Twinterview on Franchising
Avishek Gupta, a member of the Dairy Network Enterprises team interviewed me on Twitter about franchising. Here is a transcript
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Avishek_Gupta: What if I want to #franchise my business? What would a #franchisee look for?
S_Sivakumar: Actually just three things! RaRoI (to take home), Brand (to pull customers), SOP (to idiot proof execution)…
Avishek_Gupta: Thanks, that’s precise!But, what if I don’t have a brand? Will ONLY the other two work? My Query specific to small rural enterprises.
(Comment added later by Avishek to this transcript – assumption behind the question was that it will take some time to create a franchisable “brand” across different remote rural locations and hence the “lack” of brand for a relative newcomer like DNE)
S_Sivakumar: If not brand, something else to “pull” customers. Say, a unique product or service. Otherwise it’s partnership, not franchising!
Avishek_Gupta: Partnership v/s Franchising!!…Thanks a LOT for the insight! 🙂
S_Sivakumar: When you franchise, you bring everything to the table except last mile. In partnership, you combine complementary strengths
Avishek_Gupta: How to get a rural entrepreneur set up a franchisee? How does he get to know about it? What can convince him, it works? Local NGO?
S_Sivakumar: As to who can convince your prospect depends on the profile of your prospect. Local NGO, Bank Manager, School Teacher.. Best would be to conduct a village meeting (aided by an AV showing Franchisee at Work) and create “pull” for applications
Avishek_Gupta: Is minimum revenue guarantee for start-up period an intelligent way to go to convince entrepreneur? Or is it absolutely foolish?
S_Sivakumar: Minimum Guarantee is a useful tool. Ideally you should link the guarantee to efforts on part of franchisee, not a free ride!
Avishek_Gupta: So true! And our job would be to be clear about how we would “measure” the efforts of the entrepreneur in initial periods of little revenue.
S_Sivakumar: The inputs that drive the desired outcomes will define the efforts…
S_Sivakumar: Yes, in any case you can’t design reliable SOPs before running the business for a while
Avishek_Gupta: So, Franchise Package = SOP + min guarantee (proxy indicator 4 ROI) tied 2 efforts + a great service /product! Awareness thru AV of franchisee at work!
