Automotive Franchise is Emerging as One Big Business Opportunity
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India has emerged as one of the largest automotive industry worldwide with more than five million cars and commercial vehicles produced in the country. Being one of Asia’s largest markets, the sector is expanding and becoming more important for Indian citizens, offering around 15 million job opportunities by 2022. With around 19 million two-wheelers produced in 2017,the two-wheeler production is dominating the Indian share of automobile production. The automotive franchises provide various services like automotive repair, oil changes, replacement parts, car washes, and many more are providing services which are expected to rise in the days to come. With so many automotive franchises to choose from, quality should be the prime aspect while investing precious time and hard-earned money.
Investing in an automotive franchise provides support and guidance from the corporate office and fellow franchisor which lacks while starting a business from scratch. It is necessary to review and process their business model as not all franchisors offer the same level of support. Therefore, it is required to go through their training and support procedure which can provide a business with necessary tools in order to run successfully. Things to find out include the marketing and sales support to what happens if a brand comes across any challenges.
It is necessary to find out if the franchisor contributes to a business bottom line, apart from support and guidance. Hiring someone in order to grow business can allow them to reduce their royalties in order to help the franchisee, covering the cost of their employee’s salary. Speaking of royalties, it is important to understand how franchisors are implementing them. It can be a percent or fixed fee.
The idea behind the percentage fee model is that both the parties are investing in the business. As a result, the franchisor receives a meagre amount of financial rewards while the franchisee is getting a business off the ground. Although fee approach can be a burdensome process until a business is up and successful. A franchisee is expected to earn more with fee approach once it is successful.
“A good franchisee facilitates the expansion of companies, while the best franchisor provides meaningful support and guidance to partners in a consistent manner,” says Chackochen Mathai, Founder and CEO, Franchising Rightway.
Looking at how your territory will be protected is a major concern from a franchisee point of view. Failing to protect your territory can allow another franchisee from the same brand disassembling your clients. Franchise Disclosure Document (FDD) comes up with two terms ‘Exclusive and Protected territory’. An exclusive territory allows your franchise to be the only one in the territory while protected territory can grant some amount of competition like franchisor sales via alternative channels. The Internet can be the best medium for carrying forward the sales in protected territory.
Entrepreneurs choose to invest in an automotive franchise as vehicles require servicing and maintenance throughout the year. Whether the economy is good or bad, it hardly affects the business as these machines require regular maintenance.
This article was originally published on Franchise India by Shahram Warsi.