Franchising in rural areas


When it comes to using a template of an enterprise (franchisee) for replication and promoting entrepreneurship/job creation in the rural areas here are a few concerns that comes to my mind as stumbling blocks. Imagine a milk collection centre or a village dairy healthcare worker or a bicycle milk vendor as an example of a franchisee. The context is rural and Indian (or possibly any of the developing countries)..

Taking things forward from my previous post where I refered to the twinterview with Mr.Sivakumar, I am trying to dig a little deeper. I am looking at it from the point of view of somebody who wants to build a network of franchisees (specific to dairy supply chain) in the rural areas.

  • You have to run the business for sometime before you can think of franchising it.

Add to it. You should possibly keep a particular site or a small group of sites under your control to test out different products. Keep the owned entity to try out various experiments. As new challenges emerge, the solutions can be tried out in the owned entity and then rolled out in the other entities.

How do you START the “owned” entity?

Decide upon a potential mix of characteristics that you think you would expect in the franchisee owners and then start with the person and guarantee a payment.

But then you might ask, you need someone with at least some level of entrepreneurial  mindset to set up a franchisee. Why should your selected “owned” franchisee owner expect to get paid? This means you have not found the right kind of person for doing a test run of the franchisee.

My answer: Separate identifying the characteristics of the right kind of franchisee owner from the identification of the processes required for the franchisee operations. Please note, the “owned” entity is meant to be a test bed for the PROCESSES of your franchisee enterprise and JUST that. You can deal with the “profile” of your franchisee owner differently. In any case, identifying the “right” franchisee owner is potentially the most difficult job. (We will discuss this in a separate post)

This means that since this is your first location you are bound to make mistakes and why should anybody want to fund your mistakes with his/her sweat equity? 🙂 It is a necessity for you to make sure that this first “owned” franchisor stays with you to make your franchisee model a reality. DO NOT BOTHER spending money for salary, only make sure that the business model is shaping up. BUT make sure you have a hard stop on the timeline as to how much time you are going to give for the model to shape up. Do NOT try to solve too many problems in one go. Peel the layers and start with one piece which is really essential. Something similar to what Eric Ries calls Minimum Viable Product (MVP).

The focus of this first and owned entity is to PROVE the business model, test it, and DOCUMENT it before looking for and training franchisees.

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