Why one should Franchise

Statistics

The food industry, which is currently valued at US$ 39.71 billion, is expected to grow at a Compounded Annual Growth Rate (CAGR) of 11 per cent to US$ 65.4 billion by 2018.

Food and grocery account for around 31 per cent of India’s consumption basket.

The Confederation of Indian Industry (CII) estimates that the food processing sectors have the potential to attract as much as US$ 33 billion of investment over the next 10 years and also to generate employment of nine million person-days.

Research

In a country like India, every other person keeps a dream in his/her eye of starting a restaurant. Irony is that they don’t know how to get started with it. There is a model called ‘Franchise’ which can help one to start their business and help it grow as well. “There are two models one is owned restaurant and other is franchise model. I started researching and comparing and came to a point after analyzing one graph which I thought was very interesting. There was one chart which showed the comparison of franchise versus owned restaurant and it was a tracked data over a period of ten years when I saw that during the first year, 95 per cent of franchise restaurants were doing well and existing. At the end of the year, the number of owned restaurant was 50 per cent. By five years, around 85 per cent of franchise restaurants were rocking the market while the owned restaurants were down to 25 per cent. And after ten years, 75 per cent of franchises restaurants were still there and owned restaurants got more down to 15 per cent. It was clear for me that I’ll probably be in the array of franchise model restaurants,” says David Griffith, Founder and CEO of Habanero Foods International.

Benefits

Here, the question arises that why would you franchise as a restaurant owner? Why can’t you do it by yourself? First of all, capital is a gigantic worriment. As every entrepreneur understands that how difficult it is to raise money, open different outlets and get employees work under you and pay them. Therefore, the biggest advantage in franchising is that you’re expanding your brand, selling your products, generating revenue without even putting your own money. Of course you need to invest in the basics as in the platform of franchise model but you’re not putting your money into reach out to more outlets. Secondly when franchise invests their money to open an outlet of your brand in other area than franchise would be more active and involved to raise the business than even your manager.

Somebody who is not into restaurant business and wants to enter this industry than franchise is an enormous way to understand the business. One can’t just go and open a restaurant if he/she cooks well because restaurant business is like another business. There are always some strategies and science behind a business and a franchisor imparts the sense and science both into the business. Franchisor will help from choosing a righteous location to the standard design that should be followed to raise bottom line. What you are paying for is knowledge and the brand which already exists. A franchisor typically provides a platform to the entrepreneurs to build their brand. It is a fantastic way to scale one’s brand and a viable business model at the same time.