Select Page

    Unlike in case of startups where everything is planned from the scratch, in a franchise business, the franchisees get to work on a predefined ready-made business platform which saves them from the struggle and hardships of starting a business from nothing and help them launch their franchise business in a very short span of time. But once the investments are made and the franchisees get bound by the contract, it can be difficult for them to reverse their decision. Prudence says it is better for an entrepreneur to thoroughly scrutinize the pros and cons of associating with a franchise brand before making any investment into it and becoming its franchisee.

    Brand Evaluation – Is it the right brand to a franchise? 

    Of course, there are perks of franchising big brands. The bigger the brand is, the easier it gets for a franchise to attract investors, find competent staff, engage the best suppliers, attract the targeted segment of customers and all of these could place a business on the fast track. However, association with big brands is costlier, rigorous in terms of operational compliance and comes with little or no scope for negotiation. Working with off-brands can be economical and they may provide more operational autonomy and better revenue-sharing, but it may take longer for the franchisees to get their businesses rolling.

    The bigger the brand is, the easier it gets for a franchise to attract investors

    Some of the preliminary considerations involved in evaluating a franchise brand are listed below.

    • Brand USPs
    • Brand awareness, popularity, and relevance in the local conditions
    • Promotional strategies and activities of the franchisor
    • Existing franchisees of the brand
    • Competitor brands
    • Investment and costing, revenue sharing and minimum guarantee, ROI, and breakeven
    • Operational model
    • Ownership and control
    • Terms and conditions of engagement, personal guarantee etc

    Brand Marketability – Can the brand be marketed successfully?

    The marketability of a franchise brand or the products/services being offered under it largely depends on two broad parameters –

    1. Local factors – customer demographics, the size of the market demand, targetable market share, competition, regulatory framework etc.
    2. Franchisors’ marketing model/approach – value proposition, pricing and promotional strategies, supply and distribution network etc.

    Even a good, reputed brand will not be able to sustain itself in a new market if the local market conditions are not favorable from a business point of view. Secondly, the franchisors’ marketing model/approach must fit into the local market conditions. This is where a bit of autonomy comes in handy for the franchisees to be able to customize the franchisors’ marketing strategies to suit the local business environment.

    Even a good, reputed brand will not be able to sustain itself in a new market if the local market conditions are not favorable from a business point of view

    Site Requirements – Is it possible to address the franchisors’ site requirements?

    Different brand franchisors have different site requirements for their franchise stores and these site requirements are explicitly mentioned. It is the responsibility of the franchise to locate suitable site options which meet these requirements and the site must also be approved by the franchisor. However, finding the right site is often a time-consuming and tiresome process and involves considerable investment especially in the backdrop of real estate space becoming scarce and expensive with every passing year. Therefore, it becomes important for a franchise to carefully study the site requirements and figure out if suitable site options are available and if they should invest in it. Some of the common site requirements are given below.

    Finding the right site is often a time-consuming and tiresome process and involves considerable investment especially in the backdrop of real estate space becoming scarce and expensive with every passing year

    • Site should be situated in a prominent market area, on the main street with high visibility
    • Preferably ground floor and corner plots
    • Parking facility
    • Access for inventory vehicles
    • Electricity, power backup
    • Necessary space and infrastructure for servicescape needs, safe use of equipment and devices
    • Necessary permissions from local authorities for building, electricity connection, trade etc.
    • Minimum surface area

    Operational Model – How will the operations roll out?

    In franchise business systems, franchisors define the operational model or framework following which the franchisees will have to execute the business activities. This includes the value-chain route, business processes, flow of operational activities, SOPs, standards of performance and output, reporting and audit etc. The franchisees’ stores act like an extension or a branch of the franchisor’s business. Two important considerations arise at this point.

    This includes the value-chain route, business processes, flow of operational activities, SOPs, standards of performance and output, reporting and audit

    • Is it feasible to implement franchisor’s operational model?
    • Does it suit the entrepreneurship personality of the franchise?

    Following franchisor’s operational model depends on the availability of the required resources like funding, technology, and technical infrastructure, skilled and trained manpower, supply chain and logistical infrastructure, raw materials, suppliers, and vendors etc. Secondly, not every entrepreneur is cut for the franchise business. There isn’t much scope for business innovation and creativity here. Business growth and expansion remain confined to the boundaries defined by the franchisor.

    Exit Options – Are the exit routes open and convenient?

