Franchising In India W.R.T.

Baskin Robbins

Index SR NO. TOPIC
1 2 3 4 5 6 7 8 9 10 11 12 13 Introduction Introduction to Franchising Business Format Franchising and Product & Trade Name Franchising Emerging Trends in Franchising Evolution of Franchising in the World Evolution of Franchising in India 4 R’s of Franchising Franchising Framework Offer Document Modes of Franchising Advantages & Disadvantages of Franchising Issues in Franchising in Indian Market Franchise Laws in India

PAGE NO.
1-2 3-7 7-9 10-13 14-15 16-18 19-20 20-22 23-25 26-28 29-31 32-33 34-37

SR. NO.
1 2 3 4 5

TOPIC
History of Baskin Robbins Marketing Strategies of Baskin Robbins Competitors & Promotions of Baskin Robbins Case Study-The Loot Stores Bibliography

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38-41 42-47 48-52 53-58 59

EXECUTIVE SUMMARY

Franchising is a unique and dynamic business method. A successful franchise will allow both the franchisor and franchisee to reap the benefits. However, franchising should not be 1

Franchising In India W.R.T. Baskin Robbins considered a fast road to fortune, nor should it be used to assist a business that is not performing well. Understanding, time and money are all required to successfully establish a franchise. Time required for setting up a franchise could be up to three years and then it could be a further three to five years before the franchisor begins to make a profit from the franchise. Benefits of franchising include the franchisee’s funds and labor are used to expand the business; franchisor can be free from the day-to-day operations of the business; the franchisor can see a profit without excessive investment in the business; fewer staff management problems; each franchisee will be the owner of the business and therefore more determined to succeed and more franchise businesses can be spread over a greater geographic area, therefore increasing the pool of potential customers. Franchising is one avenue that can be used to successfully expand a business. Many of the world’s largest corporations have used franchising to speed up their growth as global brands. Like any business venture, a franchise needs to be managed correctly. There are several guidelines to operate within for those considering expanding a business via franchising. The franchisor should own and operate at least one outlet before franchising commences. The franchisor will then be able to predict any problems and rectify these before others invest in the business.

Also, the business must be profitable and be able to be easily replicable. Before any expansion commences, the franchisor must receive professional franchise advice. A detailed operations manual must be written by the franchisor and the franchisor must also establish a sound training program. The franchisor must be keen to develop the business and be open to suggestions that could benefit the franchise and to maintain standards to ensure consistency across the network. The franchise should have a sound marketing campaign. 2

Franchising In India W.R.T. Baskin Robbins An unfortunate statistic is that an entrepreneur has a high chance of failure in their first five years of operating the business. Before franchising is chosen as an expansion method, a business should be trading for at least three to five years to show it has a profitable concept, demand for its good or service and a business structure able to support franchisees in many different locations. If the business fails to meet these guidelines, it may become another statistic of failed business. Franchise consultants should be approached for advice regarding expansion via franchising. It is crucial for potential franchisors to speak to these experts.

INTRODUCTION
Businesses can be started in different ways. There are sole proprietorship, partnerships and joint ventures. But among these, the recent trend of expanding business through a wide network is known as franchising. But in addition to franchising, there are two other popular methods by which businesses expand their market and distribution channels: 1. Distributorships 2. Licensing In a distributorship, the distributor usually: • has a contractual relationship with the supplier • buys from the supplier in bulk and sells in smaller quantities • is familiar with local markets and customers • may do business with many companies, more than just the supplier/producer • may not receive contractual support and training from the supplier/producer like a franchisee. 3

Some popular distributorships include: a.T. Amway b. in which the franchisor exerts significant control over the franchisee’s operations. Compaq Computer 4 . Some popular licensors include: a. d. Unlike franchises.Franchising In India W. A franchisee with a great deal of leeway in how to run the business may look like an independent distributor. Canon Inc. Knorr Soup Vendor Licensing. Baskin Robbins Some distribution arrangements are similar to franchises and vice versa. Color Me Beautiful Cosmetics c. licensors are mainly interested in collecting royalties and supervising the use of the license rather than influencing the operations of the business. Apple Computers c.R. Netscape Communications b. on the other hand. allows a licensee to pay for the rights to use a particular trademark. A distributor may be subject to many controls by the supplier/producer and begin to resemble a franchise.

started in the 1960's. Baskin Robbins INTRODUCTION TO FRANCHISING A sizeable proportion of the Indian population still lives in the villages and has limited purchasing power. franchising in its modern concept has become popular in India only in recent years. The industry is still very much in an evolutionary stage. The Indian market has a segment of approximately 150-200 million people with growing purchasing power. garments and apparel. entertainment. New franchise business concepts now span across diverse sectors as education. This is small in comparison to India's total population. more than 100 million Indians have a per capita income in excess of $2.500. Approximately 8 percent of Indians have a per capita income of more than $3. Approximately 2 percent of Indians have a per capita income in excess of $13. or about 80 million people. which translates into a segment of 20 million relatively well-off consumers. fitness and personal grooming clinics. One well known example of this is the Bata shoe chain. who seek products and services for a better lifestyle.R. healthcare. stationery and gift shops. India also has a large and growing middle class and a much smaller wealthy segment of consumers.800.000. 5 . but still comprises a substantial market segment. Franchising in some form has been operating in India for several decades. specialized food services.Franchising In India W.T. However. and courier services to name a few.

and because it offers the potential to establish products and services that meet global standards.6-2. In the hospitality and food service industries. The same study estimates that total annual sales turnover achieved by franchised businesses in India is in the range of $1. Kentucky Fried Chicken.Franchising In India W. there is a growing need to improve this regulatory framework. several foreign companies with strong brand names established a presence in India through franchising. Dominos Pizza. However. there are approximately 600 active franchisers and more than 40. Pizza Hut and Dominos Pizza have opened many outlets and McDonald's has been open for business since 1996. in terms of brand protection and rules regarding payment of franchise fees. NIIT for computer training schools and Apollo Hospitals for healthcare are examples. Avis and Budget for car rental. A legal framework for new franchisers interested in setting up master franchises in India exists. India does not have a specific law on franchising as yet. Similarly. Indian companies with strong brand recognition are also using the franchising route to expand business volumes. Some international companies that operate through franchises include: Hertz. and Baskin Robbins for food. Radisson. Archies for giftware. Following the economic liberalization of 1991. opportunities for franchising will increase. the Indian franchise economy currently accounts for 5 percent of the country’s GDP. Ruby Tuesday. Franchising is poised to spur economic growth because it encourages private enterprise with no danger of flight of capital.S. Subway. Baskin Robbins As the service economy grows in India. this has been the preferred method for starting operations in India. Franchising is covered within the broad definition of transfer of technology contained in domestic legislation. MRF for automotive tires.1 billion. an increasing number of players are seeing franchising as a growth option. and some countries in the west. Best Western and Quality Inns for hotels. According to industry experts. Given the current boom in the retailing and entertainment sectors in India. 6 .000 franchisees in India currently across various sectors. Unlike in the U.T. TGI Friday.R. According to a study conducted by the Federation of Indian Chambers of Commerce and Investments (FICCI).

Franchising In India W. Baskin Robbins 7 .R.T.

T. can be defined as the contractual license granted by one person (the franchisor) to another (the franchisee) which: • • • Permits or requires the franchisee to carry on a particular business using the franchisor’s know-how under the franchisor’s brand as an independent business. 8 . Baskin Robbins What is Franchising? Franchising in general means granting of certain rights by one party (the franchisor) to another (the franchisee) in return for a sum of money. The business format of franchising. Allows the franchisor to exercise continuing control over the manner in which the franchisee carries on the franchised business. Obliges the franchisor to provide the franchisee with ongoing support in carrying on the franchised business. training. merchandising and management in return for a consideration from the franchisee”. plus assistance in organizing.Franchising In India W. being the important one. The above definition is a very general in its nature and encompasses many different forms of licensing arrangements.R. the agreement inevitably requires the franchisee periodically during the period of the franchise to pay to the franchisor sums of money in consideration for the franchise and / or goods and / or services provided by the franchisor to the franchisee. The International Franchise Association (IFA) defines franchising as a “continuing relationship in which the franchisor provides licensed privilege to do business. As a commercial matter. The franchisee then exercises those rights under the guidance of the franchisor.

