How should you venture into this business currently worth Rs 4,004 crore? Estimates are that by 2010 this business will address 126 million tiny tots in the country!
Did you know that around 50% of a person’s ability to learn is developed in the first four years of their lives? Lina Ashar, founder of Brainworks and Kangaroo Kids Education, elaborates,
This is a critical period in a child’s life when specific types of learning take place. The brain is especially receptive to stimulation in the area of language, for example, during the first three years. Therefore, children that are exposed to speech (talking, reading, singing, etc) on a regular basis, exhibit language skills that far exceed those with little verbal stimulation.”
Lina, along with many specialists in the educational field are now pitching this concept and stressing towards the importance of preschools in a child’s life. Even parents are realizing the significance of building a foundation for their kids, thanks to tough competition that exists nowadays with regards to school admissions. They no longer resort to the neighborhood play schools or day care centers but are on the lookout for preschools with a reputed name and infrastructural facilities for their child’s overall development.
Several preschool chains have already opened up in the past few years to cater to the requirement. But with around 126 million children expected to be in the age group of 0 to 4 by the year 2010, according to the United Nations Population Division, the demand for preschools in the organized segment could be on the rise like never before.
A Rs 4,004 Crore Industry
According to reports by brokerage firm CLSA Asia-Pacific Markets, the preschool industry in the country is currently estimated to gross about Rs 4,004 crore ($985 million). The report also indicated that the largest chain of preschools in India comprises of just 550 schools, less than 4% of the total market potential of 15,000 preschools.
This is primarily because most preschools in India fall in the unorganized sector. Says Lina, “The business of running preschools has tremendous potential in India as it is still highly unorganized and often lacks a standardized curriculum, infrastructure and quality. Given that it is lucrative, and there is still a quality gap, there is scope for several organized players to get into this business.”
According to Sarita Sayal, Director of Mother’s Pride, which enrolls around 10,000 children annually, “Driving this growth are several social factors, like the increasing number of double income nuclear families who desire to enroll their kids in the best of schools and fear losing out on the rat race.”
Setting up the preschool
The business is said to be low on investment and high on returns, with a break-even period within the first two years of operations. “If one plans to use the franchising model only, the investments are lower, since you only need to spend on curriculum development, nationalized marketing and teacher training. Starting your own school, however, is more capital intensive, since the cost of property refurbishment, toys and other equipment is high. Excluding brand building costs, we can safely assume around Rs 15 to 20 lacs per school,” says Lina. Trishna Kids, a preschool chain launched in Hyderabad, just about a month and a half back by Triumphant Institute of Management Education (TIME) is looking at an investment of around Rs 30 crore for around 200 schools over the country in the next three years.
Playing equipment, teaching supplies, interiors and transportation for children are significant investments. Besides this, one also has to pay attention to qualified teachers and staff. Says Jayesh Nair, Head of Trishna Kids, “Often, the quality of teachers suffers if the franchising model is adopted. To deal with this, we only appoint teachers who are well experienced and qualified in dealing with children. We have a separate team that trains teachers throughout the year to keep them abreast with teaching techniques” says Jayesh.
Many preschools also invest in a day care for children. Most schools that are running such centers get any where around 50 to 100 children annually, from both within the school and outside. Madhulika Bhupatkar, Director of Little Pearls, an initiative by the house of Pearl; which also runs the Pearl Academy of Fashion, says “A day care center is definitely a secure option for many working parents. Our day care provides all the facilities that a child would typically require throughout the day. It is equipped with a sterilizer, refrigerator and microwave to cater to these needs. A full time nurse for the babies ensures that we have a well-trained personnel taking care of them.”
Apart from academics, parents are also paying a lot of importance to extra curricular activities these days, wanting their kids to pick up an instrument, dancing or a sport as early as possible. Therefore, investing in an activity center that has programs in dance, music, art and craft, drama and speech, storytelling and other outdoor games for the children is of utmost importance.
So, could setting up daycare or activity centers be an opportunity in itself? Possibly. But as Sarita puts it, “Running a day care is a very delicate business as the children involved are very young. It is best if an entrepreneur joins hands with a preschool. He can make use of its experience and also get business easily.”