    Keeping their business interests in mind, most franchisors prefer to keep their options of terminating the franchise agreement wide open. But the same is not always true the other way round. It is not always convenient for a franchise to terminate a franchise agreement in the event of availability of better business opportunities, the emergence of operational difficulties in running the franchise, lack of profitability etc.

    Some of the common grounds based on which a franchisor can terminate a franchise agreement are:

    • Failure to pay royalties to the franchisor
    • Any material breach of the contract by the franchise
    • Failure to execute operations as agreed by the franchise
    • Failure to comply with legal and regulatory obligations
    • Franchisee going bankrupt or insolvent etc.

    In the event of a franchise agreement coming to an end, the franchise is subject to the stipulations and obligations laid down in the contract. Some of the common liabilities on the part of the franchisees in the termination of the franchise agreement are:

    • Payment of all outstanding dues as per the contract
    • Return of all assets belonging to the franchisor
    • Agree to the non-disclosure agreement (trade secrets, operational model, financial details etc.)
    • Strictly refrain from using franchisor’s trade name, copyrighted materials

    Thus, it is very important for the entrepreneurs/franchisees to clearly understand the terms and conditions of terminating the franchise agreement and ensure that their exit routes are fair and smooth.

    In working with franchise partners, franchisors will seek to ensure that their businesses and brands continue to grow and strengthen and not take a beating because of letting someone else do business for them. It is the responsibility of the entrepreneurs, who’re interested in becoming brand franchisees to assess if they are considering the right brand for their targeted markets to steer their business interests and whether they can meet the financial, logistical and operational requirements of the franchisors

    To read more article related to this topics click here6 Things You Must Keep a Check on Before Entering Into Retail | YRCHow Can an SME Raise Funds from Public? | YRC05 Reasons why Developing the Right Culture in the Organization is Inevitable for Growth | YRCHow SOPs will Benefit Wholesale Brand Venturing into Retail | YRC.

    YRC is an “Expert Service Division” of Mind-A-Mend Consultancy Pvt. Ltd.

    Author Bio

    Nikhil Agarwal

    Chief Operations Officer

    Get Advice

      PROCESS AUTOMATION

      The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

      In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

      Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

      Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

      YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

      VIDEOGRAPHY & PHOTOGRAPHY

      No matter how good your product is, the customer would know only if it looks good.

      Photography includes the following steps:

      • Cataloguing your products
      • Cataloguing your images
      • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
      • Choose the right camera & lens (You may also outsource the photography to a third party agency)

      DIGITAL MARKETING

      Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

      Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

      These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

      Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

      This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

      IT INTEGRATION

      Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

      YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

      IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

      This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

      Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

      WAREHOUSE & LOGISTICS PLANNING

      • How many cities or countries you wish to sell in?
      • Where should your Warehouse be located?
      • Should you have one warehouse in each country or city?
      • Should you be having your own delivery team in your base city?
      • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
      • How should I manage the logistics if my goods are coming from different countries?
      • How should the goods be stored and barcoded?
      • How much space do I require for warehouse?
      • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

       

      At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

      We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

      Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

      UI & UX DESIGNING

      This Step involves 03 distinct parts:

      Part 1: Choosing the right Platform:

      From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

      Part 2: UX Designing:

      “UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

      UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

      “As per statistics, 68% of the customers abandon the carts before payment”

      An interesting UX ensures the customer sticks on to the website for a longer time.

      Part 3: UI Designing:

      UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

      A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

      The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

      If User experience is the bare bone, user interface wraps it up with an attractive cape.

      At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

      SAMPLING & PRODUCTION

      This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

      In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

      Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

      Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

      Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

      Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

      Production Sample is made before the production which is the replica of what is going to be finally produced.

      Once you are through with all this, you are good to go ahead & get your goods manufactured.

      PRODUCT DESIGNING / SOURCING

      Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

      Product Designing / Sourcing can be done in several ways, as follows:

      • In-house Design Team
      • Freelance Designers
      • Outsourced Design Team
      • Ready Product Sourcing (From Manufacturer or Wholesaler)

      At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

      These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

      If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

      Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

      BRANDING

      Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

      Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

      It is an integral part to attract the target audience.

      ORGANOGRAMS & SOP’s

      Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

      SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

      At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

      CRITICAL PATHWAY

      Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

      CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

      CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

      At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

      BUSINESS STRATEGY & BUSINESS PLAN

      Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

      Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

      Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

      YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

      MARKET RESEARCH

      Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.