A franchisee is no less than an entrepreneur, however, the model they work for is very different from building their own venture. In franchise or dealership model you have to maintain the goodwill of the brand along with creating performance standards in terms of quality of products. THARUN RAO, Managing Director, Hyderabad-based Quality Group, is taking seven major brands to multiple locations with his company. In four years, the company’s turnover is Rs 60 crore per annum and by 2020, Rao is expecting to achieve a target of Rs 120 crore per annum turnover.
How unique is the working model for Quality Group?
Quality Group is mostly into dealership and franchise business and it is associated with the brands like Royal Enfield, Renault India and textile groups like Raymonds and Arvind. I get associated with the brands which are doing the best work in the industry and try to launch them in multiple locations.
How the franchise or dealership model is different from creating your own brand?
This model of work is completely different from entrepreneurship. My work involves associating with the brands which are already established. As a franchise partners, we take these brands to the market where they don’t exist.
Every business model has its own disadvantages, how would you describe yours?
When companies hand over its dealership, they expect a lot from you. However, when you are getting associated with a brand you can’t take a call on your own as you are not the manufacturer. You can’t take a decision on what the manufacturers are producing. You just take these products to the market. I feel these are the few major challenge in this business model. Secondly, we cannot go to the venture capitalists for funds and the brands we are getting associated with do not encourage the same. At the same time, money is one of the main requisite to start a business. Hence, we have to raise funds from friends and family.
What were the initial challenges you faced before starting this venture?
I was 20 years old when I started this business without any idea about running a business or the industry. So starting early is always tough. However, with immense support from my father I easily sailed through that phase. From the finance perspective, banks will not trust you during the initial years, so you need to prove them something. Somehow, I was able to make them believe.
What entrepreneurs need to keep in mind before entering the dealership business?
All entrepreneurs getting into dealership business need to have some passion for the brand which they are getting associated with. They should not look at this model as a profit making thing and instead should have some understanding of the brand. Moreover, several applicants would apply for dealership of the same brand, so get ready to face series of interviews with the brand. They will be judging you on your passion, commitment and involvement into the business. So prove them with confidence.
(This article was first published in the August issue of Entrepreneur Magazine. To subscribe, click here)