Last, but not the least, according to AL Deivanathan, CMD of Apple Kids Education, a considerable chunk of your initial investment should also go towards generating brand awareness. “Besides advertising in newspapers, we also advertise in magazines like Woman’s Era and channels catering to children like Cartoon Network and Pogo.” Depending on how well the business is doing, you can cut down on this cost over time. This is because a majority of the parents depend on word of mouth (i.e. other parents) while selecting a preschool. If your reputation is good and you manage to generate a positive word of mouth, the word spreads easily.
We also got in touch with some parents to tell us about some of the other requirements while selecting a preschool. Rakhi Pathela, a housewife, whose son just passed out of Mother’s Pride this year says, “Finding a school that was in the neighborhood was important.” Bimal Uppal, a police officer, with a working wife, also agrees, “The only thing that stopped me from sending my daughter to one of these schools is the distance factor. I didn’t feel comfortable about sending a three-year-old so far away from home and eventually settled for a playschool close to home.” Jayesh also seconds this notion. “No one wants to drive for an hour for a three-hour school. It doesn’t make sense.” Therefore, ensure that you choose the right locations to set up your chain of preschools.
Both Rakhi and Bimal also stressed on the importance of large and spacious classrooms, as well as outdoor areas. “Most preschools as of now are within the four walls, with not enough space attributed to an open area for the kids to play and move around. This is extremely important for the child’s overall grooming,” says Jayesh.
Following the franchising route
Like many existing preschools in the organized sector, you can also adopt the franchising model to achieve rapid growth. Also, as more and more parents are on transferable jobs, this would ensure that the child just has to shift to another branch of the preschool, rather than leaving it.
“Franchises enable not only sharing of expenses, but also knowledge, experience, brand image, as well as technical expertise,” says Deivanathan.
While on the lookout for franchisees, most preschools have a minimum land requirement of around 1000 square feet and a franchisee fee of anywhere around Rs 4 to 40 lacs, depending on the location. The royalty fees, which is on the total fee generated by the school in a year, can range anywhere between 15% and 30%.
After selecting a franchisee, ensure that there is a similar ambience, supplies and infrastructure in all the centers. A training program for the franchisees should be set up for this. Apple Kids, that has over 160 centers all over India and claims to be the largest preschool chain in South India, provides its franchisee with staff recruitment and training, transport, gymnasium, effective promotional material and even takes care of advertising. It also provides books, uniforms, shoes, activity charts, school bags, crayons, diaries, lunch boxes and water bottles to the children. “With an investment of Rs 6 lacs and annual loyalty fee of 30%, we set up the entire school just within ten days,” says Deivanathan.
But entrepreneurs should be very alert when following this model, because it might just appear that with such little investment requirement for franchisees and the desire to scale up rapidly, the quality of education will most likely suffer. Jayesh’s advice with regard to this model is, “Ensure that the prospective franchisee has enough experience in the educational field, has reasonable financial resources and has a passion for working with kids. Since, the franchisee doesn’t deal with the company directly; it could lack quality and a professional approach.”
Having a different approach
With more and more players looking to get into this business, attracting potential clients towards your school can be a difficult task. So, how can this be dealt with? Simply put, like any other startup, either do something different or do some things differently!
Trishna Kids, for example, can boast of their quality of teachers that have been well experienced in teaching for over seven years.“The reputation of TIME itself as a leading coaching institute for competitive exams such as CAT, GRE and TOEFL, sets us apart from the rest,” says Jayesh. Apple Kids, on the other hand, boasts of its ISO 9001:2000 certification from International Certification Services, accredited by the joint accreditation system of Australia and New Zealand. “Our curriculum, syllabus and methodology are at par with the international standards,” says Deivanathan.
When asked what sets Mother’s Pride apart, Sarita says, “Our founder Sudha Gupta did an extensive research on the psychology and needs of children before chalking out a scientific curriculum. That is the reason we constantly innovate and stay abreast of all other schools. Not only children but parents are also educated about parenting through books and seminars. We invest a lot of time, energy and money in research and development.”
Little Pearls also knows exactly how to attract those little delicate darlings to their school. Their school has a doll house, kitchen and a children dress up room. “We also look at holistic development through well-planned activities such as art and craft, yoga and taekwondo and computers. Each of these activities helps the child develope motor skills as well as creativity and imagination,” claims Madhulika.
