Franchising has been around since the 19th Century but it was not until Ray Kroc, a Multi-Mixer Salesman adopted Franchising for the expansion of his little known acquisition back then Mc Donald’s Fast Food that it gained such a strong popularity and momentum.
Today, almost half of the Restaurant businesses in the United States are franchised units and that is what caused the Fast Food Revolution, as we know it. In fact, Franchising is mostly responsible for the creation of the most successful format of Restaurants – the Quick Service Restaurant. The whole dynamic of the relationship between these two industries is what has revolutionized the entire business of eating out across the world.
Franchising is important in different ways to different people, and its importance varies from the utility it offers to all the sections of the business applicable. For the Restaurant concerned, Franchising is the best way to expand to various territories in a fast and effective way without the need of a large network of highly skilled individuals or the need to have a super costly core management team for each store. For the Brand, the advantage is that the business model is easily recognizable and acceptable. From the industry’s point of view, franchising is the most suitable way to make brands and products popular with regular customer visits and high brand recall value. From the point of view of an entrepreneur (franchisee in this context) is that the business model is well established and defined. Even the roles and responsibilities of the different crewmembers as well as the owner himself are well defined and as a result, the customers feel more secure and confident about the consistency and quality of the products. This leads to a more confident and a more loyal customer base for not just the brand or chain but for the entire concept of franchise stores hence increasing the footfalls to any particular location among other things.
Restaurant Operations are a typically complicated as they have to be able to build on the concept that even the most complicated products are made in the simplest and most effective manner by the most unexpected source of manpower. Simpletons who have very little or no training or background of the industry are usually introduced to the operations as entry-level crew and trained on the job by means of an intricate system of operations broken up and simplified to a great degree of detail by effective restaurant systems. Creating such systems is no child’s play and requires the highest skills and knowledge of operations and franchising. Brands take the decisions like developing a correct business operations plan and expansion well in advance to accommodate the possibility of major problems at later stages.
Every business needs a proof of concept and the flagship store or the pioneer store of a potential franchise system usually has one (or more) profitable prototypes across the business models to highlight the strengths of the business model in a variety of scenarios. However, a correct expansion plan is of utmost importance as gradual growth and planning are important to sustain and manage growth considering the importance of correct logistics and material management, organizational support and observation and support from the HQ to the units etc., which are crucial for the growth of the business model.
India has been one of the late bloomers in the field of Franchising and Organized restaurant industry both and this has been more of a blessing for the market dynamics as the factors like economy and society development has taken major leaps only in the past two decades and eating out has evolved a lot. The Indian Growth story largely loses its shine to the fact that the brands that are opting for Franchise route for their expansion are either locally run stores with a considerable home market value or brands that have ambition and uniqueness of concept but are not at all financially ready to take the required steps. Important aspects of franchise marketing like branding and organizing resources to display the franchise opportunity on a more practical and real way. The whole idea of franchising is just to make more money in India by way of Franchise Fees and post-sales support and organizing operations is still a distant reality for India and the considerably small number of brands that do so have achieved unmatched success and growth through this excellent medium of expansion.
In conclusion, the first generation entrepreneurs who want to enter the industry in a correct way with genuine serious efforts made behind developing brands and business models is what makes the franchise opportunity worthwhile. The business owners need to have more faith in the business model and should be able to stick around a little longer to give the franchisee unit holders what they want to run their units successfully.
About Rohan Bhatt
Rohan Bhatt, Founder & Head Consultant of Square Consulting, is a Franchise & Hospitality Consulting professional with over 11 years of hands on experience in developing and sustaining franchise brands across India.
He has headed the expansion and franchising part of various brands such as La Marque World Dining, Singh Saaab Di Rasoi, Unique Brew Café, Moodies Restro Café, Tasty Khaman, Mexican Rodeo & The Dough Company.
His acute sense of retailing & hospitality and his innovative restaurant support & development systems make him an integral part of the team showing the company’s commitment to not just large numbers but systematic development & support for the large number of stores planned in the network.
He has also provided end to end solutions for various brands on a strategic level which gives the businesses a correct direction for organic and sustainable growth.
Franchising and Restaurant Industry – “The Inseparables”
