Franchising – Dutch Uncles

SuperK, Bringing Modern Retail Experiences to The Smallest of Towns in India

Anju Nambiar — Fri, 23 Apr 2021 05:35:04 +0000

SuperK, a rural retail aggregator has raised INR 6 Cr in a seed funding round backed by Strive VC, FirstCheque VC, Ramakant Sharma & Syndicate, Srinivas Anumolu, Director of Platforms & Products Partnership, Facebook, Anand Chandrasekaren, Lalit Keshre, CEO of Groww, Rajan Bajaj, CEO at Slice, Sampad Swain, CEO Instamojo.

Powered by this funding, SuperK (a tech retail start-up) will be accelerating its hiring efforts, doubling down on its technology offerings, and improving its infrastructure. The vision of the company is to empower small-scale retail stores within the country.

‘‘

SuperK has managed to expand the take home incomes of their franchise owners. There has been a measurable boost in their earnings and more then 40,000 families associated with the brand have received a positive contribution margin.

SuperK’s Business Model

The smallest towns of India are not aware of what it’s like to shop in a modern retail store, or to walk into a modern supermarket. They do not know what the latest technology driving retail shopping feels like. Even if they want to experience new-age retail shopping, they will have to travel to big cities.

SuperK is thus solving a problem, closing a gap and bringing an unavailable product/service to a consumer who hasn’t known it or doesn’t know they need it. Their consumer base belongs to the smallest towns of India and the company is empowering entrepreneurs from these towns to effortlessly set up and run their own supermarkets. By offering franchises of the SuperK store to budding entrepreneurs from small towns, they have differentiated themselves from other retail tech start-ups. While other start-ups in this sector are offering tools to stores, SuperK is actually creating outcomes FOR the small stores by utilising the technology tools themselves.

It wasn’t easy for SuperK since they spent ample time, one and a half years to be precise, to perfect their business model. It required a lot of tweaking and didn’t come about instantly or quickly. Currently their network is scaling up, expanding, and growing with a target consumer base that includes entrepreneurs and retail shoppers from Tier III, IV, and V towns of India.

How SuperK is helping small towners and aspiring entrepreneurs

SuperK has managed to expand the take home incomes of their franchise owners. There has been a measurable boost in their earnings and more than 40,000 families associated with the brand have received a positive contribution margin.

SuperK’s technology offering connects retail warehouses, stores, and vendors. They also have a mobile app that facilitates this connection. The next big differentiator of the brand is their approach. While pre-established retailers are competing with individual retailers, SuperK is enabling local small-town entrepreneurs to take on large retailers in their vicinity.

They have a very unique, one-of-a-kind business model which can operate with a negative working capital. This sets them apart from other retail chains. The fact that they are unique gives them the leverage to scale at a faster pace compared to other retail chains.

Technology is strongly backing this business model. The company is a provider of a tech-based system and a standard operating plan which anyone can use to set up a store.

SuperK is a franchise store which can be opened by anyone. The franchise owner will be able to manage procurement, marketing, promos, and merchandising for their franchise.

The company also provides an end-to-end operating system for the franchise owners. It allows them to offer standardised low pricing, discounts, cashbacks as well as a digital bill for customers. By the end of 2021, SuperK is expected to reach an annual gross merchandising value of $10M.

What’s in it for me?

The founders of SuperK have brought disruption into the small towns of India and especially a very legacy industry. Their immense experience in retail has enabled them to create this product/service.

SuperK is rebranding the existing small form retail stores by giving them benefits like technology and intelligence. Tech retail start-ups can think of creating a chain of mini supermarkets with a problem-solving edge to the idea because it has worked for SuperK.

Through innovation, you can empower small towns and aspiring entrepreneurs to take on the legacy retail chains.

The post SuperK, Bringing Modern Retail Experiences to The Smallest of Towns in India appeared first on Dutch Uncles.

Keventers: Ending the Quest for the Best

DU Desk — Tue, 30 Mar 2021 04:35:04 +0000

Gone are the days where you sat in an ice-cream shop and enjoyed a nice cold, simple milkshake. The very thought of milkshakes bringing about a feeling of nostalgia and flings one back into the past to simpler times. Entre Keventers, a name that nowadays is synonymous with milkshakes and nostalgia the world-over. What began as a simple dairy factory in the Chanakyapuri area of Delhi in 1925, has now exploded onto the international and national markets as an industry disruptor in the food and beverage sector. Keventers holds a timeless feel to its brand and is one of India’s oldest standing names in the industry. Edward Keventer could have never imagined the scale of the business’s success all those years ago and he would be proud to see how far it has come.

