DEAL JEANS

Images Retail - - COVER STORY | FOCUS -

Sameer Pa­tel, Founder and Chair­man, talks about the franchising jour­ney of the brand in this ex­clu­sive in­ter­ac­tion.

Tell us about your franchising jour­ney in 2018. How many new out­lets have you added? Have you repo­si­tioned any of the pre­vi­ous ones?

Deal Jeans has es­tab­lished its brand eq­uity with MBO trade part­ners over the past 15 years and has then em­barked on the EBO jour­ney in the year 2015. Within a span of three years, the franchising model has helped Deal Jeans grow at a much faster rate cast­ing its pres­ence through 23 ex­clu­sive out­lets across In­dia and in­ter­na­tion­ally. Hav­ing a strong hold on

MBO mar­ket with our ex­per­tise and ex­pe­ri­ence, we have joined hands with our dis­trib­u­tors and re­tail­ers who have strong pres­ence in their re­spec­tive re­gions and this has helped Deal reach in smaller towns hav­ing a huge buy­ing po­ten­tial and vast reach. We started in the year 2018 on a high note with our first ex­clu­sive out­let in the North­east re­gion at Im­phal fol­lowed by Surat, Goa and Patna. We have also re­fur­bished and re­struc­tured the look and feel of our out­lets at Bilaspur and Jodh­pur with up­grad­ing in-store de­sign­ing, façade and fix­tures to main­tain uni­for­mity in­brand po­si­tion­ing across In­dia.

Based on your ex­pe­ri­ence and ex­per­tise, what do you have to say about the un­der­stand­ing of franchising in In­dia, es­pe­cially if you have to com­pare it with the sys­tem seen in Eu­ro­pean or Western coun­tries?

Some of the key dif­fer­ences as com­pared with In­dian and Western coun­tries are: Lack of a Sin­gle Le­gal Frame­work:

In­dia does not have any spe­cific laws on franchising. When fran­chisors en­ter In­dia, they are gov­erned by a num­ber of dif­fer­ent na­tional and re­gional statutes and codes rather than a sin­gle com­pre­hen­sive statute.

Tax Con­sul­tants: A tax con­sul­tant whose aware of global reg­u­la­tions and sys­tem, to come in terms of a prof­itable franchising con­tract Due Dili­gence: It is also vi­tal to con­duct thor­ough fi­nan­cial and le­gal due dili­gence a prospec­tive fran­chisee, along with a fea­si­bil­ity study. Lin­guis­tic/cul­tural Dif­fer­ences:

Un­der­stand­ing lo­cal cul­ture and tastes and in­no­va­tive strate­gies like “In­di­an­iza­tion” of prod­ucts is vi­tal to a fran­chise’s suc­cess. Ex­pen­sive Real Es­tate:

In the large ci­ties of In­dia, re­tail space con­tin­ues to be ex­pen­sive and the qual­ity is rel­a­tively poor. As com­pared to in­ter­na­tional mar­ket, the fa­vor­able credit schemes make the process eas­ier also tighter. Re­sis­tance to Fees & Cap on Roy­al­ties:

In­dian Fran­chisees also face stiff re­sis­tance to­ward the fran­chise fees/roy­alty pay­ments, which are con­sid­ered higher than some parts of eastern and western coun­tries

Tell us about the franchising busi­ness of your brand, high­light­ing the key mile­stones that are dear to the com­pany’s jour­ney.

In 2017, Deal Jeans out­let lo­cated at Ghu­mar­mandi, Lud­hi­ana and op­er­ated through fran­chisee model clocked a sale of ₹50 lakh in a day’s op­er­a­tions, an av­er­age of ₹7000 in billing ev­ery minute on the launch day. The out­let is spread across an im­pres­sive 1,600 sq.ft. area. The store ex­tended its op­er­at­ing hours to mid­night that day mak­ing a record-break­ing sale of 2,346 ap­par­els in 12 hours – 1,139 gar­ments in bot­tom cat­e­gory and 1,207 in the top cat­e­gory. This has been by far an in­cred­i­ble achieve­ment ac­com­plished by Deal Jeans.

What are the chal­lenges as­so­ci­ated with franchising in In­dia?

Many busi­nesses fail due to un­der cap­i­tal­i­sa­tion as the cost of cre­at­ing the fran­chisee sys­tem and the cost of sup­port­ing new fran­chisees usu­ally ex­ceeds roy­alty rev­enue. The fran­chisors has the set SOP shared to the fran­chisee join­ing on­board. But these pro­ce­dures aren’t pri­or­i­tized by the fran­chisee of­ten fail­ing to achieve set ROI in the in­ten­tion of sav­ing on cap­i­tal. Fran­chisees need to un­der­stand the im­por­tance of fol­low­ing these set guide­lines for a long-term as­so­ci­a­tion. Also num­ber of for­eignowned brands have now been in­cor­po­rated into the lo­cal mar­ket. While this has a pos­i­tive eco­nomic im­pact and gives con­sumer more choice, it also in­creases com­pe­ti­tion and puts pres­sure on the home-grown brands.

What makes your brand a fa­vorite with fran­chis­ers - things that you do for re­la­tion­ship and busi­ness build­ing for them.

Our franchising pol­icy helps the fran­chisee to keep the store fresh and stock the lat­est mer­chan­dise be­cause of the end of sea­son sale sup­port and stock cor­rec­tion mech­a­nism. Our EBO pol­icy en­sures a level play­ing field for all sales chan­nels.

What do you ex­pect from the fran­chis­ers?

While lo­ca­tion of the prop­erty re­mains the most im­por­tant cri­te­ria, we ap­point re­tail­ers who have ex­per­tise in re­tail, so that they can achieve the de­sired ROI.

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