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Food Franchising Consulting

Franchising in F&B Business

Franchising is a time-tested strategy for business growth and expansion. The long list of successful brands comprising names like KFC, Pizza Hut, Domino’s, Burger King, Taco Bell, McDonald’s, and Subway are a glaring example of the effectiveness of franchising. However, the triumph of the franchising model is not limited to only big names. Today, a large number of small and medium food enterprises like restaurants and cafes use the franchising route to grow their businesses and expand their markets. In many places, the food franchise business model has even turned hyperlocal. More industry insights and business solutions are discussed ahead.

Most Sought-After Verticals in F&B Franchising

Restaurants

The restaurant business is probably the most popular vertical when it comes to franchising.

In restaurant franchise models, an existing business (franchisor) allows another business (franchisee) to operate a branch or outlet (the franchised outlet). From the perspective of franchisees, these businesses seek to reap the benefits of an established brand name (of the franchisor). This model can take unique shapes and forms depending on how a franchisor and franchisee agree to make the franchised business work for mutual considerations and interests. For example, in the FOCO model restaurant franchise, the ownership of the offspring business remains with the franchisee but the operations are carried out by the franchisor.

Franchising in the restaurant business has many advantages for both franchisors and franchisees. Franchisees gain access to a proven business model, ready-made brand recognition, marketing and operational support, advanced business systems and technologies, etc. On the other hand, franchisors get the opportunity to expand to new markets, counter competition more effectively, alleviate risk exposure, etc.

As restaurant franchise consultants, YRC maintains that it is imperative for franchisors and franchisees to carry out research and analysis on the industry, markets, competition, trends, supply chains, key partners, consumer behaviour, demographics, financial and commercial aspects, and legal and regulatory environment.

F&B Kiosks

Typically, the Kiosk model is a small-mobile format type of F&B business that deals in readymade or quick items like tea, coffee, ice creams, shakes, etc. The Kiosk model is also popular with products like dumplings, noodles, or other street fast food. However, the kiosk model franchise is most common in the beverage category. If visiting a market or shopping mall, it is highly likely to come across one or more kiosk stalls. These kiosks are often outlets of local brands and businesses. Because of the simplicity of installing and operating a kiosk, kiosk-based F&B franchising is one of the simplest forms of franchising. This model works best for small businesses and simple products.

The links to two case studies explaining how YRC has helped two brands achieve scale and expansion – Yewale AND Kiosk Kaffee are provided at the end.

Café

The café business is a popular choice among contemporary entrepreneurs for an F&B business. There is a strong conviction that they understand the needs and aspirations of customers from the same age group as them. Although starting an independent brand is a more popular choice among these new-age café business owners, the effectiveness of franchising cannot be negated. There is access to an established brand name, a proven business model, operational and marketing support, etc. Franchisors may even provide direction and input for developing a strong cafe franchise business plan.

Confectionery Retail

In confectionery retail, franchising can be a slightly tricky affair. Local SME confectionery retail businesses with a fair amount of success and popularity tend to reflect reluctance in seeking business growth and expansion via the franchising route. Confectionary products like cakes, pastries, cookies, sweets, or sandwiches come with a touch of localised expertise and experience of the business owners. This causes apprehension that franchisees might not be able to deliver the same touch in the products. Trust and confidence combined with robust franchise SOP manuals help overcome this barrier. In confectionery franchising like a sweet shop franchise model or a dry fruits business franchise, three critical considerations are the maintenance of trade secrets, SOP-based operational planning, and transparency and consistency in reporting, auditing, and other controlling measures.

Hotels

Since the middle of this century, the hotel franchise business model has emerged as a popular growth and expansion strategy. The formula has worked well for numerous hotel brands around the world. However, like any other business model, hotel business franchising has also undergone its fair share of changes. Today, hotels and branded hotel chains are embracing the asset-light strategy. The emphasis on localisation strategy is too good to be messed with. An interesting development is the adoption of a sub-brand strategy to cater to different market segments.

How YRC can help

Franchise Strategy Development

Formulating a franchise strategy is about evaluating the effectiveness of franchising as a growth and expansion strategy and preparing the blueprint for the execution. Every business has a unique positioning, constraints, and competencies. There is no universal-size franchise strategy. In formulating a franchise expansion strategy, tailoring is of utmost importance. It involves charting the most feasible roadmap and model that is mutually beneficial to both the franchisors and franchisees. It also entails the assessment of different franchise formats and solutions. YRC’s objective is to help clients come up with the franchise expansion strategy that is best for their business under the given set of conditions. YRC’s franchise development specialists also assist in developing master franchise structure and international franchising plans for speedy application, adaptation, and expansion.

Franchise Model Development

In developing franchise expansion strategies, one of the most common pertinent decisions to be made is the selection of the base franchise model. YRC’s team of franchise development consultants carries out extensive tests and analysis to evaluate the suitability of various standard franchise models like FOFO, COCO, FOCO, COFO, and also, hybrid franchise models. The team analyses a multitude of factors concerning each model to determine this suitability. Local and hyperlocal market conditions are also taken into account.

Franchise Operations Manual

In offering the service of developing franchise operations manuals, YRC’s goal is to help clients become process-oriented enterprises and achieve operational excellence. These manuals constitute a documented reference to help business processes in tandem with the established operational standards and requirements. These manuals also serve as a point of reference to both franchisors and franchisees on deliverables.

Franchise Legal Advice

With the right planning and implementation, franchising is a powerful strategy for accomplishing quick business growth and expansion. However, it is also important to safeguard the brand name and goodwill of the business partners tied in a bond of franchising. It is important for franchisors and franchisees to draw the lines and keep their expectations transparent in the form of contracts and agreements.