A Brief History of Keventers: Almost a Century in the Making

The Legacy of Keventers dates all the way back to the early 1900s, even before the first dairy manufacturing unit which would become the eponymous brand was established. In 1899 Danish dairy entrepreneur Edward Keventer came to India and began setting up dairy manufacturing units across Delhi, Aligarh, Calcutta and Darjeeling in the early 1920s. Keep in mind that it was a far cry from the classic milkshakes we know today.

Come 1925 is when things started to really take shape with the dairy unit that was established in Chanakyapuri area of Delhi which was a privately labelled dairy products company. After that, the popularity of the brand shot through the roof and remained as such even through the change in ownership after Edward Keventer passed and his nephew Werner Keventer took over the business.

By the 1940s the Keventers brand had risen through the ranks and become a prominent dairy manufacturer in India despite the turbulent times and the chaos surrounding the fight for India’s independence. After Independence the company once again changed hands and was bought by Ram Krishna Dalmia of the Dalmia Group in 1960, marking a new era in the brand’s journey.

Under new ownership, the company pivoted and underwent an aggressive revamp that still stayed true to its roots. The plant was refitted with a more modernised structure (modern at the time that is) and was making use of the latest machinery for milk bottling and pasteurising. These efforts made Keventers famous for its milk and ghee products and even led to the expansion of the manufacturing of ice-creams. By the 1970s the brand was at its peak and was popularly termed as ‘Keventer’s Shake’. The demand was so high in fact that Keventers had 48 distributors and stockists, this distribution network was on par with that of the demand for fresh milk products.

This forced the company to invest in the production of less perishable products that could achieve wider distribution to keep up with the demand. As a result, even the Indian army began using Keventers’ milk powder and condensed milk.

‘‘

As it is with every business the landscape around it is constantly changing and so too does the feasibility of operations, Keventers managed to ride out that change and came back stronger than ever.

A Bump in the Road

As it is with every business, there are bound to be setbacks and this came in the form of time and change for Keventers. As New Delhi changed with time so did the area of Chanakyapuri where the factory was located. It morphed into a residential area from the industrial locality that it once was and with that Keventers was no longer able to operate the factory there leading to its doors closing.

Fast-forward decades later to 2015 and Keventers was being pulled from beyond the brink by the Grandson of Ram Krishna Dalmia, Agastya Dalmia. Though the initial relaunch was a failure, he persisted and tried again, this time with the aid of Aman Arora and hospitality consultant Sohrab Sitaram who now sits as the CEO of the company.

Pivoting and Revamping: An Innovative Business Strategy

The Challenges Keventers Faced Starting out the Gate

One of the biggest challenges that the company had to overcome in the wake of this pivot was trying to bring their image back to life, in the sense that, since the company closed its doors up until it was relaunched the activity in the market was practically non-existent and people needed reminding. While the brand was very well known amongst the Gen-X, the challenge lay in bringing out that brand presence and recall value amongst the Gen-Y demographic as well.

The second issue that they faced was tracking down the original recipe to bring back the originality and authenticity. Though Keventers managed to track down the original recipe, the challenge of boosting brand recognition remained; the solution was franchising.

Franchising Keventers: A Big Step in the Right Direction

The franchising model was adopted to spread the brand presence across the country while simultaneously carving out a niche category for itself in the milkshake business. What made this franchising model so successful was that it operated under the premise of outsourcing the selling rights to major market players and gave them permission to open outlets across a specific city.

This garnered so much success that the master franchising plan was expanded to foreign countries like (Nairobi) Kenya, the United States, Nepal, UAE (United Arab Emirates) and even Oman. Now the company proudly holds footing in over 70 cities across four countries. With over 200 outlets under its brand by the year 2019 and looking to expand to 100 more outlets in Nepal and West Asia, the brand was thriving.