Lina claims that Brainworks has one of the most compelling value propositions in the industry today. “Firstly, we have a strong understanding of the preschool business, thanks to Kangaroo Kids and have partnerships in key areas such as book publishing. Secondly, we have our professional management team, Better Value Brands, which is in place to spearhead this venture. Last but not the least, we have the marketing and creative strength of Star TV channels, as they are our media partner.”
Looking at the Challenges
One of the biggest challenges that this industry faces at the moment is awareness amongst the parents about the importance of preschool education. “Parents usually plan, research and save up for their child’s higher studies but not preschool education,” says Sarita. Parents are not convinced about shelling out Rs 35,000 to Rs 50,000 a year on preschool education.
Generating brand awareness and trust can also pose as a challenge. “It took me at least three years to make parents believe in our service. In India, everyone wants their kids to know everything at the age of three. If the neighbor’s child knows 20 rhymes, they expect their child to know the same. Since we aren’t following the traditional curriculum and are following an integrated method of education, it was hard to convince parents at first,” says Deivanathan.
We also asked Madhulika of Little Pearls what has stopped them from branching out so far. “I think the challenge we face today is the availability and readiness of quality teachers to be a part of such a setup. Preschool education requires teachers to have very specific competencies apart from an inherent passion for children; thus making it a rare combination to get.” Keeping the teacher student ratio low (around 1:10) so that every child can get individual attention could be tough when there is such a scarcity of qualified teachers.
So, how can you deal with this problem? Many housewives with MBA, B.Ed or a PhD degree can make good teachers, provided they get the right training. You can also tie up with teachers teaching in primary or secondary schools, to work with you on a part time basis.
Tags:Brainworks, Kangaroo Kids,Mothers Pride, Franchising Model, Trishna Kids,Little Pearls,Apple Kids,Preschool Franchise, Education Franchise, school franchise, Kids Franchise,play school franchise, day care franchise,
Showing posts with label Franchising Model. Show all posts
Showing posts with label Franchising Model. Show all posts
Tuesday, June 15, 2010
Sunday, April 18, 2010
Franchise Agreement And Franchise Legalities In India
Today, India is one of the biggest emerging markets for various goods and services, ranging from bare necessities to expensive luxuries. Until 1991 due to the archaic Foreign Exchange Regulation Act, 1973 (FERA), almost all sectors of goods and services relating to the consumer markets in India were secure from the grasp of foreign investors. After the repeal of FERA and the coming into force of the Foreign Exchange Management Act, 1999 (FEMA), foreign investors found their passage into India with rules for entry becoming far more favourable. Today, a convenient medium of entry by foreign companies into the Indian market is the franchising model. Franchising also exists as a successful business module for local companies in India within various sectors.
The United States of America stands at the forefront of the franchise boom. Today, the legal environment in the United States is highly conducive to the healthy growth and evolution of franchising. With more than 50% of total retail businesses in the United States, 45% in Canada and 26% in Australia choosing a franchise model for expansion the impact of franchising on retail industries across the globe is considerable. To foster the rapid and sustained growth that this channel brings it is critical that laws to regulate the franchising business exist.
However, there are no laws enacted solely for the purpose of regulating the growing business of franchising in India, even though many nations across the world have enacted such laws. The result is that when franchisors enter India they are governed by a number of different statutes and codes rather than a single comprehensive enactment.
Franchise Laws across the Globe
There are many countries which have developed comprehensive legislation to cover franchising in their respective dominions. At the federal level in the United States, the Federal Trade Commission ’s Rules on Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (1979) regulate the information a franchisor is required to supply the prospective franchisee in order to enable the franchisee to make an informed decision on the prospects of venturing into the business. The North American Security Administration Association (NASSA) has adopted a Uniform Franchise Offering Circular (UFOC) which delineates the information required to be disclosed to a prospective franchisee. Disclosure requirements under franchising are well-defined in the USA.
In 2000, the Ontario Legislature in Canada adopted the Arthur Wishart Act which deals comprehensively with disclosure requirements as well as important aspects of the franchisee-franchisor relationship such as fair dealing by each party to a franchise agreement as regards its performance and enforcement, and the right of action for damages for breach of the duty of fair dealing.
In the United Kingdom, there exists no operative franchise-related legislation. However different aspects are governed by norms laid down by the British Franchise Association (BFA), the regulatory body of the franchise industry in the United Kingdom. These include a code of ethical conduct, disciplinary procedure, complaints procedure and appeals procedure.
