I have summarized the blog for you. Of course, you are invited to read the story and share your feedback.
Summary
In this blog, I announce the two primary franchise methods that I practice with my Brand clients to grow their brand. I list why they are my preferred ways and my dislike for the older method.
The Blog
The way we are so used to doing a franchise of a F&B business is changing.
With new-age entrepreneurs and investors realising that a business has to be a fairer game, not one-sided, they are actively discarding the older ways of the ‘Traditional’ franchise model.
No more is today's well-informed entrepreneur and investor interested in paying a high fee, build liabilities to promote other brand and then offer royalties as long as he does business without a shared support system.
The market indicates that the age of glorified sale presentations and selling elaborate dreams of unlimited riches and fame are going-away.
The way to F&B business is now via active and passive collaboration, and I don’t think there’s any turning back.
It is my job to continually explore better and more innovative ways and methods to build wealth in the Hospitality business, which brings me across some very interesting insights.
Herein I discuss two new franchising models gaining widespread recognition and being well received in the market.
PICO (micro-QSR)
PICO format offers a low-cost, small-footprint (80-100 sq ft) option, enabling fast, affordable franchising with 8-12 month returns on lower levels of investments focused on delivery and takeaway business.
The model targets building QSR business with primary offering of a small space, limited inventory and product offerings, low rent and staff costs and overall lower levels of investments.
The model does include a royalty fee, but the start-up capital is easy on the pocket by approximately 60-80% compared to traditional QSR’s.
The model addresses a major roadblock of massive capital investments all the while maximizing revenue per square feet.
“The Burger Company” is credited with bringing the model to light and in the market.
Franchise-first
Quite different from PICO, this model is at a whole new level. The model is designed to empower entrepreneurs by providing a turn-key platform with lower barriers to entry compared to traditional models.
The business (Franchisor) invests in building his/her brand, supply chain, and operations specifically to empower franchisees, often eliminating traditional franchise fees and royalties in favor of high-volume product sales.
In this model, it is about completely accepting responsibility for your own ship and helping other's sail. This model is about disciplined execution and shared responsibilities to success.
This approach removes franchise fees and royalties lowering initial investment for franchisees, allowing franchisees to invest more in store setup and infrastructure and focusing on structured, repeatable store ownership.
The franchisor makes money by supplying products directly to the franchisee, making the partnership more of a wholesale-distribution relationship.
“Burger Singh” is credited with bringing the model to the market.
My thoughts
Both of these models demonstrates that it is important to realise that to succeed, both the parties, the Franchisor and the Franchisee, need to collaborate and understand each other's needs, capabilities and ability to execute.
It is not a solo game anymore.
To add, these models are dominantly QSR based. I think that fine dine hospitality business brands are going to stick to traditional models but with more investors stepping in the game, most brands would be driving their own (CoCo) ship, which is happening with every established brand even now.
Would there be more models to franchise a brand come up with time?
Hopefully yes, and I would keep on bringing them to you to learn from and build value.
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