Refining the Product for the Modern Customer

The Franchising aside Keventers revamped the old classic milkshake and added some modern twists to it. The first change was to the packaging itself. In order to maintain authenticity and that nostalgia factor in a modern world, they moved back to the old ways of selling milkshakes in classy glass bottles rather than the PVC cups used prior. This change came with a sleek logo and it is reusable for the modern environment-conscious crowd. This had the side-effect of turning the bottles into somewhat of a collector’s item.

Coming to the contents within the bottle, the meat of the story, or milkshake, in this case, Keventers introduced flavours. To be more specific, it introduced a wide range of flavours from Butterscotch, Chocolate and Strawberry, of the original old-school recipe to chocolate mint Oreo, Banoffee and even KitKat for the younger generation (A something-for-everyone approach).

Handling Financials in a Smart Way

In its initial stages of the relaunch the company started small by not investing much in expansion but as demand and popularity grew so did the need for a Franchise model. By April of 2016, the brand started selling master franchise rights and this was a smart way to expand without having to invest too much money from the company’s side.

According to a TEDx Report, in just over three years since the relaunch in 2015, the company was clocking in with a turnover of almost Rs 100 crores in 2018. With a buy-in amount of Rs 25 to 30 lakhs for the franchising outlets, around 50 per cent of the company’s revenue comes from this, while the rest comes from percentages of monthly sales and brand royalties.

‘‘

Re-entering a market after years of inactivity brings with it some major challenges. Keventers recognised this obstacle and made some wise decisions that lent themselves to making the brand a front-runner.

Keventers’ Re-entry: Taking the Market by Storm

With all its revamping and re-launch efforts Keventers was entering the competitive market after a long time. It also entered the arena around the time when fast-foods and similar beverage/milkshake-type businesses were entering the market. One of its biggest competitors to date also made its debut around the same time in 2017. Fair to say that it was a very saturated marketplace to make a comeback in.

Keventers persisted nonetheless and it succeeded for two reasons, it was one of a kind with its unique and classic bottle packaging and the fact that it is a brand nearly a century in the making. This sense of timelessness that the other players did not have put Keventers in a league of its own, which made re-entry easier.

Another factor to consider was that Keventers was positioned at a slightly more premium brand and price than the competition across Tier one, two and three cities. These two factors carved out a decently-sized lane for the brand despite the heavy competition from players like the aforementioned Frozen Bottle and Amul.

The Marketing strategies and tactics aside one thing that makes Keventers stand out in the industry is the clientele it caters to. As mentioned before this particularly concerns the Gen-X and Gen-Y demographic, where the brand has a line into the older audience who come back for the pure nostalgia of the milkshake while the newer audience comes for the ‘hype factor’ and the classy, modern packaging which lends a sense of aged authenticity to the product and franchise.

Keventers: Surviving Through the Decades

Not many businesses in the food and beverage industry or any industry for that matter can claim that they have been around so long that they have seen the Independence of India. It is a rare and distinguishing mark for a brand to have been so intertwined with the history of the country and its economy, yet here we are.

As to the question of how this brand has survived all these decades and still managed to beat out a lot of the modern players, the answer is quite simple- time and experience. There is something to be said about having the time to see the market change and morph over time, it gives a unique insight into the patterns and trends. One such recent trend that Keventers jumped on was that of the pandemic by bringing safety regulations and safe practices to its franchise model with safety seals on all their bottles, temperature checks, in-store handwash stations, no contact preparation for their ice-creams and taking it a step further by making sure that even delivery personnel were following safety protocols.

There is also the factor of the genius moves imparted by the owners and CEO of the company to consider.

Shorab Sitaram, the current CEO and the man behind the relaunch of the company is the reason for the level to which the business has scaled up, both nationally and internationally. Having worked with big names such as Laid Back Waters, Tabula Rasa, Chi Asian Cookhouse and Chatter House, he was the ideal person for the job and was brought on in the nick of time by the owners Agastya and Aman.

His proactive and aggressive strategies such as the revamping of packaging, better demographic targeting and introduction of new and exciting flavours for a new audience helped put the Keventers name back on the map. The first outlet of the revamp hit the market in Select Citywalk in Saket as the flagship of the campaign and the rest is history.

With plans to expand to Switzerland and London, it looks as if there is nothing holding this brand back, which says a lot considering it was on the brink of fading into obscurity just a few years back. In essence, it showcases the company’s ability to adapt and change with the times by staying on top of the latest happenings in the industry, a holistic approach if you will.

