India’s textile industry dates back centuries, making it one of the oldest in the world. The industry is extremely diverse, with hand-spun and hand-woven textile sectors at one end of the spectrum, and sophisticated mills at the other. Textiles are dominated by the decentralized power loom, hosiery, and knitting sectors. India’s textile industry is well-positioned to produce a variety of products suitable for different market segments, both within the country and overseas. Let’s look at why you should franchise your clothing business can create a huge impact in the business world.
The Textile industry in India employs around 4.5 crore people, including 35.22 lakh handloom workers. In value terms, the industry contributed 7% of the industry’s output in 2018-19. India’s textiles and apparel industry were responsible for 2% of the GDP, 12% of export earnings, and 5% of global textile and apparel trade in 2018-19. In the period between April 2021 and September 2021, textile exports reached US$ 19.4 billion.
So how to franchise your clothing business ??
In an industry that is constantly in the fast lane, you have to bring something unique to the table that makes you stand out from the crowd. Most likely you’ve noticed a gap in the fashion market and have some creative ideas for how to fill it. Regardless of what motivated you to begin, the most effective thing you can do when starting is to pick your niche.
The organization of your franchise should be as good as it can be. Here are a few things to consider seriously:
- Where to expand? Will it be online, have a physical location, or some combination of both? Which cities and town are you focusing to expand in India?
- How does it work? Will you be an online retailer with your own website? Will you sell on social media? Will you open a bricks and mortar stall? How are your franchisees going to operate?
- Key personnel in your business? Even if you’re the main person, are there other key people helping you? This helps in knowing the number of experts present on the panel to execute the plans.
- What plans do you have for sales and marketing?
What is the process to franchise your clothing business?
Growing any business through online and retail store operations is a key strategic issue. After initial launch and consolidation, it is inevitable that, over the course of the brand’s life cycle, the expansion will be considered. Where to grow and how to grow will then be equally as important.
You can access new markets in many ways, including by increasing your online presence, developing flagship stores and forming joint ventures with partners. Franchising has increasingly proven to be a premier strategy for a wider variety of brands across a spectrum, as it allows both brand control and capital management. Essentially, it is an easy route into new markets, and the local expertise can be leveraged.
You must consider many factors when considering franchising as a means of expansion to minimize loss of control and damage to the reputation of the brand while maximizing franchise potential and revenue streams. Franchises are a great way to expand clothing brands. Here are five tips for clothing brands.
1. Understanding and protecting your brand and other intellectual property.
Branding is king in the clothing world. Your products, stores, and online presence are all manifestations of your brand personality that are currently attracting customers and will attract franchisees as well. Franchisees will also be attracted to your business knowledge – that you understand how to reach your target market and manage a business. It is, therefore, crucial to think about how your brand, products, know-how, and other valuable intellectual properties will be packaged and distributed in other markets.
Brands should be concerned about protecting their intellectual property. Successful brands are inevitably copied. Laws protecting intellectual property include trademarks, know-how, designs, copyright, and trade secrets.
2. Territories and network planning: regional versus national considerations.
If you’re planning an expansion, think about the type of rights you’ll grant to your franchisees. Is the franchise exclusive, non-exclusive, or a sole franchise? A master franchise or an area development franchise?
Almost every prospective franchisee wants to expand their territory or have the option to take on additional territories. In general, the more rights you grant a franchisee (including territory and duration of exclusivity), the more power and reliance you put on that franchisee.
Giving large territories may be a good idea in a region where key players have established networks that will open doors and provide access to prime real estate. A longer-term agreement may be appropriate if there is a substantial investment that must be recuperated by the franchisee in a mature market. There may be an issue with this strategy in mature markets with a large choice of franchisees and structuring options.
3. Franchise should be structured appropriately.
You also need to make sure your clothing brand is having the potential to be franchised.
The effectiveness of your monitoring system (whether it is done by a third party or in-house) is critical. By maintaining your trademark registrations, and by making your brand consistent, regardless of whether your franchisee is presenting your products to customers, you are maintaining the validity of your trademark registrations.
4. Consider how your offer may attract franchisees and prepare it accordingly.
Choosing how to sell your upcoming franchise proposition is another step. As part of the preparations for franchising, you will need to develop a franchisee pack that explains how you will grow your brand. Having a credible franchisee pack demonstrates your commitment to growing your brand.
This package should contain your concepts for the brand, the stores, product range, and online presence. It will enable a prospective franchisee to make an informed decision on whether to proceed to enter into commercial discussions with you. You will need to provide financial information – such as the range of royalty and other services payments, order lead times, franchisee criteria (such as how much capital is required), and any franchise fees.
Do not forget that this is your pitch. You may need to comply with other pre-disclosure obligations in addition to the disclosure document. This is not your franchise contract. The information provided must be accurate. No marketing information should misrepresent what your franchise offer is to be.
Nevertheless, you should not include any confidential information and your franchise operations manual should never be included in your pack. It is vital that you place in place a non-disclosure agreement before sharing your confidential information with anyone.
5. Make sure the right commercial terms are in place
When you and a franchisee have the right commercial terms, you will both have the appropriate allocation of risk, and the obligations and responsibilities will be clear. Franchises are about relationships and interdependencies. There needs to be an appropriate balance of risk allocation in the contract.
In order to manage your legal risks, you need to be aware of your power position when negotiating with the prospective franchisee. This is so that you can determine what you are willing to concede and what you cannot. You will know what is and is not “market” if you have a competent adviser. When your brand is the latest, hottest thing, and you have a queue of potential franchisees interested in doing business with you, then a firmer franchise agreement that benefits you will be necessary.
If this is not the case, and yet you continue to press for unrealistic commercial terms, then you will ultimately have a complex, protracted negotiation with your prospective franchisee. This will result in delays and increased legal costs. Additionally, you may attract a franchisee who is too eager to do business with you on the wrong terms. The smart franchisees may be less willing.
In conclusion, many clothing brands are growing through franchising. By following these top tips, you can be sure you are ready to take that next step to franchise your clothing business. If you are thinking of expansion, planning and implementing the right strategy is key. Sparkleminds can help you to grow your clothing business. We are ideally placed to make sure you get the right advice and the right commercial terms in place to franchise your clothing business.
