Do you the common word between Amway, Orifalme, Tupperware, Herbal Life or Avon?
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They are all very large Network Marketing companies operating high volumes in India. Companies who are operating the typical Distribution and Retail Models like Lakme, Loreal, Lotus, Revlon, Maybelline, Biotique and Hindustan Unilever (who also operates a Direct Selling Model) have been competing with the Direct Selling cosmetics brands in India, tooth and nail and the industry is positioned interestingly dissecting the two models as each one of these is trying to reach the customers through their means and grab their market share. Then there is the E-commerce Model, which players are using to sell directly online. We personally believe that franchising is the bridge that all these segments could be used in India.
Well the answer is simple. Look at what Patanjali has achieved in India through franchising. They have franchise stores across the length and breadth of the country and are selling directly to customers at such low prices. They started with the traditional distributor led FMCG Business Model and also integrated franchising to unlock the potential of millions of shop keepers who could become their exclusive franchises and open Patanjali Stores. Hindustan Unilever has been using all three models In India for different brands.
1. Traditional Trade Model with the FMCG Dealer Distributor led distribution
2. Franchising Brands like Lakme
3. Direct Selling Model of Aviance and Ayush Lever Brands through Direct Network Consultants
4. E-commerce Model which was launched recently.
The startup costs for buying a franchise range from a few thousand to millions of dollars, according to "Entrepreneur" magazine. Primarily you’re buying the rights to use the franchise’s branding and marketing as well as its demonstrated abilities to get customers to buy. You also need to buy equipment, hire employees, make payroll and handle accounting in addition to leasing or buying a building where you can house your business. MLM businesses usually require a small cash investment to get started. Some require you to buy a specific amount of products each month and pay a monthly fee for training.
The revenue for an MLM businesses comes from two sources: You are paid for any products or services you sell, and you receive a predetermined percentage of the amount made by people you recruited to sell -- your "down line." The more people you recruit to sell, the more money you make from their sales. In a franchise, the business makes money from the direct sale of any products or services customers buy.
Building equity in your business is an important aspect of owning a franchise. You own the business, so you can build brand and value in case you want to sell the franchise to another buyer. Since you don’t own anything in an MLM business, you work as a salesman does, making only as much as you or your down line can sell. If you decide to leave an MLM company, you lose everything you’ve built, so you see no return on any initial investment you made.
In an MLM business, you do not have to limit the number of people you recruit to your down line. While this allows you to build a large sales force, the competition gets fierce if most of your salespeople are selling in the same area. By comparison, the parent company that sells a franchise does research to determine if a market exists for the new business. If so, the company sells you the franchise and gives you an exclusive territory in which it cannot place another of its franchises, helping to eliminate direct competition.
Selling products door to door or one-on-one is the hallmark of network marketing, so you must find ways to convince people to buy and also to sell for you as a down line distributor. Finding more distributors for your down line often requires inviting people to a meeting where you introduce the MLM concept to them. Franchises rely on established branding and proven advertising tactics to attract customers. Franchises are more likely to use print and online advertising, press campaigns and promotional tactics to make sales.
1.Location/territory: Goldsikka franchise agreement will designate the territory in which you will operate and outline any exclusivity rights you may have.
2. Operations: Goldsikka provide details as to how franchisees are expected to run their units.
3. Training and ongoing support: Goldsikka will offer training and training programs for franchisees and their staff. Training may take place at corporate offices or out in the field. All ongoing administrative and technical support will also be outlined in the agreement.
4. Duration: The duration of the agreement will be as per mutual agreement and it differs from party to party of the franchise agreement.
5. Franchise fee: There will be an upfront initial franchise fee that grants the franchisee the right to use the Goldsikka’s trademark and operating system. Franchise fee is not refundable.
6. Investment: Franchisee is required to make investment towards establishment of shop and related infrastructure.
7. Royalties/ongoing fees. Goldsikka royalty structure requires franchisees to pay an ongoing royalty, usually a percentage of total sales, which is often paid on a monthly basis.
8. Trademark/patent/signage. Goldsikka will outline how a franchisee can use the Goldsikka trademark, patent, logo and signage.
9. Advertising/marketing. The Goldsikka will reveal its advertising commitment and what fees franchisees are required to pay towards those costs.
10. Initial and ongoing training and support: Goldsikka will provide a host of pre-opening and continuing support, including training, quality control etc.
11. Renewal: Franchise can apply for renewal after expiry of contract however the renewal rights are exclusively reserve with Goldsikka.
12. Termination: Goldsikka will reserve the right to terminate franchise contract if it deems any action of franchisee is outside the law or contract. Our performance of franchise is not on par with acceptable level.
13. Cancellation policies. The franchise agreement will describe how the franchisee can be renewed or cancelled.
14. Exit strategies. Goldsikka may allow franchisees to sell their franchises upon approval from Goldsikka. Or Goldsikka may buy back the franchise at a rate determined by its team or to match any potential buyer's offer.
15. Record keeping have to be carried out by franchisee
16. Site selection and development: Franchisees have to find their own sites and develop them according to the Goldsikka standards. However franchisee needs to take Goldsikka approval before for location.
17. Insurance requirements: Franchise agreements will define the minimum insurance a franchisee is required to have prior to opening and during the term of the agreement.
18. Non Disclosure agreement: Franchisee has to sign a NDA, that franchisee will not share any confidential information or trade secret or policies of Goldsikka with competitors or anyone else.
19. Franchisee cannot carry out any other business activity in the premises than what has been agreed with Goldsikka.
20. Goldsikka will not have any liability emerging from the actions of franchisee