The Master Franchisee needs to have sufficient drive and resource to fully exploit the territory and control the unit franchisees territory. franchisee’s can be classified into: 1. or a Master Franchisee may decide that it is commercially appropriate to further divide the territory up with separate regions and grant a Master Franchise for each separate region.R. It owns the know-how of the concept and the brand name.T. Now. 3.Franchising In India W. It will then grant unit franchises to unit franchisees throughout the territory. It grants franchises to third parties. Unit Franchisee – This is the simplest and most common form of franchising. 2. depending on the rights granted. 9 . This franchisee is granted the right to operate one unit or outlet of the franchised business. Baskin Robbins Who is a Franchisor? He is the owner of the franchised system. These franchises are known as regional franchises or sometimes area franchises. Regional Franchisee – In a geographically large area a franchisor. Who is the Franchisee? He is the one who has been granted the right by the franchisor to carry on the business using the franchisor’s know-how and the brand name. Master Franchisee – He is generally granted the right to a substantial territory.

R. 5. convenience stores. The franchisee pays an up front franchise fee and agrees to pay continuing royalties to the franchiser that help the franchiser provide research.Franchising In India W. recruitment agencies. Developers – Large Corporations sometimes prefer to exploit their territory by opening outlets themselves. These are known as developers. hiring and training. as well as a complete system of doing business. including – fast food restaurants. These are referred to as multiple franchises and usually have a large number of individual unit franchise arrangements – one for each unit. development and support for the entire system. but several. estate agents. Business Format Franchising Business format franchising offers a variety of services to the franchisees. advertising and marketing. There are many examples of business format franchising. They provide the franchisee use of trademarks and logos. 10 . These are pilot operations so that they become fully familiar with the business at an operational level and can localize it so as to improve its chances of success. automotive services. hairdressers etc. which allows them to open many units. Baskin Robbins 4.T. product supply and more. Multiple Franchises – Some unit franchisees operate not just one unit. interior layout and design. They will assist the franchisee with site selection. They have a single developer agreement.

product. but most importantly. service mark. 11 . or securing locations or sites for vending machines or rack displays.T. The franchisor assists the franchisee in any way with respect to securing accounts for the franchisee. 2. also offers three characteristics: 1. 2.R. The franchisor exercises significant assistance in. The franchisee sells goods or services which are supplied by the franchisor or a person affiliated with the franchisor.Franchising In India W. 3. operation. 3. Baskin Robbins The type involves three characteristics: 1. The franchiser provides trademarks and logos. trade name. petroleum and soft drink. This type of franchising does not include royalty fees. national advertising campaigns. The franchisee sells goods or services which meet the franchisor's quality standards (in cases where the franchisee operates under the franchisor's trade mark. the franchisee's method of Product & Trade Name Franchising Product and trade name franchising generally is associated with industries such as automotive. This type. The franchisee is required to make a payment to the franchisor or a person affiliated with the franchisor at any time before to within six months after the business opens. The franchisee is required to make a payment to the franchisor or a person affiliated with the franchisor at any time before or within six months after the business opens. advertising or other commercial symbol designating the franchisor ("mark") or which are identified by the franchisor's mark.

12 . Baskin Robbins Franchising may seem like an easy way to start ones own business and many times it is just that. the continuing royalty.R. What is a Franchise fee? A fee paid by franchisee to a franchiser. While it varies from franchisor to franchisor. Many franchisors today don't even need to send them a check. This refers to the checks that needs to be sent to the franchisor on a routine basis throughout the term of the agreement. It is the royalties or a certain fees paid to the franchisee by the franchisor in exchange of the rights to market the product or the service. the ability to make the investment to secure the franchise and open it for business. in some systems. the care with which you select the franchise. the royalty is typically calculated as a percentage of your sales. success in franchising will depend on three key factors.T. Thus. and most importantly the drive and ambition to make it successful. However. investing in a franchise is no guarantee that you will be successful. US standard accounting practice requires that franchise fee revenue should be recognized when all material service or conditions relating to the sale have been substantially performed or satisfied by the franchiser. each week or on some other regular schedule to the franchisor. You pay this for staying in the system. you give them permission to reach into your checking account and wire transfer the payment directly to them.Franchising In India W. One may be required to send the payment each month. When you sign the franchise agreement. The principal fee in franchising—other than the franchise fee—is the royalty fee or.

IT is becoming increasingly important in the field of Web-based selling. observers report that the sector is at the threshold of a new growth spurt. 1. where franchising has not reached even a third of the penetration levels recorded in the USA. Baskin Robbins EMERGING TRENDS IN FRANCHISING As well as developing into a truly international concept. This is a clear signal that other countries. 2. can expect to see franchising take off like never before. Growth prospects continue to look bright Although franchising is extremely well established in the USA. franchising can easily be adapted to the needs of almost any industry sector that requires an effective and efficient distribution channel. no matter which industry sector they belong to. Some of these are discussed below. a large variety of business sectors are expanding successfully under the umbrella of franchising. business format franchising has managed to extend its reach into many different industry sectors and this trend is set to continue. In addition to issues involving management control and internal communications.T.Franchising In India W. Initially. Today. 13 . the concept was the domain of fast-food operators. However. Other trends are emerging that will affect all franchisors.R. Technology A relatively new impetus for franchising comes from the need to keep up with technological advances.

This has become necessary because the well-documented success of franchising has attracted a number of reckless or even fraudulent operators. home repair services and even care for the bed-ridden or aged. 4. While most countries initially accepted that franchising could be controlled through a combination of existing contract law and self-regulation. These individuals want a larger piece of the pie than one unit can offer them. This drives the development of personal services franchises. although it must be said that their legislation is less severe than that introduced in the USA. Australia and several countries within the European Union followed suit. corporate managers are entering the franchise arena as prospective franchisees. 14 . With the notion of a job for life becoming increasingly obsolete. franchisors preferred to attract franchisees who would be content to operate one unit hands-on. from pizza delivery to home cleaning.Franchising In India W. Franchise legislation One major change that has taken place in franchising worldwide is in the field of legislation. 5. short on time'.R. Baskin Robbins 3. Franchisee profile In the past. Many franchisors continue along this path but there is pressure on them to change their approach. The USA was the first country to introduce specific franchise legislation. More recently.T. Shift towards services Populations in many of the more developed countries experience a shift towards 'rich in assets. and they have the expertise and the funds to support this. an increasing number are now moving towards specific franchise legislation.

Franchising In India W. • • Not every franchisor can handle multi-unit franchisees effectively. • The danger exists that a very strong multi-unit franchisee begins to exert undue influence on the network's strategic direction. • Not every type of business lends itself to multi-unit ownership. Baskin Robbins Franchisors have been quick to realize that it is easier to grow the brand with the help of a smaller group of aggressive franchisees rather than with a large number of yesteryear's franchisees who were content to look after one unit as long as it earned them a reasonable living. In effect. The calibre of franchisee who qualifies for multi-unit ownership is likely to be a nononsense person who expects 'top service plus' from the franchisor. 15 . processes and workflows can be standardized. an absentee-owner could soon lose control. Unless systems. Individuals must be carefully assessed to ensure successful placement. the black majority which was formerly excluded from the economic mainstream is assuming an ever-increasing role.R. This demands advanced management skills and the willingness to play for high stakes.T. The franchisor must be on the lookout for this and reassert his/her leadership position the moment a challenge is presented. Women are still a minority but catching up fast. In South Africa. This helps drive the growth of the brand but franchisors need to be adequately prepared for the challenges it poses. • Not every franchisee is cut out to be a multi-unit owner. the franchise network would soon find itself in a similar situation to a branch operation that depends on salaried managers. This change in attitude creates significant new challenges. • Another important trend in franchising is the inclusion of individuals who tended to play a lesser role in franchising in the past. Franchising is the ideal vehicle for the implementation of sustainable BEE initiatives.

