Franchisee Business Do not limit your thoughts based on the resources you have at hand
Alkesh Agarwal Co Founded Re-Feel Cartridge. He & Amit was in to the business of selling and maintaining IT Hardware and his brother joined the business. Alkesh wanted to do something different as the existing hardware business was not giving him the growth and scale. He got into the Hardware business because he wanted to start something on his own but did not have enough of money to invest and hence took this way. He gan researching the industry for an underserviced need and found out that Cartridge filling was one area. There was no organized player in the space and the refill quality was never good. He researched the cartridge refill market models overseas for a few months and figured out the franchisee and the retail model in the space. He thought that he will take the concept and give it a shape and fine-tune it for the Indian market. The first challenge was the lack of right team who can scale it and make it successful and he decided to move ahead with three of his friends as con-founder. Samit Lakhotia – who was good in marketing, Amit Barmecha who was good in operations and Rajesh Agarwal who was good in technology. . They pulled in INR 1 Lakh each and went into setting up their own retail outlets. They realized that it required INR 30 Lakhs and their initial corpus was no good. They changed their model and went into the concept of setting up Franchisees which leveraged the people who had the money and wanting some expertise to monetize on.
The on-boarding of the first few franchisees was tough. All of them hesitated in signing up because Re-Feel had neither an office nor a brand. Alkesh says that it took 2.5 years to research and get the technical facts right and tied up with players outside India to get the model right. They built a good brand by making brochures, collaterals, website and reached out to their known circles to convince them to become Franchisees but nothing great happened. They attended a big conference in Kolkata in the seventh month and their first break came in. One person came to their stall and said that he was planning to sign up with Cartridge World the next day and wanted them to convince him on why he should sign up with them. The objections were all about lack of branding and being a startup and the team spent the next three hours in convincing the prospective franchisee on how they were different from that of an American company in terms of standardisation of price, quality and service levels fine-tuned for the Indian market. After convincing the person on the hard facts , they offered a pilot of 15 days and the prospect accepted. The pilot went on well and they got the go ahead. The team took the next three to four months to take the franchisee to success and figured out the template of the franchisee model. The first franchisee was a massive reference because the first franchisee broke even within just a few days of launch. The success of this franchisee got the second one.
The outreach was through Franchisee India. They did effective email blasts through their database and got great leads. They also set up booths in exhibitions and got good amount of enquiries coming in. The in-bound enquiries were handed over to the sales teams which nurtured the leads and converted them into franchisees. They also had a list of Franchisees which they targeted using Cold Calling and signed deals with them also. After signing up a few franchisees, Alkesh set up a two member Inside Sales team to call.
Alkesh talks about a tough time which they went through. There was a time in the early days when no new franchisees signed up for almost six months. Re-Feel almost went broke. Alkesh recollects that Funding or Investment was not popular in Kolkata in those days and they had the last INR 2 lakhs with them. Back of the hand calculation showed that they will wind up in the next 45 days. They took a big initiative on sales and participated in a big exhibition which cost them INR 1.5 lakhs. They thought they will anyways die in 45 days and decide to take the plunge and die early if it meant by at least pushing hard one last time and went for the show. This, Alkesh says was a turning point for them where they closed 4 Franchisees which generated 20 other Franchisees for them and they came out of the exhibition with a cheque of INR 20 Lakhs. They went on to acquire franchisees at a run rate of One Franchisee in every 5 days in 2009. The Franchisees also like them because they give exclusivity to them in terms of geographies to make sure they succeed.
When asked if there was something he could have done better, Alkesh says that he was delaying his hiring the right guy and reaching out to the right platform to market because of lack of funds. Since there are of lots of initiatives competing for the same limited funds within the company, the operations, office space, furniture and other expenses were given priority over Marketing. He says that the startup mind-set was different as he always looked at the next two to three months of survival and did not focus much on marketing. He realized later that he needs to have marketing to generate the right sales and sales people cannot do it all by themselves.
Alkesh’s Advice to early stage entrepreneurs – Do not limit yourself and your thoughts based on the resources you have in your hand. Think of what you can do if you will have all the things. You can map through the resources once your mind is open and you can make the list of what you can compromise and cannot to build a minimum model of your business which you can scale based on the success.
Re-Feel today has around 100 plus direct employees and around 1280 employees spread over 250 Franchisees all over India. They have been awarded the Top franchisor consequently for 2009, 2010 and 1022 and the franchisor award of the year 2010, Featured on the cover page of The Franchising World 2910, Featured in CNBC Young Turks , Nov 2012 and they have been covered by media over 100 times in the last few years. They have also raised a PE fund of USD 5Mn.