FRAEWS N - Indian Franchise Association · FRAEWS An Indian Fanchise Association Newsletter N...

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FRA EWSAn Indian Fanchise Association Newsletter

N

Before you franchise your Business model,do a franchise feasiBility studyFranchising an existing business can provide significant benefits. For instance, it provides faster growth, additional revenue and increased branding. However, not all businesses lend themselves to a good and successful franchise model. reasons being:

June

2011ISSUE-6

Vol - I

in this issue we would bringthe following details:

Before you franchise your Business Model, Do a Franchise Feasibility Study

01-02

From the Chairman's Desk 03

FranConsult: The right place to do Franchise Feasibility Analysis

04-05

Fran Buzz 06-08

Hot Event of the Month 09

Case Study: Gitanjali 10

IFA Profile 11

Page

• Problems are faced in aptly modelling the business as a franchise.

• There is lack of financial returns available for a franchisee.

• Business has its own intricate issues that revolve around different complex conditions and are hence sometimes hard to solve.

• It is difficult to assess the current and emerging competitors that may act as a threat to franchising a business model.

• The business to be franchised is primarily dependent upon the owner's unique skills.

• The proper knowledge of legal or licensure prerequisites prior to franchising a business is also an inevitable aspect that is at times must not taken care of.

• A thorough analysis of consumers’ demands and preferences are ignored.


Before you franchise your Business model, do a franchise feasiBility study

Nevertheless, a feasibility study conducted by a qualified and experienced franchise consultant can determine if these or other issues might apply. In addition, a well designed feasibility study can provide a blueprint for franchising a business. Moreover, it makes good sense to do a study before investing a significant amount of money into franchising.

A good feasibility study helps to uncover any hidden material which is yet not discovered and explored by the potential franchisor and enables him to critically assess the future success of his business expansion. A “feasibility study” is essentially and typically the study of market forces and business issues that can or may influence a franchisor’s business or franchise opportunity in the future. A feasibility study can provide the following:

• Industry profile • Competition • Market size and potential • Current comparable franchise programs including relevant features • Recommended franchise or license model

Once the feasibility study is completed by the consultant it is given back to the client company to become its property. If the decision is not to franchise than the information given is still of significant value and can be kept aside for future usage.

For more information regarding franchising a business and feasibility studies contact FranConsult, an initiative of Indian Franchise Association.

Recommended franchise or license model

Current comparable franchise programs including relevant features

Market size and potential

Competition

Industry profile


fromthe director's desK

BreaKinG Boundaries in 2011

Dear Friends,

Let me take this opportunity to introduce you to Indian Franchise Association's Newsletter - Fra(n)ews. With Fra(n)ews, we aim to bring forth the latest developments taking place in the franchise sector, thereby increasing awareness in the franchise community. This newsletter would also act as a platform for all the start-ups as well as established brands, to showcase the business potential and seek potential franchisee's attention.

It's my sincere hope that Fra(n)ews would successfully help in disseminating franchise knowledge to the entire franchise fraternity. In addition, I strongly believe that it would assist franchisors in reaching out to their potential investors, and in turn aid the aspiring entrepreneurs to get their desired brands.

Gaurav MaryaChairman | Indian Franchise Association (IFA)

Gaurav Marya, Chiarman, Indian Franchise Association (IFA)


franconsult: the riGht place to do franchise feasiBility analysis

The question of how to franchise a business is invariably answered by doing a franchise feasibility analysis and other pre franchising steps. A franchise feasibility analysis highlights the strengths and weaknesses of an existing business, giving an overall thumps up or down to the future business prospects.

An objective franchise feasibility analysis by a recognized expert will bring forth the pros and cons of the underlying business model. A franchise consultant or an expert raises and then further answers the relevant questions that help in finding out how well prepared a business is for franchising. Some of the questions are as follows:

• Has the model been proven sufficiently in the market? • How profitable are operations? • Is there enough profit in the business model so that royalty and other payments can be deduced and still leave the franchise owner a sufficient profit margin? • Can the business be taught to someone else, usually a person with no experience in the industry?

Are You Ready to conduct the Franchise Feasibility study?

If Yes, contact FranConsult

A franchise feasibility study analyzes, grades and prioritizes the company on a variety of these and other factors.

