NOĒSIS

-to perceive, think

December 17, 2010

Characterisitics of good franchisees

Methodically screened agents (Implies that a fair amount of trial and error has to be done to decide upon the best fit profile of a potential franchisee operator.)
Strict quality monitoring and follow-up training (Standardised and exhaustive training modules )
Uniform branding and product mix (Centrally experimented and released based on the learnings obtained by the franchisor on the effect of tweaks on different aspects of the product mix. Implies a lot of trial and error again.)
Effective promotions
Low cost of goods achieved through scale (This is crucial. In order to ensure the quality of the finished product, it is essential to ensure that the raw material that goes in is standardised and of the same quality. The only way this can be ensured is by offering the raw materials at the least price.)
Stiff penalties for violating the rules (including expulsion)

Published by

Avishek Gupta

I help drive sustainable development by financing the growth of professionally managed entrepreneurial ventures that solve key social and environmental problems. Having financed and observed over 150 ventures from close quarters, I understand the challenges that such ventures face in scaling up. I have the knowledge of process, financing and technology solutions that can help overcome those challenges. Separately, I have the experience of building businesses that finance early/growth stage companies. Most recently, I was involved with growing Caspian Debt to a full-fledged operating company from an initial 3 member fund investments team.

3 responses to “Characterisitics of good franchisees”

ashutoshtosaria

December 22, 2010 at 2:44 pm

I recently had a chance to visit 2 franchises of Moti Mahal Deluxe, the legendary Delhi restaurant famous for its butter chicken. The franchisee that looked less resourceful made better (and closer to the original) butter chicken. How does one maintain the same taste and quality across different franchisees (owned by different owners)? I guess food (of the non-McDonald kind) is a tricky category because of the kind of variables involved.

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1. Ovee
  
  December 27, 2010 at 10:38 am
  
  @Ashutosh: That reminds me. Whether it is a franchisee or owned stores, Indian food tends to vary in taste and looks across branches. I have been to Cream Centre Mumbai and Chennai, even the simple onion rings vary in looks and taste!
  
  Reply
Kandarp

December 28, 2010 at 10:30 am

@Ashutosh: You are right in observing that its difficult to achieve exact standardisation in case of food products where dish is prepared at the local outlet. This can be avoided to a great extent by using same ingredients, standardising preparation methods, training people who prepares at a common facilty….

It is also important to bring all franchise outlets to a common level in terms of resources…a consumer should not normally come to know that this outlet is less resourceful etc…

It is also noticed that some variation in the outlet’s outlook according to local culture, traditions and festivals is useful in attracting local people. But this variation is tricky. It should not look too different from other franchise outlets at the same time the variation should be significant enough to be recognised.

@Avishek: There are some essential points missing here and some needs change. Common advertising and networking between different franchisee owners are imp points. Standardisation as much as possible not only in product but also in the process should be brought. For example, a consumer should get satisfactory response from any outlet even if the complaint is with any other outlet.

Imposing stiff penalties is not the best way of ensuring compliance from the franchise. Better way is to create adequate incentive of keeping everything in compliance. Regular monitoring will help but self-motivation for compliance on the part of franchise will also save monitoring cost.

Leaving very little at the discretion of franchisee owner and standardising maximum of processes will help in successfully operation a chain of outlets. At the same time, some flexibility should be left for local variations.

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