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Franchise Consulting

Fund raising is not the only option to grow your business, we can help you to grow your business through franchising.

We can provide you end to end solution when it comes to franchising.

Definition of franchising:

Franchising is a replication of the successful business model. Three words are important to note here. First, there has to be business model, second is it has to be successful and third it is replicated the way it is (No experiments on new franchisee outlets)

Brand/Franchisor:

The franchisor is who is looking to expand the brand and franchise their business

Franchisee Investor:

A person who is looking to invest in franchisee in particular territory

Meaning of Franchise fees:

Franchise fees are charged by the brand to give rights to franchisee investors to use the brand name, process, etc. in a specified manner in their territory. It varies from brand to brand and total investment in the unit.

Meaning of Royalty:

It is the same as franchise fees, but it is charged on a recurring basis. Say 10% of turnover in franchisee outlet or Rs. 25000 per month etc.

Single unit model:

It refers to the standard unit, which is franchised. For eg., You as franchisee investor gets the opportunity to own a single unit.

Multiunit model:

It is the same as the single unit model, the only difference is franchisee Investor would like to buy rights for 2-3 units combined and can bargain for better franchise fees.

Master franchisee model:

Master franchisee is franchisee only but larger territory says Mumbai rights or India rights. Along with rights given to single-unit franchisees, the Master franchisee gets the right to sell franchisee in its own territory. MF can earn a share in franchisee fee and royalty/margin also from units appointed in their territory.

FOFO, FOCO, COFO model:

There are variants in franchising models to suit the needs of brand and franchisee Investors.

FOFO is franchisee owned and franchisee operated. As the name suggests franchisee needs to get involved in the franchisee unit to operate.

FOCO is franchisee owned and company operated. This is more like an Investor model wherein the franchisee investor invests amount and it is managed by the brand.

COFO is company-owned and franchisee-operated. This is followed wherein the brand wants to appoint some entrepreneur to operate the unit opened by the company.

Franchise period

Franchisee rights are given to franchisee investors for definite time i.e. 3 years, 5 years, etc. and then one can always renew it.

ROI/Payback period 

The payback period is frequently used in the franchisee Industry to know how much time it will take to recover Initial Investment done. Say 10 months, 15 months, etc.

Franchise agreement

The franchise agreement is an agreement signed between franchisee investor and brand/franchisor defining important terms like,

  • Tenure of franchisee
  • Rights and obligation of franchisee and franchisor
  • Territory
  • Record keeping and MIS reporting
  • Protection and allowed usage of Intellectual property
  • Transferability of franchisee rights
  • Confidentiality and non-compete agreement
  • Dispute resolution
  • Commercial terms

In India there is no specific law governing franchising, so agreement signed between franchisor and franchisee Investor plays an important role. 

Why brand franchise?

It varies from brand to brand but the most important reasons are below,

  • Local entrepreneur and serious partner is better than an employee
  • Shared investment and responsibility
  • The aligned objective of profit and growth
  • Saving on monitoring costs
  • Reduced daily involvement
  • No equity sharing in business

This enables the brand to make a scalable and sustainable business model.

Why lacs of people invest in a Franchise?

  • Established business model (No experiment)
  • Shared investment and responsibility
  • Well defined process
  • The aligned objective of profit and growth
  • Active partner/passive partner (FOCO option)
  • At the end of the day, the franchisee is an entrepreneur giving good earning potential and platform to utilize your skills

When your brand is ready for franchising?

  • Replication of successful business model
  • Unit-level economics should be positive as franchisee investor getting unit ownership only
  • Strong process
  • Dependability, so that franchisee do not replace the brand board with own board
  • Support to franchise partners
  • The right time is when a brand can create, a win-win situation for brand and franchisee

How to go about franchising your business?

Once you have finalized that yes you want to franchise your business and you can create an environment wherein there is win-win situation for your Best way to do it is, invest in your own pilot unit so that you have all it takes to convince potential franchisee investor. You need to define clearly following things useful for franchisee investor, so that franchisee Investor has to just sign the cheque.

  • About business and what franchisee owner will get
  • Investment requirement
  • Real estate requirement
  • Eligibility to take up a franchise
  • Financial model
  • Draft Franchise legal agreement

Once appointed as a franchisee, Brand needs to support the franchise in the following things.

  • Training to franchisee owner and their staff
  • Finalizing location
  • Process and procedures to be followed
  • Replicating business model

How we can help you in growing your business PAN India through franchising?

We at Expertmile through our experts can guide you on how you can expand your business through franchising or not, we can help you to make your business franchise ready and ultimately scale up your business PAN India with help our network of 4600 plus experts spread across India.