What is Franchising?
Franchising is an increasingly popular method of entrepreneurship in the 21st century. By using the brand, goodwill, processes, and marketing power of a reputed business, franchising allows an individual to get his business running much faster than by building up the brand himself. The Indian franchise industry alone is worth a little over 25 billion USD with over 3000 brands
A big advantage of franchising a business rather than trying to build a brand from scratch is the marketing power of the existing business. An existing business has some value in the market and its brand can draw customers from day one. While it may be tempting to market individual franchisees, it’s actually counter-productive and can hurt the franchise as well as the original brand. For example, a Nike franchise in Mumbai may be tempted to make their own microsite called www.nikemumbai.in. Odds are that this site won’t be nearly as good as the original Nike site and may be so far off course that it hurts Nike’s brand image. It will probably be generic, not as well thought out as the original and provide its audience with a sub-standard user experience. This may hurt Nike not just in Mumbai but globally.
Over the years, hundreds of businesses have successfully franchised their businesses out. A large reason for this is the consistency in their branding and their sound digital marketing strategy for these franchises.
Success of Nike, Domino’s, and DPS
Let’s take Nike for example, who in 2016 had an estimated 1,000 retail outlets all over the world, many of which are franchise stores. Their website is optimized worldwide in terms of price and availability of products but is by and large the same. The brand has consistent messaging, fonts, and use of colours etc. that ensure that it is the shoe behemoth it is today.
One of the world’s most successful and profitable franchises today, Domino’s Pizza, as on 26th October 2016, had over 1,000 stores in India itself. All these stores operated using the same website, social media handles, and branding. Even the schemes (30 minutes or free) were consistent across all their stores.
Closer to home, a highly successful Indian brand that runs numerous profitable franchises is Delhi Public School (DPS). With 197 schools listed on its website from Jammu and Kashmir to Karnataka, they run one of the most successful franchising businesses in India.
Failure of Krispy Kreme
While Nike, Domino’s and DPS have got their marketing right, there are numerous big businesses, which have done just the opposite. Let’s look at the popular donut company Krispy Kreme’s franchisee meltdown of the early-to-mid 2000’s. Their sinful donuts were the rage in the USA and entrepreneurs were scrambling left right and center to get a piece of the action. Unfortunately, so was Krispy Kreme. They went all-out and aggressive, handing out franchises to hundreds of people without strategic franchise marketing plans. Customers were willing to wait in long lines for a taste of the donuts and the company tried to capitalize on this by opening stores at every corner and even selling their donuts at petrol pumps and pop-up kiosks. This poor marketing strategy led to short-term profits but diluted the brand and prevented the franchise outlets (who were in great competition amongst themselves due to being in such high abundance) from making adequate profits. Eventually, a huge number of the franchises shut down and the company’s stock plummeted.
Becoming a franchisee is a great way to rapidly enter the market with a proven brand and business model but if your marketing strategy isn’t tied up to the brand’s marketing strategy, it’s extremely difficult to make it. In today’s cluttered market, a well thought out marketing plan is as crucial to a franchisee’s success as the product itself.