It is this kind of growth and smart business decisions that puts on full display the potential for growth that the Indian economy can facilitate. As they say, where there is a will, there is a way.

For more inspiring stories do read our Inspire section.

The post Keventers: Ending the Quest for the Best appeared first on Dutch Uncles.

What is the Cost of an IPL Franchise ?

Shalmoli Sarkar — Mon, 15 Mar 2021 06:51:59 +0000

With a surge in coronavirus infections across the globe, the sporting events worldwide looked grim. India’s most coveted cricket event – Indian Premier League 2020 raised a certain cloud of doubt about its happening as well. But amid the uncertainties, while following the hygiene protocols and no spectators on the stands, IPL 2020 was a roaring success with Mumbai Indians clinching the champions’ title for the fifth time. With the game getting and popular each year, it brings the question what can be the cost of an IPL franchise ?

Current brand value of IPL Teams 2020

As per Statista, the current brand valuation of Mumbai Indians is $ 70.3 Million, followed by Chennai Super Kings at $59.8 Million and then Kolkata Knight Riders coming third at $58.4 Million.

‘‘

As per Statista, the current brand valuation of Mumbai Indians is $ 70.3 Million, followed by Chennai Super Kings at $59.8 Million and then Kolkata Knight Riders coming third at $58.4 Million.

IPL auction in 2021

The IPL auction held on February 18, 2021, franchisees had a list of 292 players to choose from. A total of 1114 players had registered for IPL 2021 auction from where 292 were shortlisted. The IPL teams of 2021 can either 18 members or a 25 member team. In a 25 member team size, 8 players have to be from overseas and 17 players should be Indian.

Minimum budget for the IPL Auction 2021

Each IPL franchisee has been allotted a maximum budget of 85 crores to buy a player and no franchise will be allowed to buy a player beyond the purchase capacity. Also, the minimum amount that a franchisee can spend to buy a player is upto 75 % of the overall purse. In case a franchise completes its squad by purchasing 18 players within 70% of the money, the remaining 5% of the balance will directly go to the Board of Cricket Control of India.

The Right to Match Power

The IPL auction of 2021 was a mini-auction, due to which the Right to Match (RTM) card will not be available to franchises’ bids to re-sign the players they have released before the auction. To get the released players back, franchisees need to bid again.

In Right to Match card, the franchises can retain their released players back even if a franchisee buys him, it is generally available during the mega auction.

IPL in 2022

With things returning to normalcy, this year’s IPL 2021 will begin in April. BCCI will be roping in additional two teams in IPL 2022, where instead of eight teams there will be an addition of two more new teams. With the addition of two new teams, BCCI has decided to fix the base price of each franchisee to be at a minimum of Rs 1500 Crore. Based on the base price the bidding war will take place, and will follow the same suit where the player is bought by the one who bids the highest.

The post What is the Cost of an IPL Franchise ? appeared first on Dutch Uncles.

Fast-Track Your Franchise Network to Embrace Growth

Avijit Dutta — Tue, 02 Feb 2021 10:35:02 +0000

Are you a business owner looking to scale your business through franchising? Are you a newbie franchisor concerned about your franchisee network delivering sub-par results in accelerating growth? Well, take heart, this article will throw some light for you to course-correct and fast-track your franchisee network in a four-step action plan.

Franchising business models have worked wonders for many brands across the world when it came to rapid scaling and achieving accelerated growth. In India, well-known brands, such as McDonalds, Subway, DTDC, Inxpress, Lenskart, The British Institute, Sanjeevani and Thomas Cook to name a few, have gained significant success in growth, especially in building visibility and establishing territorial market development.

A caveat: Prima facie franchising looks easy; however, it requires a careful strategy, intelligent tactics and flawless execution to achieve growth on a fast-track.

Before we delve into ‘fast-tracking’ let us cover some foundational ground and key concepts associated with ‘franchising’.

Franchise Model: The Basics

A franchise model works well for businesses that have tasted significant early success in establishing the brand by offering real value for customers in a given market. Once a business has grown past this stage the entrepreneur might explore franchising as a growth multiplier.

In a franchise business model, there are two sides, a franchisor and a franchisee. The franchisor is the business which owns the brand, the product and/or the business format. A franchisee is an individual who takes the rights over using the brand, product and/or the business format of the franchisor in a select location within a defined territory.

