Franchise Planning

Franchise Planning

After the launch of a new product, it is important to determine the target dealer group that fits the product's market positioning, characteristics, and distribution channels. Franchising presents a mutually beneficial opportunity; however, if the dealers are not chosen wisely, their inadequate operational capabilities can disrupt the market's normal operations. Poor sales performance may lead the dealers to constantly seek support from the manufacturer; however, manufacturer support is typically tied to sales performance. This disconnect in collaboration often results in the "death" of the dealer.

While the collapse of a dealer may seem like a loss only for them, it actually has adverse effects on the enterprise. Typically, the number of dealerships established in a region for a product is limited. If local dealerships fail, it signifies the loss of market presence for the enterprise in that area. Re-entering that market becomes significantly challenging as consumers lose faith in the product due to unknown reasons, making it difficult to onboard new dealers. Thus, the collapse of a dealer does not only impact the dealer but also signifies the loss of that regional market for the enterprise.

When engaging in franchise planning, it is crucial for enterprises to be selective in their choice of dealers rather than accepting all offers. While it may be tempting to fill the basket with more "mushrooms," it is imperative to recognize and reject any harmful "mushrooms." Fulfilling instant desires may lead to self-inflicted harm in the long.

Suitability is paramount. Enterprises must conduct thorough market research and analysis, aligning with their actual requirements, to identify the appropriate dealer range for targeted and selective franchise operations.