Case # 1:
A typical education franchise organization had around 80 per cent of its outlets owned and run by the franchisor. The rest were all franchise outlets or “centres”. The franchisor had set up 10 of his centres initially and run them as successful centres before venturing into franchising.
The brand name was popularized initially through aggressive traffic – oriented advertising for the franchisor’s centres. Franchise centres were started initially in the territories where these centres existed, thereby leveraging the brand awareness that had already been created.
The system was clearly documented in a set of seven manuals. These were the start – up, marketing, academic ...view middle of the document...
The franchisees promoted their units and specific products in their local customers.
Besides charging an initial franchise fees from the franchisee, the franchisor recovered ongoing royalty fees through the sale of its products like shampoos, which were required by the franchisees in the saloon. The franchisor had earmarked a minimum quantity that the franchisee had so pick up every month. In order to build a loyal clientele the franchisor introduced a membership scheme whereby the customer accumulated points, which could be encashed at periodic intervals. This ensured that the customers logged in their purchase of the service from the saloon, which in turn ensured a very effective financial control over the royalty payments from the franchisees.
Case # 3:
For an IT consultancy organization, the quality of work done by the consultants for a client is the key to obtaining repeat orders and new clients through references. Su7ch an organization would normally not consider franchising as a possible means of expanding business. However, a famous IT consultancy service has selectively appointed franchisees in some territories that are doing quality work for clients as per the specifications of the customer.
The success of the franchising model here is entirely due to the careful selection of the franchisee. In fact, the promoter and CEO of the franchisor company himself selects the franchisees. The process started when he motivated a colleague at the franchisor’s office to set up an independent unit at a new location. The deal was to make if profitable within a year and repay the investments to the parent company in the second year. The experiment worked as the colleague came to the fore and the unit was a success.
Encourage by this, the CEO went about hand – picking 10 franchisees over a period of 5 years who are now successfully running these franchise units. Half of these franchisees are former employees of the franchisors. The other half are from the industry or are individuals with whom the CEO has interacted and default with personally in the past.
Case # 4:
A cyber café in South Korea developed a proprietary PC management system that provided control on the entire PC’s in the cyber café. In other words, the cyber café which had nearly 70 PC’s was managed from the main counter and the person manning the main counter could allocate any PC in the café to a customer for a fixed time. The software allowed him to switch off the machine when the time allotted to each customer expired and also prepared a bill for customer.
Perceiving franchising to be an appropriate strategy for expansion, the entrepreneur decided to franchise the cyber café chain. Through the PC management software, the franchisor instituted a system wherein daily updates were received from each cyber café into the franchisor’s main computer. Thus he could control the revenue at each cyber café and additionally build in features in the software which...