In this transaction, the franchisee pays the franchisor an initial royalty (ranging from a couple of lakhs to a few crores) as well as a share of the revenue from operating the business periodically. On the other hand, the franchisor shares the right to using the brand, trademark, products, business knowledge, processes as well as training and marketing assistance. However, marketing support might as well cost an additional 1-3% of revenue generated from the unit depending on the agreement.

‘‘

A franchise model works well for businesses that have tasted significant early success in establishing the brand by offering real value for customers in a given market.

Fast-track franchising to fast-track growth

Step1: Evaluate Your Business: Qualify your product and business model for franchising model

This is especially true for businesses adapting franchising for the first time. Please consider the following prompts to evaluate whether your product and/or business model suit the franchising model.

1. Have you achieved significant early success (e.g., revenue, customer base) with your product or service at least in a local market?

2. Can you establish with verifiable data that your customers recognise your brand as valuable?

3. Are you clear on what you want to franchise? Is it a product, a service, or a business format?

4. Have you standardised your product or service experience creating an identifiable, idiosyncratic experience for your customers?

5. Are your business operations & processes such as sourcing, packaging, after-sales, hiring, training & development etc standardised for repeatability and optimised for efficiency?

If your answers to any of the above is a weak ‘no’, rather not an emphatic ‘yes’ then you have more grounds to cover before you should consider franchising. A business which can be franchised requires a strong foothold in the five areas mentioned above.

Step2: Educate Yourself: Understand popular franchising business models

It’s time to take a deep dive into the underlying business models of various franchising models.

Let’s imagine we are a company owning a brand B, selling product P through our store S. We have some early success in a few locations in our town. People love our product and we are making a decent profit thanks to our efforts in standardising and optimizing our key processes. Now we want to accelerate growth. We now examine the options in front of us.

If we want to own and operate our new stores we have put in the investment into leasing or buying the stores as well as bear the cost of operating the store which includes inventory, salary, maintenance etc. In such a case the resource asks for expansion and therefore the financial risk is entirely on us. Is there an alternative, we may ask? Is there a way to fuel growth without requiring a lot of investment on our part?

Say, our business advisor recommended that we consider franchising. He also pointed out that there are three options we can explore.

Let’s take a dip into those with two key questions in mind: a) who owns the stores? and b) who operates the stores? We plot the ownership on the horizontal axis and operations on the vertical axis and the following 2X2 emerges.

FOFO Model

If the store is owned (or leased) and operated by the franchisee we have a FOFO model. This model is suitable if we have completely standardised and optimised our products and business processes ensuring predictable product quality and customer experience. Also, the reliance on the franchisee to maintain quality and process compliance is paramount because of limited controls on operations and direct contact with the end customer. It follows that we need a strong franchisee audit and compliance process to minimise our risk of reputation. The investment risk is borne by the franchisee. As a franchisor, we still have to do marketing for the store and the cost may be shared with the franchisee.

COFO Model

In this model, the company owns (or leases) the store but the operation is managed by the franchisee. Therefore, the risk of investment into the store is borne by the company. The requirement of product quality and process compliance still lies with the company.

FOCO Model

Finally, we have the FOCO model wherein the franchisee invests into the store real estate but the operations are performed by the company. In such a model the exposure of the franchisee is limited only to the investment part with no access to the operations of the store. It allows the company to have complete control over the quality of offerings. Many international service brands such as Thomas Cook use this model to expand to new countries and territories.

Few more models

A franchisee might take franchise for one single unit to begin with. This kind of franchising is called a single unit franchise. Once the first unit is successful, the same franchisee might take a second and third unit and thus becomes a multi-unit franchise. It might as well be for multiple locations within a city, multiple cities, even countries depending on the nature and market potential of the business.

All these various models are based on a) risk appetite, b) access to capital and c) confidence in deliberating control. Depending on the stage & maturity of the business the company chooses an appropriate one.

‘‘

A franchisee might take franchise for one single unit to begin with. This kind of franchising is called a single unit franchise. Once the first unit is successful, the same franchisee might take a second and third unit and thus becomes a multi-unit franchise.

Step3: Build Your Story: Create a strong narrative for ‘why’ your business requires franchising.

There may be several reasons why you might want to explore franchising. Here are a few key ones.