Fickle consumers Traditionally. franchisors moving into foreign countries can no longer rely on blind acceptance of their standard offering by local consumers. A middle-of-the road approach is usually best. Baskin Robbins 6.R. product range and delivery mechanisms. consumers expected branded offerings to be standardized and predictable and essentially. 16 . this has not changed.T. a new generation of consumers is emerging that expects a customized approach. This route is not recommended for the faint-hearted. To maintain brand consistency under these circumstances can be extremely difficult. However. For example.Franchising In India W. but this requires careful testing of every aspect of image.

view themselves as independent business people. Baskin Robbins EVOLUTION OF FRANCHISING IN THE WORLD Franchising is a term that comes from the French language and means `to be free from servitude'. and processes for inter-organizational collaboration focused upon accountability and control of performance of an 'external' business. it is a business method more suited to generic services that evolve around a recognized brand. and see their relationship with the franchisor as one between business partners. Franchising is a low-capital rapid growth market share gaining option. 17 . It was developed as a business method in the United States in 1850s. By the very nature of the franchising process. Franchisees. But there are some historians who argue that as a method of licensing. franchising developed much earlier in feudal times when the head of the Roman Catholic Church gave his clergy the right to collect church taxes locally. This is achieved through operational processes that are transferred to the franchisee organization. The goal of a franchisor is to provide a consistent product and consumer experience 'indirectly' through a franchisee. a basic standardized process capable of delivering a consistent product or service through a wide network of operational units.R. structures. and managing them for performance.Franchising In India W.T. An organization that does franchising is required to develop systems.

Internationally. Franchising is very well accepted and is entrenched deeply within USA & Western Europe. The importance of the franchising process is reflected in the retail and hospitality industries where nearly every retailer (in malls) and every major hotel are franchisees of international as well as major national chains.R. 18 .T.Franchising In India W. The hospitality industry has traditionally used the franchise route for international growth. Baskin Robbins The importance of franchising as a potential business option can be assessed based upon research in 1997 that estimated that nearly 40% of all retail sales reached consumers through the franchise route.

Interiors. Substantial action is also happening in non metro locations.8000-Rs. consumer durables. Play School & Activity Centre. so avoiding the politically undesirable situation whereby successful domestic businesses are owned by foreign corporations. Jewellery. healthcare etc. thereby spreading organized retailing over a larger footprint.Franchising In India W. It also offers India the opportunity to import and develop foreign concepts in a way.typically Product Distribution Franchises and other ones are the aggregators – typically Business Format Franchises. It is estimated that the total investments made by Franchisees is over Rs.10. The first ones are the manufacturer-retailers . Retail franchising within India. 000 crores from franchising.T.R. retailing. Education & Training. Computer & Internet. Opportunities in Franchising in India exist in the following areas like Beauty Salons & Supplies. there are two varieties of Retailers. Entertainment. Health Care & Fitness. grew initially in the apparel & footwear sectors and has gradually grown to cover a wide variety of sectors including food.000 people are directly employed by franchised businesses. Approximately 600 franchisors spread across industries like education. Baskin Robbins EVOLUTION OF FRANCHISING IN INDIA In India. profitable and pan-national manner. professional services. Food and Beverages. Business Services. home décor etc. with an annual turnover anywhere between Rs. books. Florists. Consumer Services. acceptability is growing by the day and it has a fairly conventional industry spread. Franchising affords India an opportunity to build its commercial infrastructure and develop its domestically oriented businesses in an efficient.5000 crores and over 300. Financial Services. Retail and Travel.000 franchisees. Consultancy. jewelry. Immigration Services. in this type of business model. There are close to over 40. Clothing. 19 . which ensures that the equity of the business remains in India.

In return they have the opportunity to make substantial income and capital profits. electronic goods. The franchisees finance the expansion of the business in India. 2. Geographical extent of the country – Franchising can enable a company to take advantage of the vast Indian market of over 1000 million people and growing at a rate of 1. 20 . 3. at the same time they are keen to benefit from the goodwill and technology that can be provided by the foreign franchisor.9% p. by granting a franchise) can substantially improve the efficiency in the distribution system. Baskin Robbins The key attractions of franchising in India are as follows: 1.e. Cultural Empathy – Franchising well suits the entrepreneurial side of Indian culture. Franchising allows them to reconcile these conflicting ambitions. and operating a corporately owned distribution system that fully exploits the geographical expanse of the country is extremely difficult and inefficient.a. The infrastructure is poor. Lower Capital Requirements – Franchising is an excellent way for both Indian and foreign corporations to expand their businesses and make their brand names known in India without having to risk large sums of money by way of direct investment. clothing. however. Empowering participants in the distribution system by granting them an equity interest in it (i. Indian business people are fiercely proprietary and feel a need to have ownership and control over their business operations which they can pass on to future generations. computer hardware and software and professional services.T. There is an ever-growing demand of goods and services such as fast food and beverages.R.Franchising In India W. However.

Baskin Robbins 4. 21 . A company needs a great deal of knowledge of the different regional markets in India. Franchising provides a sure and easy way of accessing the right level of relevant local market knowledge.R.Franchising In India W. What holds good for Punjab may not be relevant for Kerala. Harnessing local market knowledge – Indian master franchisees offer the foreign franchisors direct access to substantial market knowledge and a considered and sophisticated approach to its exploitation.T.

Franchising In India W.R.T. Baskin Robbins

THE 4 R’s OF FRANCHISING

American corporate history is replete with instances of franchising’s outstanding success and also many failures. Learning from them, franchising can succeed if the franchisee has a right combination of the four R’s prescribed. These are:

1.

Realism – The franchisee should be very realistic in assessment of his business

strengths and weaknesses. Certain key areas where realism is a must while deciding to go into franchising includes questions like are you prepared for the financial insecurity, are you capable of developing a frame of mind when you can smile and be cordial even when the customer is totally wrong. More important is the need for realism in evaluating the products and services offered by the franchisor.

2.

Resources – Many franchisees, during the early periods of their business when

resources constraints are common, tend to sometimes overlook sending in the royalty cheques to the franchisor. Franchisors keep feeling and rightly so that their royalty is as much a key business expenditure of the franchisee as payment for purchases or payroll is and any delay in handling this area would lead to unfortunate consequences of a long term nature. Therefore, while planning resources on a periodic basis, consider the payments that are to be made to franchisor. Another area where most franchisees have problems is to manage their resources while living within the franchising system. The franchising agreement, in most cases, clearly indicates systems, procedures and methods of managing the resources. The franchisee will do well to either be mentally prepared to accept the resource management terms of the franchisor or make it clear at the beginning that he needs the requisite leeway to manage his own resources. 3. Research – Research on the franchisor is a must for the success. Various published

sources also provide fairly detailed information on most of the franchises that are on offer 22

Franchising In India W.R.T. Baskin Robbins but to what extent that will suffice for the Indian conditions needs serious examination. Whatever be the methodology, the prospective franchisee will do well to build comprehensive information on the franchisor, the products or service of offer, competing and substitute products and services before he makes any move committing his financial resources on a long term basis.

4.

Resolve – Resolve to be part of the franchising system. The problem starts when a

person gets into franchising only because he has an entrepreneurial instinct but the instant he becomes a franchisee, the true entrepreneur in him starts resenting the shackles that are imposed by the franchising system. The options are clear – either stay within the system and fully learn the nuances of the business and prosper or try one’s fledging entrepreneurial talent and get into trouble.

Franchising Framework
The three elements of the product, branding and the system integrate together to form the franchising network. The franchisor invests in the R&D, marketing [brand building] and is responsible for quality operations control and expansion. The franchisee sells and delivers the product to the customer and provides after sales service. The franchisee invests in the outlet including manpower and equipment.

