FRO 2008: Building brands through franchising

Jagdeep Kapoor, chairman and managing director, Samsika Marketing Consultants, offered a few points that should be kept in mind to build a strong franchised brand

A brand means trust. A brand is dependable and responsible. Branding is about finding a location in the minds and hearts of consumers that generates affection. At Franchise & Retail Opportunities 2008, organised by Franchise India Holding, Jagdeep Kapoor, chairman and managing director, Samsika Marketing Consultants, listed a few points that a franchiser and franchisee should keep in mind if they want to build a strong brand out of franchising.

If two people are coming together in a franchising partnership, both of them can concentrate on different aspects of the business and help it grow, said Kapoor. While a franchiser focuses on the brand and its national image, a franchisee can concentrate on the infrastructural facilities, area location and local functions.

According to Kapoor, the franchiser and the franchisee should consider integration of the business highly relevant. Many franchisers think of franchising their business only when they need quick money, some of them even when they want to get a child married. Kapoor stressed the point that the relationship between a franchiser and franchisee was not a flirtation. Careful attention should be paid to a number of things before entering into a deal, such as the potential of the franchisee and the prospective market.

Another common mistake that franchisers make is not charging the franchisee an initial franchising fee. They think of expanding their business and expect the money to flow in later. Kapoor said this system could have serious consequences in the long run. If the franchisee got to do business for free, he would, perhaps, not put his heart and soul into making the brand and the business successful. A franchising fee ensures responsibility on the part of the franchisee and would be instrumental in successful returns.

While giving out a franchise, the franchiser should assess the long term potential of the franchisee. Many franchisees take up a franchise because they want to learn the ropes of the trade and later open their own franchising chain. Kapoor said a potential franchiser, who is now a franchisee, could pose a threat to the franchiser’s business. Franchisers should zero in on partners who are in the franchise for the long term.

The business being taken up should interest both the franchiser and the franchisee. Neither party should venture into something that does not turn them on, that they do not enjoy doing. Many people take up a franchise to experiment with a new thing, assuming they will start enjoying it in due course. But later, they discover that the thing that did not turn them on is now turning them off.

A franchiser should assess the potential of the franchisee to be equipped with proper infrastructural facilities and manpower. If a store model requires six staff members and a manager, then it should have them from day one. Many franchisees start their franchise store with only two staff members, thinking they will acquire more staff as time passes. According to Kapoor, a consumer comes into a store for a brand experience and if that’s lacking due to shortage of staff or other requirements, it will definitely affect the brand image of the chain. He said it was better to have fewer but complete franchises, rather than lots of incomplete ones. This factor goes a long way in determining the consumer’s inclination and participation in the franchisor’s brand.

Kapoor stressed on the involvement of the top management from both sides in the franchising business. If any of them is taking up the business as a side profession, it might not be that profitable. Kapoor said he followed the maxim: “Dhyaan bat gaya, sales ghat gaya (Attention halved is sales halved).”

He concluded by saying integrity formed the overall crux of franchising. Consumers buy brands on trust and the franchiser and the franchisee should maintain the integrity of the brand in all their operations.