Access funds for growth

Growing a business requires resources. We may use funds raised through equity, a business loan or a network of franchise investors. Deploying equity or debt funds in expansion may not be the best route if we do not have assured flow of capital through successive equity rounds. We might as well decide to fund growth by a combination of equity capital and franchise investments reducing the ask to raise more funds through equity. This might be a cheaper way to fund growth.

Rapid scaling and territorial acquisition

Franchising allows for rapid scaling to multiple locations. The local entrepreneur who is taking your franchise knows the local market better than you do. Moreover, a franchisee will also do the heavy lifting (e.g., daily operations) for you for a particular market freeing up your bandwidth for focussing on product development and marketing.

Reduce risk

A franchise model is essentially a mechanism to share and/or transfer financial and market risk to participants. This way risk is decentralized and fragmented. Performance of one unit may not affect others. You can always close/shift a non-performing unit to other potential location without attracting a full share of the cost of failure.

Build a lean organisation & reduce cost

Franchising essentially means a transfer of risk through outsourcing a major chunk of ground operation through a mutual risk-reward structure. Because in most common franchising model’s unit operation is managed by the franchisee you don’t have to engage your resources in hiring and managing employees. This means you can create a lean organisational structure saving you costs and management bandwidth.

Two stories: Two categorically different whys

We need to build up one story that you tell yourself defining “your whys” as a franchisor, another for a potential franchisee defining “their whys”. Remember we all want to believe in a story. If we do this right, the acquisition of franchisees becomes easier.

Step 4: Design a replicable system: Ensure appropriate structural change in the organisation to fit rapid scaling, make it modular

In step 1 we had a list of qualifiers for suitability to the franchising model. Here we discuss organisational structure & operational procedures that facilitate deploying a franchising model.

Standardise brand identity, product, pricing & processes

If we scale a system that is not standardised, we end up with unpredictable business outcomes. Therefore, before we initiate franchising, we must standardise the brand identity, designs, brand communication, product offerings, pricing, and all the key processes from sourcing, inventory management, manufacturing, packaging, distribution etc.

Standardise quality management

Clearly define acceptable variations for all consumer-facing process outcomes along with OKRs. Then deploy an independent quality audit & compliance team empowered to ensure the desired customer experience. If we fail in this aspect, we become vulnerable to reputation risk. It is also prudent to have a central Online Reputation Management (ORM) measure in place.

Document key aspects of running a franchised unit

Have a brand manual defining brand identity, and communication, dos and don’ts for a franchisee. Have an Ops manual to elaborate on the key processes we have mapped for ensuring expected quality.

Onboarding, training, & development

Deploying a well-defined onboarding process with clearly defined KPIs and OKRs will set the right expectations from the get-go. This should include assistance on hiring and periodic training for employees of the franchisee. By being orderly we obviate possibilities of failure of a unit besides delivering a consistent customer experience across units.

Design an organisation clearly defining Centralised and De-centralised functions

To run a successful franchise network, we have to have some centralised functions such as branding, design, marketing, sourcing and distribution, product, customer relationship management, and quality assurance under the direct control of the company. Other functions like store operations, local BTL marketing, unit payroll etc could be decentralised and delegated to the franchisee. However, for every outsourced and decentralised process, we must have clearly defined OKRs and monitor those appropriately.

Have a financial model and strategy blueprint for each unit

A financial model must be defined with parameters for investments, fixed and variable costs, local market size, existing competitions etc. to evaluate the viability of the opportunity in the selected territory. It should define expected cash flows over years, payback period, overall profitability in medium to long term.

A strategy blueprint is overall planning from launch to exit (if desired) for the franchisee. It addresses key questions related to the launch, demand generation, and fulfilment.

Final thought

If we closely observe successful franchising businesses across the world, we will see that careful planning, a well-defined strategic blueprint and effective execution are common themes.

In this article, we have laid down four phases of franchising journey from the franchisor’s perspective. We start with evaluating our business for fitment to the franchising model. Then, we educate ourselves with all relevant franchising models to design an appropriate model for our business realities. Next, we build a story each for the franchisor and a potential franchisee. Finally, we design a replicable system for fast and reliable scaling.

The post Fast-Track Your Franchise Network to Embrace Growth appeared first on Dutch Uncles.