The diagram is given as follows:

23

Franchising In India W.R.T. Baskin Robbins

The system ensures that there is a flow of royalty and feedback to the franchisor. It also ensures that the franchisee receives the product, know-how and training. The system 24

Baskin Robbins incorporates control mechanisms and feedback systems to allow the franchisor to monitor the latter.Franchising In India W. THE OFFER DOCUMENT 25 . By defining these parameters. the franchisor is able to prepare an offer document that can form the basis of the understanding between the franchisor and the franchisee.R.T. The franchisor has to define all the parameters mentioned in the framework so that the three elements of franchising take shape.

the offer document is filled. Baskin Robbins The franchisee offer document gives comprehensive information to the prospective franchisee. markets etc. 1. type of company. history.Franchising In India W. Royalty and other payments 26 . This franchisee fee also covers the cost of training of the franchisee and his personnel at the time when the unit starts the business. Experience This documents the experience the company or the employees of the company have in the conduct of the business. 2. Franchise fees In business format franchising.T. On the basis of the franchising framework. Details of the franchisor This includes the franchisor’s registered key address. 4. 3.R. This part reinforces the legitimacy of the franchisor’s claim of having a franchisable product. business. there is an initial fee which gives rights to the franchisee for a given period of time to operate in a certain territory using the know-how from the franchisor. The contents of the documents have to be organized under various heads as explained below.

machinery. 6. initial training. obtaining licenses from regulatory bodies etc. interiors. promotional materials and other services Normally the franchisor gives clear specifications of all materials required for the operation of the unit and conduct of the business. 5. promotional investment. The percentage of the royalty varies with the industry and type of product and is dependant upon the norms prevalent in the industry for discounts to dealers and distributors. working capital. equipment. 27 . Since the costs vary from location to location. Franchisee’s initial investment Initial investment includes all the expenses incurred on real estate.T. Renewal of the agreement at the expiry of the franchise term is normally done by charging the franchisee a nominal renewal fee. Sourcing of raw materials. If the franchisor wants to put any restrictions on the procurement of these. Maximum businesses also fix a minimum royalty fee per annum. Baskin Robbins Normally. insurance.R. replacement fees for manuals. additional training and any material. a range indicating the normal costs maybe given for all the items. Under this head. promotional literature and media expenses. it is the percentage of the gross revenue of the unit. those can be mentioned here. it is also necessary to record any other fees that the franchisor will charge to cover the costs of other services like visits by specialists. furniture and fixtures.Franchising In India W.

procure material and create advertising programmes. Franchisor’s obligations Similarly the franchisor has to give certain rights to the franchisee for the use of the brand name in a given territory. customer service. audit requirements.Franchising In India W. termination. transfer. provide specifications for equipment and signage. This offer document should be properly created with utmost care as this is the main document which the franchisee will use as a basis for deciding whether he wants to take up the franchise or not and which the franchisor will use as the basis of the formal franchise agreement. 8. Renewals. Obligations of the franchise A clear list of obligations of the franchisee needs to be made. 28 . accord approvals for sites. 9. manpower and interiors. Baskin Robbins 7. training.R. This would include acquisition and obtaining licenses. recruitment. insurance. expense on promotion etc all of which need to be covered in detail.T. dispute resolution These need to be explained along with the situations and conditions under which they will become applicable. maintainance of records. Details of the training provided visits made to the franchisee’s unit etc also need to be included under this head.

The main problems associated with this type of franchising is the difficulty of franchisors to control the performance of the franchisees as these are located in another country. Subsidiary or Branch Office – Franchising through a subsidiary or a branch office are two methods which are often treated together. the franchisor will be required to send his personnel to the foreign country for the start up operations thus involving work permit and residence formalities. In addition. Taxation is another issue which receives due consideration. 2. The contract will in this case be a domestic contract and thus subject to local legislation. how the franchise arrangement is structured that direct franchising is not used extensively internationally. the assistance to be provided to the franchisee during the operation of the contract. Furthermore.Franchising In India W.R. The problems associated with this type are similar to direct franchising. albeit controlled by the franchisor. is a separate legal entity whereas a branch office is not. the franchisor grants franchises to individual franchisees in the foreign country through the execution of an international contract. Whatever be the difference. an advantage of this approach is that the franchisor is present in the foreign country as a corporate body.T. although there are differences which derive from the fact that a subsidiary. 29 . Direct Franchising – Under this system. The question of intellectual and industrial property rights in the foreign country also needs to be considered. Baskin Robbins MODES OF FRANCHISING There are following methods of international franchising mediums stated below- 1.

The disadvantages include that the financial returns of the franchisor will be reduced by the amount due to the subfranchisor and also that the franchisor will have to rely on the sub-franchisor for the performance of the franchise system. Master Franchise Agreements – In the international scenario. the subfranchisor. Baskin Robbins 3. detailed development schedule and the consequence of non-complying of the schedule.R. The advantages of this system are that the sub-franchisor is familiar with the local habits. These arrangements in the past have been used mostly in domestic franchising. the franchisor grants a person in another country. All the franchisor will be able to do is to sue the sub-franchisor in case of breach of obligation to enforce the sub-franchise agreement as laid down in the master franchise agreement. culture and laws of its country and that it will know ways about the local bureaucracy for necessary permits as and when necessary. who will be in charge of the enforcement of the sub-franchise agreement and of the general development and working of the network in that country. Items that are to be considered here include the number and density of the outlets to be opened. Area Development Agreements – Such agreements traditionally involved an arrangement whereby the developer is given the right to open a multiple number of outlets to a predetermined schedule and within a given area.Franchising In India W. 30 . the developer will need to have substantial financial resources so as to be able to open the required number of outlets. In respect to such agreements. The franchisor transmits all its rights and duties to the sub-franchisor. but are now being used increasingly in international franchising. In this case.T. tastes. there are two agreements involved: an international agreement between the franchisor and the sub-franchisor (the master franchise agreement) and a national franchise agreement between the sub-franchisor and each of the sub-franchisees (the sub-franchise agreement). the exclusive right within a certain territory to open franchise outlets itself and/or to grant franchises to sub-franchisees. this is widely used. 4. In such arrangements.

and proceeds to open franchise outlets and to grant sub-franchises just as a normal sub-franchisor would do.Franchising In India W. or combinations of different forms of franchising. An arrangement such as this will have to consider legislation on joint ventures in addition to all the other legalities that are involved. Joint Ventures – In the case of joint ventures. the franchisor and a local partner create a joint venture. This venture then enters into a master franchise agreement with the franchisor. Baskin Robbins 5.R.T. 6. Problems may also arise with the fact that the double link may create conflicts of interest for the franchisor. New forms of franchising. Miscellaneous forms – There is no limit to the refinement that can be made to the above forms of franchising to accommodate the differing demands of potential franchisor and / or franchisee. The advantages accruing from this arrangement may include that it could be a way to solve the problem of financing franchise operations in countries where financial means are scarce. appear at regular intervals. Examples of these are stated as follows: -Multi-unit Franchising -Affiliation or conversion Franchising -Franchise within a Franchise -Subordinated Equity Arrangements -Management Agreement -Franchise Buy-ins 31 .

A franchise increases your chances of business success because you are associating with proven products and methods. 4.T. “Owning a franchise allows you to go into business for yourself. Franchises may offer consumers the attraction of a certain level of quality and consistency because it is mandated by the franchise agreement. 5. but not by yourself. ADVANTAGES: 1. This gives the franchisee the benefits of customer awareness which would ordinarily take years to establish.” 2. Baskin Robbins ADVANTAGES & DISADVANTAGES OF FRANCHISING 6 The many advantages and disadvantages of owning a franchise should be carefully evaluated before deciding to purchase one.Franchising In India W. A franchise provides an established product or service which already enjoys widespread brand name recognition. A franchise provides franchisees with a certain level of independence where they can operate their business.R. 3. 32 .

Franchises offer important pre-opening support: • Site selection • Design and construction • Financing (in some cases) • Training • Grand-opening program 7.Franchising In India W. Franchises offer ongoing support • Training • National and regional advertising • Operating procedures and operational assistance • Ongoing supervision and management support • Increased spending power and access to bulk purchasing (in some cases) 33 .T. Baskin Robbins 6.R.

For some people. 34 . Franchisees are required to operate their businesses according to the procedures and restrictions set forth by the franchisor in the franchise agreement. These restrictions usually include the products or services which can be offered.R.T. A damaged.Franchising In India W. Franchisees must be careful to balance restrictions and support provided by the franchisor with their own ability to manage their business. The term (duration) of a franchise agreement is usually limited and the franchisee may have little or no say about the terms of a termination. system-wide image can result if other franchisees are performing poorly or the franchisor runs into an unforeseen problem. Baskin Robbins Disadvantages: 1. 4. franchisees must pay ongoing royalties and advertising fees. The franchisee is not completely independent. 3. 2. this is the most serious disadvantage to becoming a franchisee. 5. pricing and geographic territory. In addition to the initial franchise fee.

copyright and patent laws of the country to protect its rights. Legal help from local counsel has to be taken in these matters. which are serious about attracting foreign investments have amended many of their existing laws and provide reasonable protection. Latin America and other Asian countries.R. India. The corporation has to understand these laws and make the statutory applications under trademark.T. However. Copyright Protection In most of the emerging markets. This type of law existed in India too but royalties are not allowed now. he should keep in mind the following aspects: 1. However countries like India and China. Royalty Many countries have strict foreign exchange laws that restrict the payments of royalties to parent organizations. If an organization wants to penetrate into India using the franchising method. 35 . Baskin Robbins ISSUES IN FRANCHISING IN THE INDIAN MARKET International franchising is here to stay. a larger number of multinational corporations are seeking entry into emerging and developing markets of the world including China. the intellectual and copyright protection laws are inadequate. 2. Many countries have an upper cap on the percentage of royalty that can be charged from the franchisees. they haven’t been successful as they did not take any adequate precautions before entering into the markets.Franchising In India W.

