The two-day Indian Franchising Summit 2007 had specialists in the business of franchising discussing at length the grave issues concerning the success of franchising at a more local level. Senior experts also highlighted the success stories of international franchise models.
The panel discussion on ‘Franchising Beyond Metros’ covered at length the growing need to tap the B and C class towns as a very lucrative market. Each of the panelists highlighted the topic with examples from their own business experiences. Ratan Jalan, CEO, Apollo Health and Lifestyle Ltd was the moderator for the discussion, while the other panelists comprised Ashutosh Garg, CMD, Guardian Pharmacy; Rohit Swarup, Director, Xplora Design Skool; and Rahul Munjal, MD, EasyBill.
“Metros account for just 20 per cent of the population in India. With real estate prices increasing, industries today are looking beyond metros. Airlines are also connecting to smaller towns. Every industry is now realising the potential that a B and C town has,” said Jalan, while giving the example of Guwahati, where many people did not have the outlets to spend. Therefore, their readiness to spend was much higher.
While talking about franchising in small towns, Munjal, who has created the successful model of easy financing through EasyBill, said, “Franchising is all about consistency and yet some aspects of the brand should be customised. Franchising in India is mostly seen in urban areas. India’s diversity raises the question about consistency versus customisation. The brand image and what it stands for should be consistent across. This includes the logo, service delivery, retail experiences and customer perception. At the same time, brands need to understand the necessity for being ‘glocal’, obey the laws of the land, and avoid standardisation to the extent that it becomes monotonous.”
While Garg elaborated how most pharma outlets were congested and offer spurious drugs, he said that the there had been no changes in the brand value of Guardian. “Our robust supply chain and our higher returns, due to lower real estate cost in smaller towns, works well for us. Besides, we are also appreciated for having been able to create careers for rural people.”
The audience appreciated the presentation made by Xplora’s Swarup as he brought forth his unique model of franchising vocational education. Interestingly, he owns just one out of their 103 centres, while the rest are on franchise. And the model has been working well enough for him.
“We understood that we needed to add value to the franchisee and the student, who are our customers. We look at education and have also projected it as something that builds character, and that which offers a career for a lifetime. Hence, price is not a factor here if the value proposition is correct, and people in small towns are ready to pay the fees at our centres, the amount of which is similar to any institution in a big city,” Swarup said.
His success story lies in ‘flanking’, which is, growing silently without competitors knowing about them.
“Every year, we review our curriculum according to the industry needs and make it standard across all our 103 centres. In small towns, seeing is believing and news spread through word-of-mouth. Hence, advertising has little to do with publicity there,” he added.
The panel titled ‘Learning from International Franchising Experiences’ was moderated by Yogesh Kocchar of Tata Teleservices. The panel members comprised Alan Branch, VP-Franchise Partner, Donaldson Walsh, and VP, Franchise Council of Australia; David Koch, Senior Partner, Wiley, Reid & Fielding, USA; Sunial Dewan, Franchise Consultant, USA; Pattabhi Ramarao, President, Australian Foods India Pvt. Ltd (Cookieman India); and Gian Mario Migliaccio, CEO, infofranchise.in.
While Kocchar explained how franchising came through evocating economics of scale and scope, Branch elaborated that in his native country Australia, over 40 per cent franchisors encouraged multi-unit ownership. While it is essential to assess the cultural differences among geographies, it is important to question whether the franchise system is operating successfully in the home country.
“There is utmost need for coordination and flexibility in the relationship between a franchisor and the franchisee for the successfully functioning of the franchisee,” said Koch, as he elucidated his key point with varied examples. Pattabhi explained how he opened the first Cookieman store in Chennai, when the city was touted to be the most conservative metro.
“We have changed the model of doing business, by introducing Cookieman Kiosks and Cookieman Express, as we though it would suit best at a certain place,” he said. “We do not look out for franchisees, we look out for partners. Anyone wanting to be our franchisee has to work with us, and then after passing three tests, the person has to give an online psychoanalysis test so that we can check the person’s mental framework for being able to do business with us. Also, when international players come to India, they miscalculate that the population size will translate into sales with similar high figures. This is where they often go wrong,” he explained.