The franchise feasibility analysis also documents what steps, protective measures and documents need to precede the expansion effort. Many of these can (and should) be done in-house by existing personnel with a little outside expertise. This will result in the most efficient use of time and resources. It will also produce the most professional and user-friendly results.

We at IFA, believe that the Franchising as a mode of doing business is an easy and risk free business to a quick expansion. IFA being a non profit organisation with a vision to create awareness about the strength lies in franchising.


franconsult: the riGht place to do franchise feasiBility analysis

Franchising in the safest mode of business as adding manpower, opening an offices or outlets is no more a headache for expanding or increasing the sales for your business. In USA around 45 % of GDP is generated through the franchise business and India is gearing the same mode with annual growth rate of 30 – 35% with a GDP contribution at 6 % shows a huge potential in India.

In case you would like us to study the feasibility of your business to model it to franchise format, please do write to us as the myth that this business is not limited to F&B/Lifestyle/ education / manufacturing sector only. For more details about our consultancy please feel free to contact FranConsult

At FranConsult , we would help your business format to convert into a franchise business and help you grow faster day by day. We would help clients by developing their models in to a franchise format through proper strategic planning, competition mapping, feasibility study, designing operational procedures, legal agreements and compliances.


fran BuZZ

Attracted by its growing economy and huge middle class, several U.S. restaurant chains are heading to India to sell sandwiches and burgers, pancakes and sausages, coffee and ice cream. They follow in the footsteps of international fast food chains which have already established their presence here.

Business is brisk at a Kentucky Fried Chicken outlet in a New Delhi market as customers line up at lunchtime to place orders.

U.S. restaurant chains like KFC, Pizza Hut, and McDonald’s are cashing in on India’s growing appetite for fare being sold at western food chains - pizzas, burgers and sandwiches.

The market is driven by a country where about 700 million people are under 30, are earning larger pay packets thanks to a

buoyant economy, and are quickly acquiring a taste for Western fast food and global brands.

Yum Restaurants India runs eating outlets like Pizza Hut and KFC. Its Chief Marketing Officer, Sandeep Kataria, says dining out is catching on in a big way. As people do become a little bit more affluent, they are looking at places to be able to go out, have a good time, also break away from the routine of everyday eating at home. Honestly, the opportunities, the options available in India for leisure are limited. What does a typical family end up doing in India currently is to mix shopping along with a movie along with eating out. That therefore is a great opportunity for companies like these. It seems business will only get bigger and better. Increasing numbers of nuclear families and hectic work schedules are also helping fast food gain popularity in a country where home-cooked meals and traditional curries have ruled the roost for decades.

Alternative Dining Experience Restaurants Management L.L.C, announced the grand launching of the Dukkan Falafel concept, by the grand openings of its first 4 outlets in Dubai focusing on expanding their operations to capitalise on the growing franchise industry in the Middle East and North Africa (MENA) that is estimated to be worth USD30 billion.

“Modernizing, and Conceptualizing the great tradition of eating falafel, without losing any of the traditional taste and its glamour was our objective” said Rami Wardeh, Chief Executive

Officer and Co-founder of Alternative Dining L.L.C., he also added “The originality of our

menu items, and recipes, the freshness of our food, and the intimate cosy atmosphere will allow our diners to re-live the authentic Falafel dining experience.”

With a total of 20 outlets expected to be opened by the end of 2012 just in the UAE, and expansion plans that includes the GCC, India, Southeast Asia, and a major development in The US-Canadian Market, Dukkan falafel will be the largest Falafel restaurant chain in the world, with more than 200 operated outlets planned by the end of 2015.

Dukkan Falafel is now offering both individual and area development Franchising

food chains keen to capitalise on mena’s usd 30 Billion franchise industry

several u.s food chains foray into the indian food market


franchising - a new Business mantra to cater to india’s half a billion middle class

fran BuZZ

India is a country of youth. Any forward-looking businessman would know: A younger population means more years of economic productivity, as well as higher potential spending power over time.

One way to reach out to this immense pool of consumers quickly is via the franchising route, as an estimated half a billion new consumers vault themselves into the middle class over the next few years. These newly-arrived middle-class consumers will be demanding better quality of

services, products and all manner of discretionary consumption trappings that come with progress up the economic ladder.