R. The franchisor has to ensure that no action taken by the franchisee with respect to the advertising. but there are delays in system which the franchisor should be aware of so that incase of legal disputes. Many countries which do not have a well developed legal system may not be suitable for an international organization to venture in. The franchisor also has to take care while designing the product. India has an elaborate legal system.T. 36 .Franchising In India W. promotion etc should hurt these sentiments. Legal Recourse It is necessary for corporations to check the effectiveness of the legal system prevailing in the country. 4. Cultural issues India is a sensitive market especially if it’s related to culture and religion. Baskin Robbins 3. the implications and method of action are clearly understood and implemented.

Franchise arrangements are subject to an array of laws and regulations in addition to those regulating commercial contracts and intellectual property rights.T. 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. This includes. A franchise agreement will be governed by the Indian Contract Act. property laws. There are no specific laws governing franchising in India. An order granting or rejecting an injunction may be appealed by an aggrieved party. commercial law relating to contracts and joint ventures and intellectual property law for protection of trade marks and know-how. 1872 and the Specific Relief Act.R. insurance law and labour laws also apply to franchise transactions. which may be granted at the discretion of the court considering the balance of convenience and the interests of justice. Primarily a franchise agreement is a contract between the franchisor and the franchisee. As a result a franchise agreement may be governed by different laws. Laws relating to taxation. The first law which comes into the picture is the Contract Act 1872 which governs contracts in India. 37 . laws and regulations applying to specific sectors of goods and services will also apply depending on the franchised laws. 1963 which provides for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract. inter alia. Additionally.Franchising In India W. If a party to the franchise agreement commits a breach of contract. Baskin Robbins FRANCHISE LAWS 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.

The international business environment demands a well-defined suitable legislation that is complete in all respects. However the application of different laws to one agreement makes it complex to decide various issues arising from the agreement. a franchisor would imagine that a certain issue is the franchisee’s responsibility under one law. Baskin Robbins The following are the reasons why a comprehensive franchise law is required in India: 1. For example. This poses the following problems: a. c. This proves to be detrimental to the smooth functioning of franchising operations in India and also makes time-bound operations involving new enterprises difficult.R. b. 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.T. 38 . ambiguities are created as to certain issues. whereas the franchisee would think the opposite based on a different law. The lack of a comprehensive legislation on franchising in India leads to the applicability of multiple laws to a franchise transaction.Franchising In India W. 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. Application of Multiple Legislation A well-defined legal structure is indispensable for the effective functioning of any business operation. Ambiguities: Due to the necessary application of multiple legislation.

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. to make certain disclosure to the prospective franchisee wherein he is supposed to reveal detailed information regarding himself. Baskin Robbins 2. In the absence of a specific statute governing the franchise agreement. his financial position. a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures. This ensures transparency and facilitates an informed decision. 3.T. Applicability of Laws of other Countries Normally.R.Franchising In India W. 39 . In India. A franchisor should be required. in the absence of effective disclosure norms. his litigation and bankruptcy history. the franchisor refrains from providing any information that is likely to prejudice or make a franchisee reconsider the business proposition of the franchisor. This proves to be an additional burden on the parties. the facilities he offers etc. particularly the franchisee. by law. 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. 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.

Baskin Robbins 4. Baskin Robbins has its global presence felt all over the world and the term icecream is synonymous to Baskin Robbins. More than 100 franchisees are multiple franchisees who own more than one BR store. Such agreements are made to suit the specific environment of their respective countries and hence are not suitable for Indian environment.Franchising In India W. This in itself ratifies the kind of confidence BR generates in the franchising world. Baskin Robbins is renowned for its World Class Ice Creams. Now with all the details of Franchising given. Lack of Proper Format for Franchising Agreements Due to lack of a specific format. 40 .R. below is a huge. Baskin Robbins is one of the fastest growing food brands in India. massive and successful franchising company in the world known to be the largest ice cream franchisor in the world with more than 2700 outlets in USA and around 3100 outlets internationally. Baskin Robbins. franchisors from other countries draft agreements which are in the same format as is approved or followed in their countries. Currently there are more than 290 franchised outlets across the nation. the liability of either party is either determined by the agreements entered into between them or on the basis of general prevailing law. and this leads to a great discrepancy among the courts which try such disputes on liabilities.T. The liability clause is different in different countries. Talking about its presence in the Indian market. 5. Liability of Parties Uncertain Due to the lack of specific legislation. Sundaes. Beverages and Ice Cream Cakes.

Irv opened Snowbird Ice Cream in Glendale. A year later. two brothers-in-law shared a dream to create an innovative ice cream store that would be a neighborhood gathering place for families. They started out in separate ventures at the advice of Irv’s father. During World War II. By 1948.R. His store featured 21 flavors and emphasized high-quality ice cream sold in a fun. Burt and Irv recognized that to maintain the high standards they set in the beginning. CA. Burt was a Lieutenant in the U. Baskin Robbins HISTORY OF BASKIN & ROBBINS Three-quarters of a century ago.Franchising In India W. personalized atmosphere. there were more than 40 stores in Southern California when Burt and Irv purchased their first dairy in Burbank. In 1949. each store would require a manager who had an ownership interest in its overall operation. When the war was over. the two founders had pioneered the concept of franchising in the ice cream industry. Burton [Burt] Baskin and Irvine [Irv] Robbin had a mutual love of old-fashioned ice cream and the desire to provide customers a variety of flavors made with ingredients of the highest quality in a fun. Even though they didn't realize it at the time. inviting atmosphere. This concept eventually grew into Baskin-Robbins. 41 . Irv worked in his father's ice cream store.S. California.T. and the development of new ingredients and flavors. Navy and produced ice cream for his fellow troops. Burt opened Burton's Ice Cream Shop in Pasadena. they had six stores between them. This business decision allowed them to have complete control over the production of their ice cream. In 1945. the two entrepreneurs were eager to capitalize on America's love of ice cream. As the number of stores grew. As a teen.

This hands-on. Cherry (pink) and Chocolate (brown) polka dots to be reminiscent of clowns. small business approach allows franchisees the ability to create a strong presence in local communities all over the world. Korea and Australia. opening stores in Japan. In 1954. the company had become an ice cream empire with more than 400 stores throughout the United States. Through this franchise business model.Franchising In India W. high-quality ice cream treats to more than 150 million customers worldwide. we continue to provide innovative. "Not everyone likes all our flavors. Their recommendations included the "31" logo to represent a flavor for every day of the month. That year they won their first Gold Medal and set the pattern for county and state fair participation. With this over-arching branding. advised a uniform identity and image under the name Baskin-Robbins 31 Ice Cream. Carson/Roberts.T.800 around the globe. the use of cartoons to bring their flavors alive with personality to graphically highlight the name and delicious ingredients. with more than 2. earning Gold Medals for Baskin-Robbins Ice Cream every year since that first contest. A local advertising agency." — Irv Robbins Baskin-Robbins continued to expand. but each flavor is someone's favorite. We are 100% franchised. Baskin-Robbins put their product on the line against their competitors at the Los Angeles County Fair. with each owner holding a stake in the business' success. The franchise model created by Burt and Irv decades ago is still used by Baskin-Robbins today. In the 1970s the chain went international.800 locations throughout the United States and 5. while product development and merchandising are handled at Baskin-Robbins headquarters. 42 . And as a result. Baskin Robbins It wasn’t until 1953 that the ice cream chain dropped the separate identities of Snowbird and Burton's and became Baskin-Robbins.R. Baskin-Robbins has grown to become the world's largest chain of ice cream specialty stores. Saudi Arabia. BaskinRobbins' iconic pink spoons were created with the belief that people should be able to try any of their many flavors without cost. carnivals and fun and lastly. and by the mid-1960s.

