trends in Business, Franchising and Entrepreneurship. He can be contacted at dhawal@mail.com