Foothold

Franchising is fast becoming a route for regular entrepreneurs to become restauranteurs—either as a business opportunity or to fulfill the romanticism of owning a restaurant. The main advantage,says Kurlawala,is that “there is a support system. You eliminate the mistakes franchisers have made.”

Gautam Shewakramani,Director of Primary Cuisine Pvt Ltd,counts the benefits of franchising beyond the paramount one for him — the brand value of the chain. “The access to a franchiser’s technical knowhow is important. People underestimate what it takes to get the right recipes and kitchen operations (including equipment,processes and supply chain) going,” says Shewakramani,a franchisee of Komala’s,the Singaporean South Indian fast-food chain. He has stakes in hotels but this is his first independent restaurant venture. In some cases,franchisers create menus,train and recruit staff,setup supply chain,bear marketing expenses and even share the capital investment. Thus,this hand holding provided by franchisers while setting up operations is the main incentive to franchise and not start one’s own restaurant.

The other advantage is scalability. Obtaining franchising rights for a foreign brand nationally means that franchisees can themselves franchise the brand to others. Shewakramani aims to sub-franchise the Komala’s brand once his operations have stabilised,since the restaurant opened its first outlet in Phoenix Mills last month.

Gaurav Goenka,Director of Mirah Group,is a franchisee with rights to the Manchester United Café that opened in February,but prefers buying a stake in restaurants and then expanding them. Until 2005,he had no stake in the food and beverage industry,but decided to buy over Rajdhani,a vegetarian Marwari cuisine restaurant,which he has now expanded to over 30 outlets nationally. “The (then) owners of Rajdhani provided the expertise and we provided the capital required to scale up the chain,” he explains. Similarly,he purchased Falafel’s and recently invested in Café Mangii,Bandra. He plans to open four branches of the cafe in the city,starting with ones in Andheri and Powai by September.

Franchising,however,isn’t without risks. Since the capital invested is by the franchisee,if the venture fails the loss is only of diminishing brand value for the franchiser. “Typically,the franchisee pays a lump sum up front and then royalty every month that is normally a percentage of revenue. Still,Shewakramani admits that franchising is the quickest way to open a restaurant,but only if approached correctly. Goenka,having been both a franchiser and franchisee,says that while people with no experience in the industry are equally able run a franchisee,they tend to be impatient and often cut corners. “As a rule of thumb,we choose franchisees whose livelihood isn’t dependent on the restaurant.”