In franchise legal advice services, YRC offers assistance in drafting franchise agreements and franchise disclosure documents, and formulating franchise exit strategies. Proven principles and established processes are followed towards securing that these agreements and documents are free from doubts and defects.

Some of the popular franchise agreements covered by YRC include:

  • franchise agreement for food outlets,
  • restaurant franchise agreement,
  • tea business franchise agreement,
  • Other paperwork of a similar nature.

Franchise Audit Report

YRC offers all-inclusive auditing resolutions for franchise businesses. YRC’s franchise audit reporting solutions are developed in consideration of the operational, commercial, and contractual requirements. The objective is to help clients keep a steady and reliable watch over the health and strength of the franchise business. Audit checklists are also provided so that audits can be carried out independently by clients.

Franchise Lead Generation Strategy

One of the most important requirements of a franchise business plan is identifying the marketing channels for franchise lead generation. In consideration of the budgetary objectives established in the franchisor business plan, YRC determines the best-fit lead generation and marketing strategies for the franchise business.

Franchise Setup Manual

After the commercials are finalised in the franchise store business plan and the paperwork is completed, the timelines for setting up the franchise business become critically important for both parties. YRC’s tested and proven franchise setup checklist solutions customised to meet the specific case requirements serve as ready-to-go maps in setting up the business.

Franchise Business Proposal

After verbal discussions and meetings on a franchise business opportunity, what follows is the need for documented evidence or sample broadly highlighting what has transpired between the parties so far. This document is referred to as the franchise proposal document. It is like a pitch-deck document meant for potential investors highlighting the macro picture of a business opportunity. Sometimes it can also include detailed reports and analysis. YRC deploys franchise pitch deck professionals along with creative designers and copywriters in developing these proposals. The customised templates and samples used are proven and tested over time with high success rates.

About Your Retail Coach

Your Retail Coach is a retail & eCommerce consulting house with more than 10 years in business. YRC specialises in customised enterprise solutions for startups and existing brands and businesses. With a rising international trail and a success ratio of 95%, YRC has served over 500 clients across 25+ verticals. In F&B franchising consulting, YRC offers a comprehensive package of services and solutions encompassing planning and implementation for franchise business setup and rollout.

For customised and ready-to-go solutions for business setup, management, and expansion or to speak to one of YRC’s franchise business consultants.

FAQs

How to start franchise of my food business?

If you want to franchise your food business, these are eight steps to be followed:

Step 1: Make your company profitable. Nobody will invest in a loss-making brand. Create a niche. Define the value chain.

Step 2: Develop a franchise expansion strategy for franchising your business. Identify and examine the market potential and assess the prevailing and potential competition.

Step 3: Develop the franchise working model. Assess and make a decision on the best-fit model for franchising your business.  Popular models are FOCO, COFO, FOFO, active franchise model where you turn your own store into a franchise store, or any other hybrid model.

Step 4: Develop franchise operations manuals that will provide directions to franchisees on the practices and processes to be followed in operating the franchised business.

Step 5: Draft franchise agreements defining the terms and conditions of the franchising covering the rights and liabilities of both parties.

Step 6: Develop a guidebook containing instructions on business aspects site selection, lease negotiations, and the purchase of assets and inventory.

Step 7: Draft a business proposal pitch deck for the potential franchisees highlighting the advantages of franchising and the scope of success.

Step 8: Formulate strategies for lead generation and attracting potential franchisees. This could be a part of the franchise business plan (financial and commercial assessments).

Note: There is a reference to this answer from the next question ­- How to start franchise of my food business?

How to franchise my restaurant?

First, touch upon the basics of franchising a restaurant business:

  •         You have to ensure that your restaurant business is profitable
  •         Your restaurant business must be scalable
  •         Your restaurant brand must have a “niche” as a competitive leverage
  •         You must get your brand name and trademark registered by the appropriate authority

Now follow the steps outlined in the answer to the above question – How to start franchise of my food business?

How much will it financially cost to franchise my business?

The exact figures may vary. Here are some of the important costs involved in franchising a business:

  •         Purchase/development of systems/software for franchise business operations
  •         Hiring/expansion of teams to execute/support franchise business operations
  •         Investments into assets to establish/boost the capabilities of the value and supply chain

YRC Franchise Consultants advocate developing a franchise business plan encompassing:

  •         Sales and Operations Plan for at least 5 years
  •         Financial & Commercial Plan for at least 5 years
  •         Franchise Breakeven Period, CAPEX, and OPEX
  •         Franchise ROI and ROC
  •         Franchise Exit Terms and Financial Ramifications
  •         Franchise Revenue-Profit-Sharing Model
Is my business ready to franchise?

To ensure your business is ready for franchising, your business must meet the following four conditions:

  •         Your business is profitable
  •         Your business is scalable
  •         Your business/brand has a “niche”
  •         Your business has a registered trademark (under application included)
How do I sell my franchise business?

Here are some essential points for your consideration as a would-be franchisor:

Don’ts

  •         Do not go for any 3rd-party model; commissions and fees are okay
  •         Do not pitch franchise proposals without criteria; maintain privacy
  •         Do not deviate from your documentation and documentation procedures

Do’s

  •         Form your own team for attracting and generating franchise leads
  •         Be meticulous with the initial 4-5 franchisees before getting into paperwork: these initial entities will serve as your brand ambassador for the next fifty franchisees
  •         Develop and implement SOPs for managing leads till onboarding and operations
  •         Use delegation

Case Studies

Yewale Tea (150+ Outlets within 02 years)

Kiosk Cafe

DNS – Desserts & Shakes

Taza.iq

Nana Grocery Delivery- Saudi Arabia (50+ stores in 02 years)

Click here for testimonials

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We work only for Visionaries.

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.