Brands Offering Revenue Share To Franchisees

Economic Times:

In a major departure from earlier days, brands today have started offering minimum guarantee and a share in revenue to franchisees and not even asking them to buy merchandise for sale at the franchisee store. This has substantially reduced franchisee’s business risk and need for working capital, even as it has escalated cost and risk for brands.

And brands are willing to take this because of their immense urge to have a foothold in every significant market. In earlier days, and in many cases even today, franchisees were supposed to buy merchandise and manage store and the risk of unsold stock also lay with them.

But things are changing now. Several brands, including Reebok, Wills Lifestyle, Lee Cooper, Givo and Koutons, offer a minimum guarantee or revenue sharing model. Broadly, it means the brand guarantees a minimum income to the retailer or a chunk of revenue whichever is higher. More.