Comparing the Franchise versus Traditional Business Models

Presented by Samarth Rao

Kidopia Ventures Pvt. Ltd.(http://kidsconcepts.in)

Choosing the right Business Model could decide your chances of Success or Failure too.

Choosing the right model helps make the business success a little simpler and less difficult

So… which then is the better business model!!

2www.kidsconcepts.in


In a Franchisee Option, the Concept is already existing & proven in the marketplace.

In a Traditional Business, one needs to do trial and error – should have or develop an expertise in each & everything

Traditional Biz


Tried & tested systems and processes already in place and running

All systems needs to be newly created and processes designed

Traditional Biz


Support would be available on going from the Company / Franchisor

Everything has to be managed and learnt by self. No external support at roadblocks

Traditional Biz


All the marketing designs, collateral will be provided by the company. Tested already. Just have to use them

All designs need to be newly designed and tested until it works effectively. Also expensive as many versions need to be tried

Traditional Biz


Can start the business operations immediately.

Needs lots of time to initially set up with lot of trials and coordinate for everything from materials to logistics to finance to recruitment & more.

Traditional Biz


Risk is mitigated with proven & working systems in multiple locations already.

Risk is relatively higher as no part of the business has been time tested. Everything has to be newly tried on assumptions and beliefs.

Traditional Biz


The Franchisor would provide regular Updates and also focus on regular R & D and innovation for new upgrades.

Everything needs to be handled by self. No other person or company would help with upgrades or updates

Traditional Biz


Franchisee is provided complete hand-holding in all these by the Franchisor

One needs to completely device their own plans and discover marketing approaches or get trained separately

Traditional Biz


Focused, planned & clearly aware of the initial and recurring investment as the same is already tried elsewhere.

No clear idea. Appears less initially, but can be much higher as there are lots of trials to be made and new vendors to associate with less volume

Traditional Biz


Expert opinion, feedback & testimonials shared from existing set of franchisees

No way to gather any feedback or wisdom from others experience

Traditional Biz


All franchisees can benefit from these processes, trademarks, IP and brand value provided by the franchisor

As it would be an independent new entity, brand recognition would take few years along with confirming to Processes, trademarks, IP etc.

Traditional Biz


Business Systems and Processes already being proven, one needs to focus on personal efforts and following the system only. Existing, working model enhances chances of success.

Unforeseen, unanticipated, new challenges at every step. Can get into a roller-coaster ride, hence affecting productivity and bottom-line. Statistics prove that more than 95% of new businesses fail in the first couple of years.

Traditional Biz

Primary source for this slide share presentation: http://kidsconcepts.in/what-is-the-difference-between-a-franchise-and-traditional-business/

Trends in the $24 Billion Indian franchise market: http://www.franchiseindia.com/articles/Research/Latest-Trends/Franchise-trends-that-entrepreneurs-can-t-miss-in-2015-724/

KPMG and FAI report on Franchising industry in India:

http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/Collaborating_for_Growth.pdf