The Australian government has adopted a mandatory code of conduct and has also modified the Trade Practice Act 1974 to provide for franchising. The new code imposes comprehensive disclosure requirements and provides for mandatory mediation of franchising disputes and minimum standards for franchise agreements including, inter alia, a cooling period, refrain from seeking from a franchisee a general release liability, disclosing material facts and refrain from unreasonably withholding consent to transfer of the business.
In April 2002, the Japan Fair Trade Commission (JFTC), the competition authority of Japan, published new guidelines on franchising. These guidelines contain three parts - a general description of franchising, provisions for the disclosure of necessary information (such as details of the assistance to be offered to franchisees, the nature, amount and conditions of repayment, if any, of the fee to be paid at the time of entering into a franchise agreement, etc.) at the time of the offer of a franchise and a part on vertical restraints between a franchisor and its franchisees. Under the guidelines, the failure to provide necessary information shall constitute deceptive customer inducement, which is considered an unfair trade practice.
On 31 December 2004 the Ministry of Commerce of the People’s Republic of China promulgated the Measures for the Regulation of Commercial Franchises which became the sole legal framework for franchising in China. The measures became operative on 1 February 2005 and provide detailed regulations for franchising, comprising of 42 articles over nine chapters covering a wide span of areas from the franchise agreement to disclosure requirements, special rules for foreign invested enterprises and legal liabilities.
Need for a Franchise Law in India
A healthy legal environment is of great importance for franchising and should include provisions pertaining to all areas that fall within the ambit of franchising. This includes, inter alia, commercial law relating to contracts and joint ventures and intellectual property law for protection of trade marks and know-how. Franchise arrangements are subject to an array of laws and regulations in addition to those regulating commercial contracts and intellectual property rights. There are no specific laws governing franchising in India. As a result a draft franchise agreement may be governed by different laws.
Primarily a franchise agreement is a contract between the franchisor and the franchisee. The first law which comes into the picture is the Contract Act 1872 which governs contracts in India. A franchise agreement will be governed by the Indian Contract Act, 1872 and the Specific Relief Act, 1963 which provides for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract. If a party to the franchise agreement commits a breach of contract, the aggrieved party has the option to initiate a suit for specific performance in Indian courts and apply for relief in the form of a temporary or permanent injunction, which may be granted at the discretion of the court considering the balance of convenience and the interests of justice. An order granting or rejecting an injunction may be appealed by an aggrieved party.
Laws relating to taxation, property laws, insurance law and labour laws also apply to franchise transactions. Additionally, laws and regulations applying to specific sectors of goods and services will also apply depending on the franchised.
The following are the reasons why a comprehensive franchise law is required in India:
Application of Multiple Legislation
A well-defined legal structure is indispensable for the effective functioning of any business operation. The international business environment demands a well-defined suitable legislation that is complete in all respects. The lack of a comprehensive legislation on franchising in India leads to the applicability of multiple laws to a franchise transaction.
This poses the following problems:
Complexities: Parties to a contract normally prefer agreements with a simple approach and encompassing all the required law procedures and rules required to be complied with. However the application of different laws to one agreement makes it complex to decide various issues arising from the agreement.
Ambiguities: Due to the necessary application of multiple legislation, ambiguities are created as to certain issues. For example, a franchisor would imagine that a certain issue is the franchisee’s responsibility under one law, whereas the franchisee would think the opposite based on a different law.
Time-Consuming: Referring to multiple laws consumes a lot of time at the initial stages of a transaction as well as other points of time when the agreement is sought to be enforced. This proves to be detrimental to the smooth functioning of franchising operations in India and also makes time-bound operations involving new enterprises difficult.
Absence of Disclosure Requirements
Countries with specific franchising legislation make it imperative for parties to a franchise agreement to disclose certain factual information pertaining to the business of the parties. This ensures transparency and facilitates an informed decision. A franchisor should be required, by law, to make certain disclosure to the prospective franchisee wherein he is supposed to reveal detailed information regarding himself, his litigation and bankruptcy history, his financial position, the facilities he offers etc. In India, in the absence of effective disclosure norms, a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures.