we continue to consistently introduce new. exciting flavor combinations. Baskin-Robbins has long been dedicated to making the experiences of eating ice cream an enjoyable one. neighborhood feel that make the experience unique to Baskin-Robbins. and they are dedicated to upholding the flavor. There is nothing quite as thrilling as the face of a child enjoying his favorite ice cream flavor. store owner and corporate team member is proud of our heritage. which is perhaps the most precious and hopeful part of our humanity. Baskin Robbins Since 1945. as well as ice cream industry-leading innovations such as hand-packed ice cream quarts. the use of traditional dessert ingredients and the introduction of mousse-textured ice creams." America's Favorite Neighborhood Ice Cream Shop There are many forms of enjoyment in life: there’s spontaneous pleasure. including our signature Cappuccino Blast. anticipated pleasure. our commitment to creating new and exciting products is unsurpassed in the industry.R. the fun. 43 . ice cream has probably generated each of those types of pleasure.000 unique. we've introduced more than 1. fun place for our customers. and the local. It’s all part of our mission to make the Baskin-Robbins neighborhood a tasty.Franchising In India W. or the delight of a mother surprised with an ice cream cake on Mother’s Day in a store you call “my Baskin-Robbins”. For people everywhere. Each employee. From our introduction of signature ice cream cakes and the growing line of beverages. there is long-term happiness and there are spur-of-the-moment joys. "In the moments of greatest pride.T. a unique flavor ribbon technique. Baskin-Robbins is composed of those who contribute in a special way to our fellow humans—helping to nourish that quality of childlike enjoyment. “America’s Favorite Neighborhood Ice Cream Shop" is a philosophy at Baskin-Robbins shared by everyone. fun and delicious ice cream flavors. Still. Our original top-selling flavors like Mint Chocolate Chip and Pralines 'n Cream continue to delight millions worldwide.

A number that continues to grow as Baskin-Robbins spreads throughout the world.Franchising In India W.T. Baskin Robbins From the ages of one to ninety-nine. people visit Baskin-Robbins anticipating the pleasure of enjoying their favorite ice creams served any way they want. The original flavors when baskin-Robbins first opened in 1945 were: Banana Nut Fudge Black Walnut Burgundy Cherry Butterscotch Ribbon Cherry Macaroon Chocolate Chocolate Almond Chocolate Chip Chocolate Fudge Chocolate Mint Chocolate Ribbon Coffee Coffee Candy Date Nut Egg Nog French Vanilla Green Mint Stick Lemon Crisp Lemon Custard Lemon Sherbet Maple Nut Orange Sherbet Peach Peppermint Fudge Ribbon Peppermint Stick Pineapple Sherbet Raspberry Sherbet Rocky Road Strawberry Vanilla Vanilla Burnt Almond 44 . Baskin-Robbins stores are visited by over 300 million happy customers year after year. Because of our dedication to being “America’s Favorite Neighborhood Ice Cream Shop”.R.

Franchising In India W. history will not necessarily support this viewpoint given that over the past few years. While their stunning strides in the IT business have been largely responsible for driving our growth. Baskin Robbins MARKETING STRATEGIES OF BASKIN & ROBBINS The last three years Baskin & Robbins have really seen our economy go into an overdrive.T. But this time the demand will big because of product as well as the change in the retail landscape. the ice cream industry has never really grown faster than 10% per annum. The telecom revolution in this country is a case in point.R. Even as saturation starts to build up in the metros. one will always see between one and three growth engines on any growth curve. there are hundreds of small cities and towns that aspire to be metros in the future and step in to provide new markets. With the size and population. there is very little danger of the traditional fear of slowdown in demand. They believe that in the coming years. Growth prospects in India in general are tremendous. but what really excites them is their potential for so many different growth leaders in this phase. What they were witnessing now is only a preview of larger things to come in the next couple of decades. infrastructure development will become the most important engine in our economy. One key problem with the growth over the past 50 years has been the complete lack of focus on infrastructure development. But again this is something any Government or people can only ignore for so long at their own peril. Typically. 45 . something that has propelled China to where it is today. which will provide more opportunities for sellers and buyers to our model is tailor made to take advantage of the boom in the retail. However. they could see more and more industries and services joining the curve.

where one pays a price but gets quality and service. -Issues and Concerns For the ice cream industry. the development of new consumption drivers like malls.Franchising In India W. People are very happy to pay more if they are given a quality product at par with the best available internationally. burgeoning disposable incomes lead to increased consumption. 46 . multiplexes. hypermarkets. -Demand Drivers Growth of malls and multiplexes across the country is boon for Baskin Robbins to access good locations and tap the ready consumers. etc opens up new avenues for this company. This is true not only of ice creams but also of practically every food category that can deliver on product. quality and service. There is an increase in customers who demand the best without compromises. -Trends There is an increase in tilt towards premium products (as opposed to expensive). You will see more and more companies heading into the hinterlands in an attempt to penetrate the smaller towns and rural belts. Baskin Robbins One disadvantage about meet in a better environment. Another issue of concern is escalating price of real estate.T. as they promise to offer the next surge of growth. development and availability of a good cold chain covering the country is essential without which they cannot reach the market target. While that perception will not change easily.R. Also. Ice creams has been that it is treated largely as an impulse purchase in this country.

evaluate their relevance to their business and manage the cost/benefit matrixnot to speak of the implementations. has been their move to outsource their distribution and logistics to core players. Lack of quality and increase in prices are the biggest concern threatening to throw all growth plans completely out of gear for Baskin Robbins. it is definitely not easy managing the very technology. Cold chain logistics is central to the ice cream business but the irony here was that it was not their core competency. While technological advances do help in delivering greater customer satisfaction. it is a difficult task to continuously keep oneself abreast of the latest developments.Franchising In India W. They have opted for outsourcing as a better business model. If this trend continues. Five years ago they decided to completely outsource this part of their business (from factory to the last mile). but unfortunately there is no sign of it happening. One of their best decisions. In fact a bubble might be welcome if it helps bring prices down to realistic levels. retail business is going to find it increasingly hard to deliver returns. This has helped them immensely in allocating valuable resources to more gainful activities.R. they were expending valuable resources to conduct this. which has paid them a handsome dividend over the past few years.T. the Baskin Robbins brand has grown rapidly in the country to become the single largest premium ice cream brand and today it operates over 200 franchised stores in 35 cities. but the single undeniable fact is that real estate prices are reaching levels that can no longer be termed as only a bubble. -Outsourcing/Logistics Baskin Robbins ice creams for the entire South Asian market are manufactured in their factory in Pune. 47 . Given the rapid changes and strides in technology. As a result when they operated it. Baskin Robbins The reasons for this might vary. Over the past 13 years.

they have created an internal call center for their home delivery service in Mumbai. Their role involves implementation. Over time. which will include a point-of-sale solution for the customer at the front end. training and offering back up and trouble-shooting. Head office forms the point of control from where all information is disseminated as well as collected. This will create value right from marketing to production to inventory planning to distribution. compiled and analyzed.Franchising In India W. but again there are teething issues. This was a decision they took after trying third party call centers to handle incoming calls from customers using their Single Number Dial-in service. 48 . which will get sorted out as the market matures. Baskin Robbins They have embarked upon an ambitious plan to link all their stores through a comprehensive computerization initiative. they are getting there slowly but surely. -Focusing on the Customer As part of their customer satisfaction efforts. The regional MIS/IT guys are points of coordination for all our franchisees in the respective areas.T. Once completed. it was necessary to have people who understood the ice cream business from within. Efficiency is a bit of a problem. As a result we decided to create our own call center with our staff trained completely in all aspects of the business. they hope to have seamless flow of information/MIS in real-time across all verticals. they realized that in order to truly deliver the right experience to the customer calling online. They wanted to ensure that the customer who calls gets the same service over the phone as they would expect when walking into one of their 200 outlets nationwide.R. While nowhere near the speed seen in the West. They have a current IT workforce of five. Bandwidth has been an issue for several enterprises.

