Here are some tips on how to get the right franchise by the dynamic CoFounder CEO of Chai Break, the Kolkata-headquartered chain of cafes.
By Staff Reporter | September 28, 2022 | 10:00 Hours
Looking to go for a franchise? Here are some tips on how to get it right:
*Select a few locations. You may know the area but do a recce with the owner/franchisor again.
*Figure out the sale expectation of that place. Explore the competition.
*Work out the rent to revenue ratio.
In a talk with #EastIndiaRetail on how they go about selecting a franchise partner, here’s Aditya Ladsaria, the dynamic CoFounder CEO of Chai Break, the Kolkata-headquartered chain of cafes (23 in all; 24th on the anvil) that serve a steaming cup of tea and a choice of Indian, Italian and Chinese cuisine. You can go for a cuppa and bites not just at several points in #kolkata but also other places like #Durgapur, #Kharagpur and in #jharkhand and #odisha too. The average size of each outlet is about 1500 sqft.
“We get the franchise to select a few locations before we go over and do the recce ourselves. We have a set questionnaire, and the study is done by our team. One questionnaire is filled by us, another by the franchise which looks at data etc, and yet another by the marketing department. The point is, since we are paying someone and if the #franchisee does not do well, then it will bring a bad name for us. We do not shut down stores. Had #Covid not struck, we would not have had to wind up our outlet in Guwahati.
“We go for a rent-revenue ratio of 12-13% on an average, the maximum is 12-15% for a high street location. When we can dictate our terms, we try to close it below 10%. Our debt to revenue ratio stands at 11.5%. Therefore, it is critical also to study the rent to revenue ratio of a place.
“We have our checks and measures for a franchisee. We ask the franchise owner to get more involved in the business. Post-Covid we are more careful about choosing a place because we now have to take into account other people’s concern as well. While earlier we would close a place/deal in a week, the time taken now is 20-22 days. We also check the vastu without which we don’t take the place”.
The target at Chai Break is to open 14 outlets this year, all not too far away from Kolkata in places like #rourkela, #patna #raipur #Silchar, #guwahati etc. “We will open outlets only in places which have more than 10 lakh population, and of course a young crowd. Next, we are planning to expand in places like #chandigarh and #ludhiana belt by making a base there, or go to #bangalore or #chennai and cover the entire South India. That is 2024 onwards,” he concludes.