In the absence of a specific statute governing the franchise agreement, the franchisor refrains from providing any information that is likely to prejudice or make a franchisee reconsider the business proposition of the franchisor. The lack of proper disclosure requirements provides a golden opportunity to a franchisor to abuse his position of importance as he is virtually under no statutory obligation to make the requisite disclosure.
Applicability of Laws of other Countries
Normally, the absence of franchise laws enables foreign franchisors to make the laws of their own country applicable to the agreements entered into with the franchisees in India. The same is the case with franchisors who enter into franchising agreements with franchisees from other countries. This proves to be an additional burden on the parties, particularly the franchisee.
Lack of Proper Format for Franchising Agreements
Due to lack of a specific format, franchisors from other countries draft agreements which are in the same format as is approved or followed in their countries. Such agreements are made to suit the specific environment of their respective countries and hence are not suitable for Indian environment.
Liability of Parties Uncertain
Due to the lack of specific legislation, the liability of either party is either determined by the agreements entered into between them or on the basis of general prevailing law. The liability clause is different in different countries, and this leads to a great discrepancy among the courts which try such disputes on liabilities.
The Central Government is currently considering a franchise law aimed at fast resolution of disputes; the proposal is expected to be placed before a sub-committee of the National Development Council. The aforesaid problems surrounding franchising in India necessitate the enactment of a specific legislation pertaining to franchising in India and providing for the gamut of activities that franchising encompasses. A special franchise law would greatly accelerate dispute resolutions and fortify the Indian retail industry.
Source:Franchising Association Of India.FAI,
The United States of America stands at the forefront of the franchise boom. Today, the legal environment in the United States is highly conducive to the healthy growth and evolution of franchising. With more than 50% of total retail businesses in the United States, 45% in Canada and 26% in Australia choosing a franchise model for expansion the impact of franchising on retail industries across the globe is considerable. To foster the rapid and sustained growth that this channel brings it is critical that laws to regulate the franchising business exist.
However, there are no laws enacted solely for the purpose of regulating the growing business of franchising in India, even though many nations across the world have enacted such laws. The result is that when franchisors enter India they are governed by a number of different statutes and codes rather than a single comprehensive enactment.
Franchise Laws across the Globe
There are many countries which have developed comprehensive legislation to cover franchising in their respective dominions. At the federal level in the United States, the Federal Trade Commission ’s Rules on Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (1979) regulate the information a franchisor is required to supply the prospective franchisee in order to enable the franchisee to make an informed decision on the prospects of venturing into the business. The North American Security Administration Association (NASSA) has adopted a Uniform Franchise Offering Circular (UFOC) which delineates the information required to be disclosed to a prospective franchisee. Disclosure requirements under franchising are well-defined in the USA.
In 2000, the Ontario Legislature in Canada adopted the Arthur Wishart Act which deals comprehensively with disclosure requirements as well as important aspects of the franchisee-franchisor relationship such as fair dealing by each party to a franchise agreement as regards its performance and enforcement, and the right of action for damages for breach of the duty of fair dealing.
In the United Kingdom, there exists no operative franchise-related legislation. However different aspects are governed by norms laid down by the British Franchise Association (BFA), the regulatory body of the franchise industry in the United Kingdom. These include a code of ethical conduct, disciplinary procedure, complaints procedure and appeals procedure.
The Australian government has adopted a mandatory code of conduct and has also modified the Trade Practice Act 1974 to provide for franchising. The new code imposes comprehensive disclosure requirements and provides for mandatory mediation of franchising disputes and minimum standards for franchise agreements including, inter alia, a cooling period, refrain from seeking from a franchisee a general release liability, disclosing material facts and refrain from unreasonably withholding consent to transfer of the business.
In April 2002, the Japan Fair Trade Commission (JFTC), the competition authority of Japan, published new guidelines on franchising. These guidelines contain three parts - a general description of franchising, provisions for the disclosure of necessary information (such as details of the assistance to be offered to franchisees, the nature, amount and conditions of repayment, if any, of the fee to be paid at the time of entering into a franchise agreement, etc.) at the time of the offer of a franchise and a part on vertical restraints between a franchisor and its franchisees. Under the guidelines, the failure to provide necessary information shall constitute deceptive customer inducement, which is considered an unfair trade practice.
