Franchising consultant’s view retailing via franchising
At what stage should a company look to franchise?
Franchising provides a fast route to expand the retail network without putting in much investment in setting up showrooms or the sales network. It is a big advantage for companies as the capital required for establishing such a network is taken care of by the franchisees.
However, a company should enter into franchising only at a stage when they are ready to supply and support their franchisees. Moreover, to attract potential investors, the firm needs to put up a strong franchisee proposal. The business model should clearly show how the franchisees will generate revenues.
For perfecting the business models and to learn from the market, many players are setting up their own CoCo (Company-owned-company-operated) store.
What are the essentials of a successful franchising model?
First of all, the franchisor has to have a model in place wherein the franchisee can generate enough business to match with his aspirations. At the initial stages, it is important the franchisor extends necessary support till the time the franchisee understands the crux of the business.
Marketing is another important element of franchising, as the brand value is highly rated. In franchising, what we do is collective advertisement – when a franchisor puts an advertisement, the cost is divided into all its franchisees. Moreover, instead of charging a higher margin, charging separately for marketing usually makes franchisees happier.