presentation and packaging is key. as they said they would target the Tier-II cities as well. Also. growth in modern retail. have kept the Television advertisement absolutely nil. In 2005. Since Baskin Robbins imports most of its vital ingredients. Thus.T. they are going to undergo 49 . In the next two years. the company is growing at the rate of 35 per cent a year as compared with the industry average of 12 per cent. With a turnover of nearly Rs 60 crore in FY08. they were reducing the size of their formats. Getting the right franchisees would also be crucial to its success as it will not market its ice cream range through the mom and pop stores. such as chocolate and other flavours. the company consciously adopted a strategy to compress its store size. the company aims to double its number of stores across the country from 300 by increasing the store density in tier-II cities. However. The ice cream maker is looking at tie-ups with airlines as well. Baskin Robbins is now planning to ramp up its store count in smaller cities seeing a rise in demand and consumer spending. their future plans involve better packaging efforts and giving the customer reasons for coming back by retaining classic favorites and experimenting with new flavors constantly. word-of-mouth and unlike other brands. but in the past six-eight months. Interestingly. multiplexes and fine-dining have helped generate demand for its brand. its strategy of going to smaller cities would enable it to have bigger stores. the average size of its store dropped to 250 sq ft.Franchising In India W. The ice cream chain spends 8 to 9 per cent of its revenues on advertising each year which includes more advertisements based on hoardings. the average size of its stores was 1. A few years ago. taking the average size of its stores to 400 sq ft. Baskin Robbins -Future plans of Baskin Robbins Overall.the company hiked prices by 10 per cent in April on the back of a rise in commodity prices. Prior to 2000. Hence in such a scenario. In 2002. banners. they have been aggressively ramping up because there's great potential for eat out today.R.000 sq ft.

T.R. 50 .Franchising In India W. bubblegum and blue mint and couple of other fruit flavors also in the near future. but also green apple. So now we would not just get the regular variants like chocolate. Baskin Robbins flavor revamping. strawberry and vanilla.

there were local Indian players apart from the much renowned Amul.T. Kwality Walls. more than half of the Baskin Robbins outlets were closed down and a complete overall change was brought in. A scoop of Baskin Robbins ice cream was compared to that of a 500 gm pack of local ice cream like Amul or Kwality Walls. Baskin Robbins became a brand that could be afforded only by the cream society.e 51 .60 per scoop. When they entered the market with their price point at around Rs. Vadilal. Baskin Robbins COMPETITORS AND PROMOTIONS OF BASKIN ROBBINS Even though when Baskin Robbins penetrated in India in the 2000’s. each for each day of the month clearly didn’t carry out the sparks in the Indian market scenario. after a rigorous market survey and brand revamping. There were many issues related to this. initially it was quoted to be an expensive ice cream joint.R.Franchising In India W. it didn’t get the much awaited response by the Indian customers. Naturals etcetera present then. Thus. Also. The quality was up to the mark and traditionally as the name suggested of having 31 flavors. The logo of Baskin Robbins got changed from to the current new one i.

chocolate. This way.e children to promote the program as well as attract customers to its outlet. Baskin Robbins does face competition from local. One such example can be given as during the release of Spiderman 3.Franchising In India W. Kwality Walls. Talking about competitors. DVD etcetera. Not only this. the host of the show or to be an audience member in the hit reality show. Baskin Robbins introduced three new flavors paying a tribute to the superheroes who come to life on the giant screens. Following were the flavors influenced by the characters of the famous movie. Amul. there was a major shuffle in the flavoring section as they got done with the conventional vanilla. . on the purchase of every scoop. Not only this.Sandstorm: Smooth silky honey butterscotch ice cream Similarly during the reality show ‘Kya Aap Panchvi Pass Se Tez Hai’. Baskin Robbins Also. Almond praline etcetera. Baskin Robbins tied up with Star Plus in a joint promotion and came up with its special flavor known as ‘Panchvi Pass’ flavor which was chocolate fudge brownie ice cream with fudge brownie pieces and roasted almonds. Baskin Robbins tried as always to target its best audience i. a scratch coupon was presented and had daily gifts like quiz books. the bumper prize was to meet Shah Rukh Khan. 52 . -Web-slinger: A tempting combination of blueberry and strawberry sorbets -Green Gobbler: Twin flavored pistachio and vanilla ice creams. Gelatos etc.R. This was indeed a successful effort.T. Baskin Robbins also has promotional offers that usually include like ‘Flavor of the Month’ or Flavors adopted from the recent movie flicks or current trends floating in the market. strawberry flavors and brought in flavors with a zing like World Class chocolate. regional ice cream brands such as Naturals. Plus.

Café Coffee Day as they offer the pleasure to sit and talk over a cup of coffee. due to the attractive ambience. This will definitely widen scopes for Baskin Robbins future growth.T. kiosks or standalone stores and recently introduced Lounge formats. But after years. This led to the consumer shift its focus to now a cheaper ice cream brand. Sales rose after the Gelatos entered the Indian market. a type of an ice cream which is said to be originated in Italy is known to be low-fat calorie ice cream popular for calorie conscious people. Hence. Thus. Baskin Robbins. buys an ice cream to seek pleasure and not worry about its other factors. Mochas. As it was fat-free ice cream.R. Baskin Robbins Baskin Robbins being a quality tastemaker and its price points over and above the rest of the brands have made it difficult in the initial years when it kick started its business in India. This was due to the usual brands becoming common to their taste buds and the zest for trying some new brands led to the slow and rising success of Baskin Robbins. in future they do have plans to tie up with some major café dealers to set up mini Baskin Robbins with popular flavors in their café itself. their target audience was minimal in the Indian market as a normal consumer here. and the taste of an Indian consumer changing overtime. and international ice cream brands like Gelato Italiano arriving in the Indian scenario. Given below is the details needed to set up a Baskin Robbins franchisee. media etcetera sums up to around Rs. Baskin Robbins operates its business by having outlets in malls. 53 . Hence. what remains Baskin Robbins main competitor would be local coffee cafes like Barista. The average annual expenses that Baskin Robbins initiates for advertisement in form of print. Baskin Robbins were now more easily accessible by the consumer. 2 crore. a large number of average Indians prefer spending their time in these cafes rather than a Baskin Robbins kiosks. apart from other ice cream brands. But till now.Franchising In India W. Gelato. the price range of gelatos was higher than that of Baskin Robbins. The capital raised for the lounge formats is much more than that of the standalone stores.

50.000 Rs.Rs.Franchising In India W.000 . More than 100 franchisees are multiple franchisees who own more than one BR store.50.000 – Rs. Nationwide East South Central Chhattisgarh Madhya Bihar Jharkhand Pradesh Assam Kerala Meghalaya Karnataka Mizoram Orissa Tripura Tamil Nadu Arunachal Pradesh Manipur Nagaland West Bengal Sikkim Union Territories: Andaman & Nicobar Pondicherry Chandigarh Lakshadweep Daman and Diu Is there a unit franchise fee included in this figure? How much working capital is required in unit franchise addition to this? Is there exclusive territorial rights given to a unit franchise? Yes Extra Amount : Rs 3. 16.000 -India -India. 8. Currently we have more than 290 franchised outlets across the nation. Unit: Investment: Master: Investment: Countries Available: Multi Units: Investment: Countries Available: What areas are available for Unit franchise?: North West New Delhi Gujarat Haryana Rajasthan Himachal Maharashtra Pradesh Goa Jammu and Kashmir Punjab Uttaranchal Rs.000 No Are any performance guarantees No 54 . This in itself ratifies the kind of confidence BR generates in the franchising world.100.00. Baskin Robbins is renowned for its World Class Ice Creams. Beverages & Ice Cream Cakes.R.00. Sundaes. Baskin Robbins Baskin Robbins is one of the fastest growing food brands in India.T.

Franchising In India W. Parlor. Kiosks 400 200 SFT and above for Cafes & Parlors 64 SFT and above for Kiosks in Malls 30 . Is the term renewable? Yes. 3 years. 55 .T.35 % 2-3 years No How long is the franchise term for? 3 years.R. Baskin Robbins given to unit franchisees? What is the anticipated percentage return on investment? What is the likely pay back period of capital for a unit franchise? Are there other investment requirements? Property Details: What type of property is required for this franchise opportunity? Floor area requirement: Preferred location of unit franchised outlet: Other Details: Do you have a standard Franchise Agreement? Yes Café.