On 31 December 2004 the Ministry of Commerce of the People’s Republic of China promulgated the Measures for the Regulation of Commercial Franchises which became the sole legal framework for franchising in China. The measures became operative on 1 February 2005 and provide detailed regulations for franchising, comprising of 42 articles over nine chapters covering a wide span of areas from the franchise agreement to disclosure requirements, special rules for foreign invested enterprises and legal liabilities.
Need for a Franchise Law in India
A healthy legal environment is of great importance for franchising and should include provisions pertaining to all areas that fall within the ambit of franchising. This includes, inter alia, commercial law relating to contracts and joint ventures and intellectual property law for protection of trade marks and know-how. Franchise arrangements are subject to an array of laws and regulations in addition to those regulating commercial contracts and intellectual property rights. There are no specific laws governing franchising in India. As a result a draft franchise agreement may be governed by different laws.
Primarily a franchise agreement is a contract between the franchisor and the franchisee. The first law which comes into the picture is the Contract Act 1872 which governs contracts in India. A franchise agreement will be governed by the Indian Contract Act, 1872 and the Specific Relief Act, 1963 which provides for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract. If a party to the franchise agreement commits a breach of contract, the aggrieved party has the option to initiate a suit for specific performance in Indian courts and apply for relief in the form of a temporary or permanent injunction, which may be granted at the discretion of the court considering the balance of convenience and the interests of justice. An order granting or rejecting an injunction may be appealed by an aggrieved party.
Laws relating to taxation, property laws, insurance law and labour laws also apply to franchise transactions. Additionally, laws and regulations applying to specific sectors of goods and services will also apply depending on the franchised.
The following are the reasons why a comprehensive franchise law is required in India:
Application of Multiple Legislation
A well-defined legal structure is indispensable for the effective functioning of any business operation. The international business environment demands a well-defined suitable legislation that is complete in all respects. The lack of a comprehensive legislation on franchising in India leads to the applicability of multiple laws to a franchise transaction.
This poses the following problems:
Complexities: Parties to a contract normally prefer agreements with a simple approach and encompassing all the required law procedures and rules required to be complied with. However the application of different laws to one agreement makes it complex to decide various issues arising from the agreement.
Ambiguities: Due to the necessary application of multiple legislation, ambiguities are created as to certain issues. For example, a franchisor would imagine that a certain issue is the franchisee’s responsibility under one law, whereas the franchisee would think the opposite based on a different law.
Time-Consuming: Referring to multiple laws consumes a lot of time at the initial stages of a transaction as well as other points of time when the agreement is sought to be enforced. This proves to be detrimental to the smooth functioning of franchising operations in India and also makes time-bound operations involving new enterprises difficult.
Absence of Disclosure Requirements
Countries with specific franchising legislation make it imperative for parties to a franchise agreement to disclose certain factual information pertaining to the business of the parties. This ensures transparency and facilitates an informed decision. A franchisor should be required, by law, to make certain disclosure to the prospective franchisee wherein he is supposed to reveal detailed information regarding himself, his litigation and bankruptcy history, his financial position, the facilities he offers etc. In India, in the absence of effective disclosure norms, a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures.
In the absence of a specific statute governing the franchise agreement, the franchisor refrains from providing any information that is likely to prejudice or make a franchisee reconsider the business proposition of the franchisor. The lack of proper disclosure requirements provides a golden opportunity to a franchisor to abuse his position of importance as he is virtually under no statutory obligation to make the requisite disclosure.
Applicability of Laws of other Countries
Normally, the absence of franchise laws enables foreign franchisors to make the laws of their own country applicable to the agreements entered into with the franchisees in India. The same is the case with franchisors who enter into franchising agreements with franchisees from other countries. This proves to be an additional burden on the parties, particularly the franchisee.
Lack of Proper Format for Franchising Agreements
Due to lack of a specific format, franchisors from other countries draft agreements which are in the same format as is approved or followed in their countries. Such agreements are made to suit the specific environment of their respective countries and hence are not suitable for Indian environment.
Liability of Parties Uncertain
Due to the lack of specific legislation, the liability of either party is either determined by the agreements entered into between them or on the basis of general prevailing law. The liability clause is different in different countries, and this leads to a great discrepancy among the courts which try such disputes on liabilities.
