Zeroing down on a franchisee is a tricky affair. A potentially years-long relationship begins with an initial assessment, and a single addition to the franchise is but one more brick in the long road to success. Gaurav Nigam, Founder-Director, Tumbledry Solutions breaks down his lens and blueprints.
Identifying potential franchisees
The intent of distributing franchises can be expansion or growth or both. They are achievable only when the franchisees are successful. Hence, the key factor is their ability to run the business successfully.
Factor 1: Intent
A huge chunk of wealthy people show interest in franchise businesses because there is a notion that it requires minimal involvement. Some common intentions of people taking up franchise businesses are as follows:
Extra income: In these cases, people already have full-time jobs or businesses. They are on the lookout for some extra income, hence, they take up franchises as a secondary source of income.
Social image: Sometimes the breadwinners in a family invest in franchises to construct a responsible social image for their family members.
We generally reject such people, because their intentions are not purely to have a successful business. They are only concerned about having basic returns or blending in the social construct.
The right intent behind taking up a franchise should be a willingness to grow along with the business. The prospects must show enthusiasm and determination to run the business successfully.
Factor 2: Capability
Once you have shortlisted prospects on the basis of intent, evaluate their ability. As explained earlier, every business comes with a set of requirements. An ideal franchise prospect is someone who is able to devote the required time, effort and monetary investment to the business.
The best prospects are ‘investor-operators’. They can invest money to set up the business and are all set to stay involved in the operations by investing time and effort.
Factor 3: Prior experience
Prospects who are already running a franchise business are ideal too, because they understand the ecosystem, insider matters and demands of a franchise business very well. They know what goes behind making a business successful.
That being said, having prior experience in franchises can never be the sole reason to finalise a prospect as a franchisee. A perfect blend of right intent and ability should be the primary criteria when identifying and choosing a franchisee.
As franchisors, we are extremely explicit and forthright in setting expectations about the kind of involvement we require from partners. We deliberately make it mandatory for the prospects to visit our existing stores, observe the operations and talk with our existing partners so that they understand what the scope of work entails. From cash flow requirements to time and effort requirements, we ensure that a prospect knows every aspect in detail. We convey the franchisor’s scope of work and the franchise partner’s responsibilities in clear terms. Those who agree after this generally end up as the right partners.
A perfect blend of right intent and ability should be the primary criteria when identifying and choosing a franchisee.
Sustainable growth strategies
Growth is a process which entails different phases, of which geographical expansion is one of the later ones.
This involves going through a product-market fit or identifying the final product. This entails experiments of launching services in the market, observing what works and what fails, then revamping the product, re-launching and observing its performance again. This cycle continues until a massive hit is made. During this phase of experiments, one should not focus on expansion; having 10, 20 or 50 stores is ideal until your product is fine-tuned and all set to perform exceptionally after scaling up.
In this phase, we need to plan out the various aspects of scale like blueprint, manpower, SOPs, finances, etc. We don’t believe in just opening stores for the sake of expansion; as a franchisor, we consider it our responsibility to ensure the success of every single store, ensuring adequate business. So, it was very important to plan the cities and towns where we would expand and how many stores a city/town would have.
To derive reliable data on whether a store will get profit-worthy business or not, we studied the demographic of targeted areas. We focused on the population of a certain area which can be a potential customer base for our stores. We also projected the growth a region will have in the coming years. Our team also developed a plan to ensure that small-scale operations do not lose their efficiency with geographical expansion.
We hired the right number of manpower to launch the desired number of stores in the target locations. This was followed by hiring top talent and providing training to the staff. Alongside this, a massive focus was driven towards keeping the business operations seamless.
For instance, training workers across the nation at multiple locations was not just tricky and tedious, but there was a high chance that this practice would deviate us from the standard SOP. Hence, we established a centralized manpower training academy. Through this academy, we ensure that laundry workers follow uniform processes and maintain our high-quality standards in every corner of India.
Similarly, business owners should make sincere efforts to streamline everything within the business by efficiently implementing the plans created.