The retail machine is steaming ahead, even as the economy remains mired in crises and inflation is barely constrained under double digits. Last year, revenues of B2C companies doubled; companies like Engro Foods and National Foods have witnessed sales and profits towering over tallies from previous years.
Smaller companies, particularly those dealing in consumer goods appear to be at the verge of booming to the next level. Where arranging the necessary capital is a hindrance, franchising appears as the key to the door to new markets.
Franchising allows any business to regularise and replicate its business model, across new markets. Be it a booming food business like Student Biryani or an established garments retailer of the likes of Khaadi or J-dot; successful firms can leverage their brand equity and expand beyond existing markets by establishing franchise outlets in the country as well as abroad.
Some international franchises have entered Pakistan over recent years; McDonalds and KFC being among the first few in the retail consumer market. However, the emergence of local franchises has been stymied and subdued. But that could be about to change.
In a recent interview with BR Research, President Francorp International - a leading international franchising agency - Ramon Vinay expressed keen interest in helping emerging Pakistani firms; particularly those engaged in consumer businesses such as food, clothing and sports goods, expand through franchising.
Vinay explained that "even very small businesses can be transported to a different country or region, and by simply copying the business model and capturing the true essence of the company, lucrative business opportunities can be created for the franchisor and franchisee."
There are many franchisees operating in the country today that have not completely satisfied their franchisors requirements. The local operators of a prominent international fast food chain are in talks with their franchisor which could soon culminate with an end to the decade-long partnership. In that case, the local franchisee has seen its demand plummet after it failed to maintain quality of food and services according to international standards.
For a franchise to exhibit success, all partners must share the vision and commitment of the franchisor. The strategic plan and operational manuals for everyday decision making also have to be clear, detailed and exhaustive.
Consumerism is booming in the country, even as the economy remains in shambles. As such there is immense potential in the country, for the emergence of franchise-based businesses. Private start-ups are finding credit had to come by as banks and other financial institutions remain fixated on lending to the government.
Franchising appears as a no-brainer for up and coming businesses with limited capital, but an aggressive growth strategy and a vision to reach the next level.
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