Eccentrics. W. Wrangler. ID. Jay Gupta. Lee. kids wear. Spykar. sports apparel. Mahim and Sion suburbs in quick succession. .000 sq.Franchising In India W. Not bad for a company that had opened its first outlet just four years ago in 2004. New Balance. “The Loot is a multi-branded discount store that offers its customers a wide range of merchandise with discounts ranging between 25% and 60% throughout the year. Welspun. formal. footwear. The Loot stocks a slew of reputed foreign and Indian brands that includes big names like Kappa. now hopes to touch the magic figure of Rs 100 crores and 100 outlets by 2009 Gupta is in fact in a buoyant mood. Parx. outlets at Mumbai’s Malad. CAT. Nike. the company’s managing director. Bossini. taking their tally of outlets to 30. Recap and SF jeans at heavily discounted prices 365 56 days of the year. ft. accessories etc. Baskin Robbins Case Study.000 sq. And for good reason! His chain of stores is on a strong growth curve and has recently added 12. Addidas. casuals.” Already a popular shopping destination for people keen on flaunting the latest brands at a price that suits their pockets. The Loot’s strength as a retailer lies in proper procurement and excellent supply chain management system which helps in getting better pricing from the manufacturer and thereafter passing the benefit on to the consumer. Park Avenue. Van Huesen. Allen Solly – women. Arrow.T. Pepe Jeans. Tuscan Verve. Lee Cooper. Puma.R. Fila. We currently offer the perfect mix of unisex clothes in semi-formal. Ragz jeans. of retail space with the opening of three new 4. Umbro. Blackberry’s. Bus Stop. Mercedes.The Loot Stores Loot Stores buoyed by the enthusiastic customer response to his ‘more for less’ value deals that run throughout the year. Reebok. Allen Solly. Rifle.ft. So what is The Loot all about? Explains Gupta.

Ahmedabad. Gupta reveals that his company follows a unique franchising system and offers facilities that no other retailer does. Jabalpur. 57 . and help our franchisees in staff and systems training.” Gupta adds.” says Gupta. “At The Loot. Mumbai (Chembur & Hughes Road). Furthermore. Baskin Robbins “Each Loot store is designed around a centralized theme that advertises the bargain or steals that are up for grabs by their customers. Surat. we strongly believe that our franchisees are not merely franchisees but our partners. Aurangabad. staring down at you from strategic nooks and corners of every outlet. “The scandalous décor of the stores displaying the vacuum pick up on the entrance doors to the jailor cells changing rooms.R. Moreover.T. thereby increasing the productivity of the franchisee. Jalandar and Amritsar of the 30 they operate pan-India. who endorses the chain.ft.Franchising In India W. we also have higher sales per sq.” he explains. we do not charge anything by way of franchising fees and we also do the interiors of our outlets. “We are the only retail organisation that offers our franchisees a 100% buy-back on unsold stock. The central grab your weapon display in each store further establishes the criminal feel of stealing from the brands via the Loot. The Loot has a network of 12 franchised stores in cities like Bangalore. Gulshan Grover.” And if that’s not enough to convince you.” Elaborating. Franchise network A firm believer in the franchise business model. Raipur. Our franchisee model has been specifically designed keeping in mind all these factors.. there is the ‘Bad Man of Bollywood’. Mysore. further stating that “we started as a franchisee ourself with 12 super-brands and understand the entire journey of the franchisee.

He also gets back his Rs. Local advertising is done on a 50:50 ration by both the company and the franchisee.” 58 .” Franchisee Selection Choosing the right franchisee is an area where due diligence is done.5 lakhs refundable deposit. relevant retail experience if any. PR and launch-related expenses which are borne by the company. personal involvement in the store. Hence the franchisee has most no liability except the cost of the interiors which in any case is quite basic. but not exceeding 2% of the franchisee turnover. Gupta replies: “We buy back 100% of the merchandise.” according to him. Baskin Robbins With regular promotions and advertising initiatives playing a key role in business development.” Asked about the exit options for a franchisee. with all the promotional activites being the same across all their outlets. but should have good market credentials. Om Prakash who runs one of my most successful franchise outlets at Mysore.” So what does he look for specifically before appointing a new franchisee? “Well. For example. “On the advertising and PR front. which incidentally no other franchisor does. “These include things like introduction.R. the person has to show serious interest.T. Gupta is also quick to stress that The Loot does not differentiate between its own company-owned stores and a franchise outlet. Gupta stresses that “we consider our franchisees as our business associates and partners rather than mere investors and thus the selection depends on factors like entrepreneurial spirit. He need not be from the same industry. have some basic fashion knowledge and a demonstrated capability of handling a team of atleast 20 people. has a background in the construction business and is now planning on opening two more outlets in the city.Franchising In India W. celebrity expenses. all the national advertising efforts are done by the company.

and every state capital and all the cities and towns with a population of more than seven lakhs. Journey So Far It was in 1996. ft. Men’s/Women’s/Footwear/Accessories). + Mens/Womens/Kids/Lifestyle Products/Coffee Shop and space for shop-inshops). that Gupta began his mission to set up a thriving business.000 sq. Medium (2.500-4.R. As The Loot offers a wide range of price points and product categories.000-8. after completing his post-graduation from Mumbai’s S.000 sq. Adidas.000 Men’s/Women’s/Kids/Footwear/Accessories) and Xtra Large (8.E. We intend to open our outlets in all cities that have an airport.500 sq. ft category stores). Nike and Weekender.” The company offers five basic store formats that include: Xtra Small (5001. it wasn’t long before Gupta had to fight a growing feeling of not being able to provide his customers with a satisfying shopping experience.T. Men’s/Footwear/Accessories).Franchising In India W. Small (1.S College. compounded by an increasing number of complaints from customers about the lack of choice at affordable price points. ft. ft. Large (4. 59 . The Loot follows a ‘buy and sell’ franchisee model.I. A dream that he pursued by opening franchisee stores for brands like Color Plus. Baskin Robbins Gupta has more by way of information. ft.000 sq.000 sq. However. “We have very clearly defined and planned the geographies for our presence. We are the only Indian retailer to have the biggest franchisee outlet with an operational capacity of 15. He avers. we are adaptive to operate in almost all geographies in India.000-2.

tier-II and tier-III town within the country. The Loot has now set its sights on achieving Rs. The Loot was nominated in the India Fashion Forum in the ‘Best Value Store in India’ category.T. While acknowledging the cut-throat competition in the branded apparel business.” he claims. The Loot bagged nomination in not one but three prestigious categories that included: Most Admired Retailer of the Year: Retail Marketing Campaign. one that has brought a lot of accolades along the way. Gupta counters by saying that the trick of survival in the face of increasing competition is to add USPs into your own business plan. 100 crores by 2009. In 2005. positioned as a ‘Value Retail’ store.Franchising In India W. In the recent 2007 edition of the IRF.” adds Gupta stating that his unique business model is designed to succeed in any metro.R. Gupta 60 . this time at the India Retail Forum (IRF). when the company was re-nominated in the same category. “We also hope to have 100 stores by then. and again in 2006. Most Admired Retailer of the Year: Retail Design and Visual Merchandising and Most Admired Retailer of the Year: Innovative Concept. As for ensuring that his ambition future plans are met without a hitch. It’s clearly been a satisfying retail journey for Gupta thus far. “It is this strategy that has made The Loot a distinct player in the field of value retailing in the multi-branded store category. Way ahead Already on a track to touch a total turnover of nearly Rs. This was a move that has since been followed up with the launch of 30 outlets. 60 crores before the end of this financial year. Baskin Robbins It was this feeling of dissatisfaction that acted as a catalyst for the launch of the first The Loot outlet in the year 2004.

“Life is always tough. As for his success mantra.T. besides giving an added focus on effective personnel training and cementing the back-end of their operations.Franchising In India W.R. but one can make it easier by sharing one’s dreams and creating co-dreamers to move up on the success path. Gupta quips.” 61 . Baskin Robbins informs that the company has invested skillfully into IT.

Books. Baskin Robbins BIBLIOGRAPHY I. Magazines Pramod Khera.R.fai.in www. Websites www.The Route Map to Rapid Business Excellence Economic Times Business Outlook .Edition II – Issue date May 2008 62 .franchiseek.franchisebusiness.com www.co.economictimes.franchisebusiness.com www.com www. Franchising.Franchising In India W.indiatimes.com II.franchise-update.com. Journals.in www.com www.exchange4media.com www.T.au www.franchiseindia.wikipedia.