The Central Government is currently considering a franchise law aimed at fast resolution of disputes; the proposal is expected to be placed before a sub-committee of the National Development Council. The aforesaid problems surrounding franchising in India necessitate the enactment of a specific legislation pertaining to franchising in India and providing for the gamut of activities that franchising encompasses. A special franchise law would greatly accelerate dispute resolutions and fortify the Indian retail industry.
Source:Franchising Association Of India.FAI,
Monday, March 8, 2010
TCY adopts Franchise Fee Refunds After 1 Year If franchise Location does'nt work : Another Franchise Strategy To Woo Franchisees
TCY Scouts For Business Partners, Offers 'Zero Investment Loss Risk'
TCY is taking the risk out of franchising. Offers to refund 'License Fees' if the franchise doesn't take off.
Ludhiana, Punjab, March 8, 2010- TCY, the education services company, has unveiled a franchising model wherein a new franchisee enters the business with 'zero investment loss risk'. The company is now offering a clause in the contract wherein a new franchisee can exit the business without having to bear the licensing fee costs. TCY is currently operating more than 32 franchisees across North India and is looking for partners in Haryana, Himachal Pradesh and J&K.
Aman Bansal, the business head of franchising division of TCY said, "Franchising is a proven and replicable business model but sometimes doubts remain in the mind of the potential franchisees. With our new contractual clause, if a franchisee wants to exit the business within one year of start of operations, we will refund the entire licensing fees." The two major initial outlays of starting a franchising business are the infrastructure costs and licensing fees. In the event of a franchisee location not working out, the company will refund the licensing fees while the infrastructure will remain with the franchisee.
The company has been in the business for more than twelve years and has developed an efficient franchise business model which has proven to be robust and scalable. In fact, many franchisees that originally started out with one centre are operating multiple centres now. Another advantage for the potential franchisee is the instant brand recall that he would get by associating with an established business brand. Since TCY bears all the advertisement costs, the publicity costs are also greatly reduced for the franchisee.
Notes to Editor
About TCY
TCY, also known as Top Careers and You, is one of India's most admired educational services providers in the education franchise industry. Its English coaching arm, BetterThink, has coached more students than any other entity in India. Operating with a hybrid offline as well as online model, TCY has carved out an identity in test preparation sector. TCYonline.com, the website of the company has over 7, 50,000 students from more than 1500 cities and town of India enrolled on it. On the website, students can take free tests from more than 50 categories. National Benchmarking Test (N.B.T.), a school programme by the company, has received rave reviews from schools across India.
TCY is taking the risk out of franchising. Offers to refund 'License Fees' if the franchise doesn't take off.
Ludhiana, Punjab, March 8, 2010- TCY, the education services company, has unveiled a franchising model wherein a new franchisee enters the business with 'zero investment loss risk'. The company is now offering a clause in the contract wherein a new franchisee can exit the business without having to bear the licensing fee costs. TCY is currently operating more than 32 franchisees across North India and is looking for partners in Haryana, Himachal Pradesh and J&K.
Aman Bansal, the business head of franchising division of TCY said, "Franchising is a proven and replicable business model but sometimes doubts remain in the mind of the potential franchisees. With our new contractual clause, if a franchisee wants to exit the business within one year of start of operations, we will refund the entire licensing fees." The two major initial outlays of starting a franchising business are the infrastructure costs and licensing fees. In the event of a franchisee location not working out, the company will refund the licensing fees while the infrastructure will remain with the franchisee.
The company has been in the business for more than twelve years and has developed an efficient franchise business model which has proven to be robust and scalable. In fact, many franchisees that originally started out with one centre are operating multiple centres now. Another advantage for the potential franchisee is the instant brand recall that he would get by associating with an established business brand. Since TCY bears all the advertisement costs, the publicity costs are also greatly reduced for the franchisee.
Notes to Editor
About TCY
TCY, also known as Top Careers and You, is one of India's most admired educational services providers in the education franchise industry. Its English coaching arm, BetterThink, has coached more students than any other entity in India. Operating with a hybrid offline as well as online model, TCY has carved out an identity in test preparation sector. TCYonline.com, the website of the company has over 7, 50,000 students from more than 1500 cities and town of India enrolled on it. On the website, students can take free tests from more than 50 categories. National Benchmarking Test (N.B.T.), a school programme by the company, has received rave reviews from schools across India.
Subscribe to:
Posts (Atom)