Five Tips For Startups Waiting To Expand Their Operations Through Franchising
Fadi and I started Under500 in June this year, as our first venture that aimed to bring healthy food that also tastes good to the UAE. We wanted to crack the healthy vs. tasty challenge with our concept, and introduce fresher, healthier dishes that are all under 500 kcals to the region. While I am an Emirati coming from a commercial background, Fadi joins this venture with years of experience in the creative industries. Together, we have joined forces as a power duo ready to take hold of the world’s health-conscious food market, and educate people on what it really involves in order to eat healthily.
We started Under500 with a greater vision from day one. Recognizing the need for adults and children in the region and greater GCC market to eat and live healthier, we consulted with leading food specialists from around the world to perfect the recipes and tastes to come up with the perfect balance of nutrients and goodness. We did not stop there and with the consultancy support of one of industry’s leading franchise specialists, Francorp, we aim to take Under500 to the world with an aggressive growth plan of 50-70 stores in the MENA region within five years. For those of you who are considering similar goals for their franchise enterprises, here are our top tips for our fellow startups in this space:
1. First of all, you need to ensure that you believe in your concept, and know that it can appeal to a wider market.
The major junk food franchises around the world have all seen a drop in sales, because the world population is shifting to healthier foods, and there is a vacuum that needs to be filled- and we are yet to identify a brand that has reached the top with a healthy food concept. We always wanted to set up a franchise, and so our business model was based on that. We believe in our concept and how it can have an impact on not just people’s diets, but also become a lifestyle choice.
With healthy options being few and far between in Dubai, we started our innovative, home-style café concept in the summer of 2016 to bring not only healthy food, but food that tastes good to the region. However, we never intended it to stop here. Across the world, education on healthy eating and controlling your calorie intake is becoming increasingly prominent, and so with this at the forefront of our minds, we anticipated that we would franchise Under500 within the first year of our opening date.
2. The second step to being able to franchise an operation is to make sure it is a profitable enterprise.
Another important factor is that the profits need to be consistent, as opposed to being a one-off from a couple of transactions. Once the process is confirmed as being profitable, consistency can be replicated; the operation is then registered under a brand name, and one can now go down the route of franchising. Franchising is merely partnering up with an investor who shares the mutual feeling that the process/ brand name would be profitable in a new location, but requires the know-how and support to compete in the franchisee’s location of interest.
3. Understand why you are franchising- and know your goal.
If it’s clear that the process is profitable, and the founders of the concept want to expand their business, but have limited access to capital (be it through equity or bank debt), then the best way to grow is through franchising. The mechanism in which a brand name, know-how and support partners up with an investor to open up in a new location, is through a franchise agreement. The growth of some of the top leading brands in the world have been through the franchising model, and we believe that in a world with so much competition and savvy investors, this formula would best suit our plans for growth.
4. Choose a reliable and notable franchising company.
We decided to partner up with Francorp, who have helped with our legal documentation, operations manual, and the entire process of franchising and finding franchisees. Francorp is the franchising leader in the industry around the world, with 21 officers covering 55 countries that we have access to. This gives us exposure to potential franchises in all the countries that Francorp have set up in. Their area of expertise is in franchise development, and so, they offer experience in a vast variety of industries and also guide you in your tailor-made structure of your franchise agreements.
They have franchised top brands such as McDonald’s, and this is where we aim to see Under500 one day. We believe that since the world is becoming increasingly health-conscious, the concept of Under500 is going to be sought after across many countries- and not just in the GCC. Francorp has an outstanding reputation, and thus we trust our concept and our business with them, in order to achieve our target.
5. Evaluate the advantages of engaging with the services of a franchisee.
Since there is money involved in franchising partnerships, we believed that the best way to protect the interests of our startup and the potential franchisee would be through a franchise agreement. We decided to go with Francorp to build this, as they are the industry leaders, they have an excellent team, and are reputable and renowned for their achievements through the companies they deal with. Also, Francorp has been in business for a long time, and associating with such a brand would further strengthen our position in the market for franchisees.