What should anyone looking to enter into and expand their existing laundry business keep in mind before investing in expansion? Arunabh Sinha, Founder & CEO, UClean condenses his vast experience into clear and concise points for everyone to follow.
Solid business model
Before diving into franchising, it’s crucial to ensure that your existing laundry business has a solid and proven business model, for which the following factors should be evaluated:
- Profitability: In simple words, Profitability = Revenues – Expenses. How quickly can your business become profitable? If the business is taking significantly long to become profitable, it will frustrate potential franchisees. While evaluating profitability, also evaluate how much time it will take the profits to cover the initial investment. For a laundromat business that can be set up in ₹20 lakhs, it should not take more than 24 months.
- Operational efficiency: For a laundry business, this translates into how many cycles you run per day vs how much is theoretically possible. An operational efficiency >70% is good and something that the franchise should also gun for. This will also translate into anywhere between 25% to 30% profitability, which is attractive for the franchisees.
- Scalability: Do you foresee yourself launching 10 laundromats in 10 different cities on the same day at some point of time in your journey? This will be a true measure of a scalable laundromat business. It will need a tremendous amount of automation in terms of technology, manpower management and razor-sharp execution capabilities. As a brand, you will have to set up SOPs and systems in the back end to be able to execute something of this nature but once it is in place, you will be able to build a model that can blitzscale.
- Market demand: Laundry by nature is an extremely hyperlocal business. Hence, demand assessment also needs to happen hyper locally – within 3 kms of the place where you want to set up the laundromat. Figure out the number of families that live in the neighbourhood – there should be at least 5,000 families within that radius.
Are there also B2B clients in the vicinity? An accurate estimation of the number of budget hotels, restaurants, salons and gyms in the neighbourhood is important since they have recurring laundry requirements. Speak to them to understand load size, frequency, existing price points at which they are outsourcing and their pain areas. This will prepare you to quickly conquer your market once you go live.
Standardised processes and systems
These are essential to ensure consistency and maintain your brand’s reputation across multiple locations. Create detailed operating manuals that cover all aspects of running the laundry business, including equipment usage, customer service standards, quality control measures and marketing strategies. A comprehensive training program must also be in place to guide franchisees and their staff.
However strong you might operationally be, it is important to be equally strong on the technology front. For a consumer-facing business like laundry, omnichannel is the only way forward. The customer should have the option to place an order from the comfort of his home. A transactional website and fully functional customer-facing apps are basic requirements. Having a strong tech platform at the back-end to help the franchise manage and oversee his business is critical.
Make digital your forte
Founders/promoters need to know the basics like SEO, Google Adwords, GMB, Facebook & Insta Marketing, WhatsApp Automation etc. Your store has to be discoverable on Google and people in the neighbourhood should know that a franchise has opened up.
Importantly, you have to be fully prepared to embrace new digital concepts that keep coming up. Digital marketing is evolving every day and you have to be nimble on your feet so that you don’t lose track.
Create detailed operating manuals that cover all aspects of running the laundry business, including equipment usage, customer service standards, quality control measures and marketing strategies.
Strong brand identity and marketing support
A recognisable brand is crucial for the success of your franchise model. Invest in creating a strong brand identity that reflects your core values, unique selling propositions and customer experience. Develop marketing materials – including logos, signage, uniforms and promotional materials – to ensure consistent branding across all franchise locations. Additionally, provide ongoing marketing support to franchisees, including advertising templates, social media campaigns and local marketing strategies.
Determine the financial requirements for establishing a franchise and the ongoing costs. This includes franchise fees, royalty fees and initial investments for equipment, technology and store setup. Conduct thorough financial projections to ensure that your franchisees have a realistic understanding of their potential returns on investment. Consider offering financial assistance or partnerships to support potential franchisees who may require assistance in securing funding.
Robust training and support
Supporting franchisees and ensuring their success is crucial for the overall growth of your franchise model. Develop a comprehensive training program that covers all aspects of running a laundry business, from operations to marketing and customer service. Offer ongoing support, regular communication channels and opportunities for franchisees to learn from each other.
Legal and regulatory compliance
Complying with legal and regulatory requirements is essential to protect your brand and avoid costly legal issues. Seek professional advice to draft a comprehensive franchise agreement that clearly outlines the obligations and responsibilities of both franchisor and franchisee.