The article in the previous issue shared tips to check if you are franchise-ready and dig into legal issues and this part will address how to select the right franchise partner

The selection of quality franchise is the ‘single most differentiator’ in making the franchise system work – Franchise India. Yes, the selection of the right franchise partner is a critical factor to succeed for various reasons such as the franchisee may be poorly operated, may be undercapitalized, may not like the work involved or is not compatible with the business venture. To drive the revenue, it is essential to understand the attributes of the franchisee, thereby driving the success of the business.

Here are some points to consider

• Operational Fit: Does the franchisee have the capability to establish, expand and operate the brand in his or her geography?
• Strategic Fit: Consider factors like experience, passion and longterm growth capability.
• Marketing Fit: Does the franchisee having the capability to market the brand and generate enough volume from his territory?
• Financial Fit: Is the franchisee financially sound and does he have the potential to sustain the business during its initial gestation period?

Sustainability of the franchise system

• Product: There is a need to have a strong, differentiated product as per customer need.
• Prototype: It is important to have a profitable prototype to replicate.
• Margins: There is a strong need to have enough margins, making business viable.
• Capitalization of system: Both franchisor and franchisee should be adequately capitalized to support the business.
• Investment in relationship: Franchising is highly interdependent and therefore it is important to provide support.
• Innovation: There should be continuous innovation from both.
• Reinventing the business model: Routine business operations create fatigue for franchisees and business models should evolve as per the need of the market.
• Training: This is the most important and mostly ignored by franchisors. There is always a need for continuous training.
• Building on quality franchisee: Finding the investor with the ‘right intent’ is critical to ensure long-term growth.
• Defining roles: Both parties should be crystal clear about their roles like marketing, training, recruitment etc.
• Right location: Regional analysis is needed for establishing the target group and competition assessment to find gaps.
• Excellent team: There must be good manpower to support the franchise operations and the team must be skilled with adequate experience.

Cluster Approach of Expansion

• Deeper penetration: It is advisable to have a strong presence in one cluster before moving to another and create a regional brand before going pan-India.
• Create entry arriers: Create a dominant presence, thus creating fear among competitors to enter the cluster.
• Follow the leader: There is always a leader in the market and can be followed in case the market is under-fed.

Strategy to Select the Right Geography or Region

• Follow the leader: Every market has a few top brands in a particular category. The market may offer space for other players to compete. For instance, many pizza chains have grown in the recent past in spite of the presence of strong players like Dominos and Pizza Hut.
• Identify the gaps: Unidentified gaps can be catered through a strong concept. For example, the presence of Cream Bell and Amul in a market doesn’t mean there is no scope for an ice cream brand offering cold stone ice cream – examples being Cream Stone, Hokey Pokey, etc.