Retailing through franchisee model

If you want to do business, have the entrepreneurial abilities and are willing take calculated risks, the best thing to do is to become a franchisee.

The need for leading companies to expand deeper into markets is to become franchisers of their products by hiring franchisees.

The greatest advantage of a franshisee will be the market knowledge and the entrepreneurial ability. The franchiser will provide him with the domain knowledge and the brand name. The risks that a person takes when he decides to become franchisee is substantially reduced by the brandname.

Now more and more companies are entering this area. The idea of retailing through franchisees is still in its nascent stage in India. "50 per cent of the retailing in US is done through franchisees but in India it is just 2 per cent ," says Ratan Jalan, head of the South Indian Chapter of Franchising Association of India.

The chapter started its operation today and will be based in Hyderabad. Jalan is Chief Executive Officer, Apollo Health and Lifestyle Limited.

The South Indian chapter aims to act as a facilitator between the franchisee and franchiser, increase knowledge and play a role in influencing decision making . Jalan said that the major impediment to the growth of franchisees is inadequate legal protection as most of agreements are not mandated by law.

"There are ample cases where the the franchisees make quick money and walk out of the agreement," he said.

While expounding on the virtues of franchising, he has a word of caution also. Franchisees should not have excessive expectations as success is not guaranteed.

"In the Indian context, franchisees should understand that success squarely depends on the entrepreneurial abilities."

The franchisee - franchiser relationship is key to the success of a venture. The service quality and investment made by the franchisee should be supplemented by greater domain knowledge extended to the franchisee by the franchiser.

"Doing business through franchisees is a way where both the franchisee and the franchiser stands to gain." Ratan says.