For instance, Singapore wellness chain Kenko Holdings opened its first Indian flagship store in Bangalore in May 2009, another outlet has opened in the same city, followed by another in Chennai in less than two years. Evidently, Kenko's Indian franchise partner agrees that along with India's economic boom will be a concurrent growth in demand for wellness services from the stressed working populace. This partner has gone from holding a mere area franchise to signing a memorandum

of understanding upgrading itself to a master franchisee covering the entire country.

In another franchising deal, Singapore holding company offers naan and biryani in a themed lifestyle concept that appeals to consumers and fans, centred around what is arguably the world's most famous football club.

Since last year, MUFB has secured three franchise partners and opened six outlets across key metropolitan cities in India.

With the country's growing number of young and affluent citizens, coupled with the football club's popularity, MUFB is receiving a franchise enquiry every other week. Thus, franchising with its growing popularity is getting bigger and bigger day by day.

opportunities, in the UAE, GCC, and India.

Alternative Dining Experience Restaurant Management L.L.C, established in 2009, operates, manages and franchises restaurants, and has ventured into the luxury segment of catering in the UAE. The company’s strategy is to differentiate its restaurants by emphasizing consistently on high-quality food and service, serving generous portions at moderate prices in distinctly designed restaurants.


indian franchise association (ifa) and centre for management joins hands to announce the commencement of 2nd batch of “the learning centre”

After the grand success of The Learning Centre (TLC), Indian Franchise Association now takes an immense pride to announce the initiation of a Professional Diploma in Franchise Management Course by joining hands with its associates Centre of Management which would be offering exhaustive study to create an in depth knowledge on franchising.

The Learning Centre (TLC) was conceptualized with a mission to impart the highest standards of quality franchise training and education to management students, professionals and entrepreneurs. The program brings tomorrow's franchise leaders together in an environment that stimulates the mind and creates a dialogue, not just discussing what franchising is today, but what it will have to become in the future. Experts at TLC believe that through the application of better practices, resources and methods, franchise talent can ensure consistent results and can better compete and excel in the Franchise sector.

The Association between IFA & Centre of Management has enabled the latter to enjoy the prerogative of running/offering the course in its college vicinity. In other words, Centre of Management is now licensed to execute the classes on courses related to Franchise Management for The Learning Centre. Leveraging on the practical examples, students learn essentials of franchising and run through multiple case studies.The course is an extension to the landmark education initiative for professionals as it will benefit them with expert On the Job training and internship vis-à-vis seamless support for their placement in the burgeoning modern retail and franchise sector along with the joint certification "Certified Franchise Professional".

fran BuZZ


hot eVent of the month


hoW GitanJali Gems douBled the numBer of stores throuGh franchisinG

problem statementDuring the global recession in 2009, the Indian market was one of the few that registered growth, while other key global jewellery markets like USA, Japan and Europe saw major decline in consumer spending and demand for jewellery.

In the context of the strong performance of the Indian economy and increasing importance of the Indian market, the Gitanjali Group, the largest integrated player in the global gems and

jewellery sector developed a perspective for rapid expansion of the reach of its jewellery brands across the country.

The company aimed at more than doubling the number of stores from 900 to nearly 2000 in next 3 years.

action plansA close study of the business dynamics revealed that the best means of achieving this was through the franchising route. In a very high value business like gems and jewellery the capex required for rapid expansion would have been prohibitively high; so even if it resulted in higher returns for the company, the capital required would have limited the rate of expansion.

The strategy is to de-risk the business as much as possible—go for franchise retail rather than company-owned stores, looking at revenue-sharing as well as capex-sharing rental models.

solutionsThe company took a decision that paying a 30-40% commission on sales generated was justified as it would translate into larger volumes. Similarly when dealing with expansion of stores in malls, the company opted for a revenue sharing model.

If the retailer and store owner share the expenses, the latter’s share of revenue could go up to 11-12% (compared to 7-8% in the revenue-sharing model).

By adopting different types of innovative models, the company has succeeded in expanding its store base to 3500 point of sale outlets (with over 900 stores), but also realised a 15-20% increase in store earnings.

This has also established a strong base for further expansion in the coming period.

case studyGitanJali Gems


ifa profile

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