- Jul 2021
Franchising is like a painting – it must be picture perfect to attract someone to buy it, install it and admire it forever. And that’s where the Picasso Theory comes in
I have been asked by many people what franchising is all about and what is the best way to go about it. Franchising is like an art piece. It is like a painting. It has to be perfect. So I picked up this artist called Picasso and built a Picasso Theory. The ‘P’ stands for ‘proof of concept’. Even if you are an international brand entering an Indian market, you need to first get your proof of concept done. You cannot just go and sell a master franchise for a million dollars and go away. You need to make one unit work. Somebody needs to make money. I have seen a lot of failure within international brands and I can give you a full list of them and I am not so excited about them. They have no idea what they are doing in this country.
They come, they pick up some money, people are excited because they want to own an international brand and they have no idea what they are doing. So we are not very excited about them as an organisation. We want sustainable business models which we can sell in thousands. And that is why ‘P’ stands for ‘proof of concept’. Going further, ‘I’ stands for, what I call, ‘innovation’. You need to have innovative business ideas and products. ‘C’ stands for ‘capital’. I feel a lot of franchise companies are under-capitalised. Even international brands do not put capital behind their businesses. They are multinational brands with no ability to support their businesses. They are like agreement machines. They draft agreements, they roll out big plans, they pull out money from people, and then forget about them.
If you do not have a sustainable business model, you are out of the game. ‘S’ also stands for scalability. If you come to this country and you want to do Delhi-Bombay, forget about it. If you come to this country and you want to do 60 cities, 500 outlets – this is your market! And what does ‘O’ stand for? It denotes ownership, a very crucial aspect in the franchise model. You need to bring operators. You need to bring somebody who will work in the store and now that society has changed, people don’t mind working out of stores.
I recently met a young guy who has done his doctorate on coffee, runs a nice and beautiful coffee store in Bangalore and his family owns farms of coffee plantation. All day he sits there and makes his barista and the entire thing. So, the point is that there is no shame in working out of stores. We will see this whole community changing like Australia or the US, where people work in the stores. No more of investors putting in money and having a micro management of businesses. All that is going to change and ownership will become very important. This is what I meant with my Picasso Theory. If you do this right, you will have a perfect picture to place and a great opportunity will be available for you.
Most brands are in a hurry to spread their reach by taking franchisees on board. The aim here is to maximise profits…