“Franchise Model should be such that helps even a low budget investor to be a part of Jewellery Brand”
Gems & Jewellery Sector:
Franchise Model in Jewellery IndustryIntroduction:
The Gems and Jewellery sector plays a significant role in the Indian economy, contributing around 6-7 per cent of the country’s GDP. One of the fastest growing sectors, it is extremely export oriented and labour intensive. The Government has recently undertaken various measures to promote investments and to upgrade technology and skills to promote ‘Brand India’ in the international market.
- In the Union Budget 2017-18, the Government of India, offered tax cuts for the middle class and other sections of society (5 per cent for the Rs 250,000-500,000 tax slab; which was 10 per cent initially). All these measures will drive consumption, which will be favourable to the gems and jewellery industry.
- The demonetisation move is encouraging people to use plastic money, debit/ credit cards for buying jewellery. This is good for the industry in the long run and will create more transparency.
3. Due to shortage of skilled manpower, the Gems and Jewellery Skill Council of India is planning to train over four million people till 2022. The council aims to train, skill and enhance 4.07 million people by 2022.
In the coming years, growth in Gems and Jewellery sector would be largely contributed by the development of large retailers/brands. Established brands are guiding the organised market and are opening opportunities to grow.
Increasing penetration in the market is possible by adopting a Franchise Model
The process of franchise development is one that requires a methodical approach and one of careful strategic planning along with targeted and professional marketing processes. The Franchisee has full access to franchisor’s comprehensive business format including brand, assortment and store concept according to which franchisee operate along with legal and financial.
Types of proposed Franchising Model:
1. Single-Unit Franchises: where a franchisee invests in the right to operate one location or branded business.
2. Multi-Unit Franchise: where a franchisee invests in the right to operate in more than one location or branded business.
3. Master Franchising: where in addition to having the right and obligation to open and operate a number of locations in a defined area, the master franchisee also has the right and the obligation to offer and sell franchises to other people looking to become franchisees of the system.
Benefits of Franchising:
1. Attractive Business Model: The Franchise Model has been succeeded in satisfying the demands of hundreds of customers and have a lucrative business model.
2. Proven Retail concept: A franchise is an independent entrepreneur and thus is responsible for performance, assortment, store appearance and staff.
3. Support in day-to-day operations: The franchisor provide day to day operations support through in-house coaching, e-learning and guidelines.
4. Appealing Store Design: The Franchisees can sell franchisor products in an attractive environment
Support areas: offered by Franchisor to Franchisees:
1. Operational Support
2. Visual merchandising
3. Training (including all the areas like maintaining accounts, selling & marketing)
4. Mystery Shopping which includes visiting of franchisees stores to have a control on how the franchisees run their business.
5. Knowledge Sharing: to provide all franchisees knowledge about product development, trends and for this can arrange meetings & conferences.
6. Marketing Materials: to provide marketing materials like PR campaigns, Digital communication, social media etc.
7. Materials & Uniform (if any): All window displays, props, in store materials, logos will be provided by the franchisor.
Essential Franchisee Qualities:
1. Retail experience with good results and proven track record
2. Entrepreneurial mindset
3. A passion for sales and for offering excellent customer service
4. Energy and passion
5. A willingness to develop and devoting full time efforts to the success of franchisor.
6. Appreciation for the brand
7. Solid financial foundation
Process for becoming Franchisee:
1. Once the franchisee has been selected and agreement has been entered between franchisor and franchisee now the second step is store opening process and for that right location is to be identified. The best places to establish jewellery store are
· High streets
· Shopping malls
· Markets having high customer footfalls
2. The store should have a wide facade with space for an entrance, signage and at least one window display
3. The store should be preferably rectangular in shape.
4. There should be a designed modular system, which can be customised a bit to adjust store layouts
5. The franchisor locates, negotiates and signs the leases for the stores and subleases the premises to franchisees.
Process for acceptance of Application by Franchisor:
Business Site Selection:
The best way to select a viable Business site
Multiply the grade to weight to determine point for each factor
The opportunity in franchising in jewellery industry can be segregated as per the categories, from gold and diamond jewellery to silver jewellery to art jewellery. Govind V Raj, Vice President – Integrated Retail Services, Titan industries says, “It is a fragmented industry with over a million jewellery vendors.
Diamond jewellery store remains one of the most preferred franchised concepts followed by gold and silver jewellery. The ratio of the retail composition of company-owned stores and franchised outlets stands at 30:70 clearly spelling the success of franchising in the segment.
Most of the franchisors should offer complete guidance and support in operating the store to the franchisees. The investment in this sector is relatively higher than other retail franchise concepts, but the low risk and high returns are indicators that venturing into the jewellery business will be a profitable opportunity. Depending on location one can expect to recover initial capex between one to five years.
How 3rd Eye Advisory® can assists clients in establishing “The Best Franchise Model” ?
We at 3rd Eye Advisory® help clients to establish a viable Franchise Model wherein we provide the complete Business Model. We guide them that which franchise they can take as per the investment available with them as many clients have money but don’t know where to invest it. After selection of the franchise we help them to choose the location and all other operational help which they require.
Article by: CS.Richa Sharma, 3rd Eye Advisory®
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