Twinterview on Franchising

Avishek Gupta, a member of the Dairy Network Enterprises team interviewed me on Twitter about franchising. Here is a transcript

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Avishek_Gupta: What if I want to #franchise my business? What would a #franchisee look for?

S_Sivakumar: Actually just three things! RaRoI (to take home), Brand (to pull customers), SOP (to idiot proof execution)...

Avishek_Gupta: Thanks, that's precise!But, what if I don't have a brand? Will ONLY the other two work? My Query specific to small rural enterprises.
(Comment added later by Avishek to this transcript - assumption behind the question was that it will take some time to create a franchisable "brand" across different remote rural locations and hence the "lack" of brand for a relative newcomer like DNE)

S_Sivakumar: If not brand, something else to "pull" customers. Say, a unique product or service. Otherwise it's partnership, not franchising!

Avishek_Gupta: Partnership v/s Franchising!!...Thanks a LOT for the insight! :)

S_Sivakumar: When you franchise, you bring everything to the table except last mile. In partnership, you combine complementary strengths

Avishek_Gupta: How to get a rural entrepreneur set up a franchisee? How does he get to know about it? What can convince him, it works? Local NGO?

S_Sivakumar: As to who can convince your prospect depends on the profile of your prospect. Local NGO, Bank Manager, School Teacher.. Best would be to conduct a village meeting (aided by an AV showing Franchisee at Work) and create "pull" for applications

Avishek_Gupta: Is minimum revenue guarantee for start-up period an intelligent way to go to convince entrepreneur? Or is it absolutely foolish?

S_Sivakumar: Minimum Guarantee is a useful tool. Ideally you should link the guarantee to efforts on part of franchisee, not a free ride!

Avishek_Gupta: So true! And our job would be to be clear about how we would "measure" the efforts of the entrepreneur in initial periods of little revenue.

S_Sivakumar: The inputs that drive the desired outcomes will define the efforts...

S_Sivakumar: Yes, in any case you can't design reliable SOPs before running the business for a while

Avishek_Gupta: So, Franchise Package = SOP + min guarantee (proxy indicator 4 ROI) tied 2 efforts + a great service /product! Awareness thru AV of franchisee at work!

Lessons in Public Private Partnerships

Over a lunch meeting today, a few representatives of a Global Donor wanted to understand the lessons I learnt in managing Public Private Partnerships. Here are the three lessons I shared with them:

Lesson 1: Design PPP projects in specific areas where Governments have failed to deliver the goods, or where Institutions created at a point of time are not relevant any more. Identify what value Private Sector can add to change the outcome to more desirable ways. Propose an option with clear roles for both partners (Principal to Principal or Principal to Agent etc). Role of Government could be Policy Reform, Bringing Legitimacy, Make Investments, Facilitate Convergence; role of Private Sector could be in bringing Consumer Understanding, Building Market Linkages, Make Investments, Manage Convergence. Lack of clarity in roles, or lac of complementarity in roles, or lack of convergence in the outcome objectives will lead to failures.

Lesson 2: “Public” is not one entity. Understand that there are three layers in Public, viz. Political leadership, Senior Bureaucrats and Operating Level Government Employees. Understand that all three layers have different personal / professional objectives and postures. Need to build an alignment individually with the global outcomes expected from the project

Lesson 3: Need to co-opt an additional P to make the project relevant. People. Or Communities, if you were to use a PPCP instead of a PPPP! This co-option being somewhat social in nature (as opposed to purely economic logic) needs to factor in class and caste dynamics