GARMENT RETAIL FRANCHISE BUSINESS, THINK BEFORE YOU DIVE

Garment retail franchise business is growing rapidly in many developing countries day by day due to the reason people are getting conscious in their look and styling and keep searching something new and different which will be best suitable for their personalities as well as keep them away from ordinary dressing.

We must give credit to some of the local brands which have changed the fashion sense of many people and made them ready to spend some more money for good quality products.

Keeping in mind the growth of different brands, they always seek for the franchisees in some potential markets.  That’s why they come up with contracts to open up their franchises in new and potential markets. It helps them to explore new markets with the expense of others whom we call “Franchisee”.

So to become a successful franchisee is not an easy job, you must know deeply below mentioned points before you dive into this business otherwise you will simply get nothing and will loss all your money for the cost of others.

Brand selection based on market need and product type: You must select a brand which is offering those products which best suit for your area and you see the deep interest of people in buying such products. Please always remember that product fits of your selected brand must be according to the body fits of your target people. For example, if your brand has the American sizes and you will open up an outlet in China and trying to sell the same sizes in China. You will not only loss customers despite having good quality and latest trendy products but also it will ruin your brand’s image. In our garment language we call it “Anthropometric” studies so you should check and get it confirmed from your franchiser if it has been done for your specific area/market already.

Investment / budgeting: Before starting this new venture,you must know that how much investment you can do in this business and how much it will require with the passage of time because in this business like others you will not be started earning profits at least during first six months so you must have sufficient capital in hand in order to bear all running expenses easily at least for one and half year. Before taking any further step, see below the complete chart for your better understanding.

Investment Type	Amt Rs	Remarks
Fixed cost
Security Deposit to brand	X1	It varies from brand to brand based on its fame and policies.
Furniture and Fixtures cost	X2	It depends on you that how attractive visual merchandising you want to keep for your outlet as well as the demands of your chosen brand.
Shop security deposit	X3	It depends on the location you selected.
Dealer cost (if applicable)	X4	If this is not your own shop and you get it through dealer.
Heat or cool plant / AC or heater etc	X5	If your plaza or mall is not centrally air-conditioned or heated
Total	sum(X1-X5)
Variable cost
Utilities + Maintenance charges	X6	Mainly electricity bill + if you have shop in Mall then you will receive the maintenance bill on monthly basis based on your shop size.
Shop monthly rent	X7	Based on the location and Mall foot flow
Salesmen salaries  + monthly commission + off days working	X8	Normal salary is Rs 15k + 1% commission
Fone / Internet Bills	X9	To entertain customer complaints or promotions of new collections
Marketing materials	X10	If it is not being provided by your brand regularly so you must choose an appropriate medium to market your brand / outlet
others/Misc	X11	(e.g. Stationary, cargo, alterations, salesman food etc)
Total monthly expense	sum(X6-X11)
Total monthly sale	XXXX	Depend on the customer foot flow
Total monthly commission to Franchiser	X65%	As per the contract ( 65-70% is normal)
Total monthly commission to Franchisee	X35%	As per the contract ( 30-35% is normal)
Total monthly Profit/Loss	sum(X6-X11) - X35%
Balance to breakeven	Sum of total profit/loss from start till current month (-)sum(X1-X5)

Area selection: Before you select any area, must remember below points into your mind.

         There must not be any other outlet of same brand in your selected at least 6Km radius area.

         You must do proper survey to know the buying trend of your product in that specific area.

         You must know the buying power of that particular area by keeping your product value in mind.

   
Many franchisees do above mistakes due to the lack of product knowledge and improper survey for that specific area.

      Many local brands trust on the reports of franchisees rather than conducting their own surveys for the selected area.
In both cases, franchisee always on the higher risks so they must take every step with full confidence and proper homework.

Marketing campaigns: Many local brands are lacking in this area and are mainly relying on Internet/facebook marketing but it can never help to market your own outlet so it must have been agreed before starting this new venture that how your franchiser will help you to market their products as well as your outlet in that specific area.

New collections and replenishment time: More the new collections/new designs your brand launches in a year and fastest the replenishment being provided by your brand, more the revenue/sales your outlet will earn.

Conclusion: If your outlet is not giving you the expected per month sales or you are not able to get recovered your fix cost after a year then you must start thinking for all above mentioned improvements before investing on your current location further. I will discuss all in detail later on.