There are several aspects to business we know, almost as practiced axioms but probably don’t document. For instance, in India, the idea of the parent offering seed capital to their ward, to ‘settle them’, has existed since time immemorial. Business formats have thrived in this manner – dealerships, agencies and family-owned businesses.
Over the last decade or so, another practical application of this inheritance capital has been franchising. It brings together two generations – the elderly who own assets such as real estate and capital, and the young who can employ their energy and enterprise to build a business using these assets.
This principle of sharing resources within families/relationships offers a win-win for all. On the one hand, idle assets owned by senior citizens can potentially be converted to revenue-generating assets; on the other hand, the younger generation can embark upon an entrepreneurial journey, without the burden of a loan to begin their business.
My future, my decisions
A couple of years ago, if we had discussed the idea that there would be a global lockdown, and that the economic value of business will be eroded like never before, we might have laughed it off.
Today, we do not doubt the capacity of an external stimulus to disrupt working structures. Just like the great world wars brought women into the workforce, COVID-19 overhauled traditional modes of working and made many skills redundant.
The other outcome of the pandemic was that several people lost their jobs. It became obvious that they would have to fall back on their savings for a while. As they dipped into their savings, eroded by the YOLO culture (travel, EMIs and the like) they realized that they would have to find a way to have a greater say in their own future. Those who were not out of a job had to take severe pay cuts. The situation was rather grim.
In the middle of this life-changing pandemic, I picked up the book 2030: How Today’s Biggest Trends Will Collide And Reshape The Future Of Everything by Dr. Mauro Guillén. Already hailed as a great book by Mukesh Ambani, I was curious to see how this ‘futurist’ was going to connect the dots looking forward.
In the book, Dr. Mauro Guillén discusses demographic shifts, economic evolutions and the future. What I could see clearly, was that the future demands a collaborative working culture where people protect their families and their income from unanticipated black swan events.
Cross-generational working models
Over the last two decades of building one of India’s largest QSR brands, I have met countless 30-year-olds who come to me with the same three problems:
- They are stuck managing an inherited brick and mortar shop but have a desire to modernize and join mainstream retail
- They are stuck in jobs but have a strong entrepreneurial bug biting them
- They want to be their own boss but need guidance.
I have always known that franchising is the answer for them. However, Dr. Mauro Gullen’s book clarified my own understanding of this. Today, I am able to put the benefits of franchising to these enterprising 30-year-olds from a very different perspective.
- Asset ownership: Most of the assets in the world are owned by people above the age of 50 or 60.
Let’s call them Gen One. Younger people don’t have the money to buy those assets. Let’s call them Gen Two
- Asset access: The younger generation would like to have access to the assets, they would like to use them. A business model like franchising is an excellent way to bring two generations together – one with assets, the other one without
- Sweating the asset: Instead of letting the asset lie idle, Gen Two can sweat the asset by putting it to work and also putting themselves to work 12 hours a day. This in turn unlocks income for Gen One
- Leverage: Gen Two takes the help of Gen One for capital, instead of taking a loan to purchase them and starting off on the back foot. Asset light is the way forward
- Modern techniques: Gen Two gets to build a new age business in an asset-light manner and focus on what’s most important ‘customer service’.
Finding creative solutions to problems
The author explains that the only way to truly understand the global transformations underway – and their impact – is to think laterally. That is, using “peripheral vision,” or approaching problems creatively and from unorthodox points of view.
Rather than focusing on a single trend – technology is taking over routine jobs – and feeling overpowered by it, Guillén encourages us to consider the dynamic interplay between a range of forces that will converge on a single tipping point. 2030 is going to look very different and we have to prepare ourselves for the same.
No matter your profession, the ability to stay relevant and thrive in your career over the next decade will require more than simply staying up to date on your domain expertise and general business knowledge. You will also need to expand your ability to think creatively and strengthen your overall social skills.
Taking this thought process, a step further, both Gen One and Gen Two need to drop their egos and work together. To every 30-year-old entrepreneur who does not want to take start-up capital from his/her parents, my question is ‘why not?’ Parents are the kindest moneylenders in the world. And as for the asset, if your inheritance includes real estate, you’re incredibly fortunate and you have the opportunity to use it to make your family proud.
Other systemic factors
Other than the social aspects that will drive collaborative working models, the infrastructure coming up in India, will also be a great fillip to franchising.
Brands that have survived COVID-19, will tell you that customer loyalty has risen like never before. The assurance of ‘value’ is topmost on people’s minds. The ‘business mantra’ of the future will be to ‘go an inch wide and a mile deep.. instead of ‘go a mile wide and an inch deep.’ Within the ambit of franchising itself:
- The most disciplined brands will win. Focussed brands that have survived the pandemic, will scale rapidly. Their familiarity has served as a soothing balm for a world recovering from the ambiguity of COVID-19. They will continue to innovate, offer value and retain the trust they have earned
- India is a very large market. Even if only 20 per cent of us belong to the affording class, that number is equivalent to the entire population of the U.S.A. This understanding of the power of India’s consumers, has dawned universally, in the last decade. From cricket viewership to mobile phone purchases, India is leading everywhere. There are opportunities waiting to be unlocked in every industry
- Around every successful business model, will develop an ecosystem of suppliers and contract manufacturers. They will expand the market rather than cannibalize each other and provide even more opportunities for franchising. Further, thanks to improved road infrastructure and connectivity brands will find it easier to penetrate tier two and tier three towns.
Summing up, it is the social structures that are going to be the cocoon of economic growth and vice versa. Happy communities that are supportive of each other will be the driving force for the future. Mauro Guillén reminds us of our interconnectedness and vulnerabilities, and as such these are things we simply cannot afford to ignore.
The understated value of franchising – to create a community of successful entrepreneurs – is sure to emerge in the decade ahead of us.
Dheeraj Gupta is the founder and MD of JUMBOKING Foods, India’s largest homegrown vegetarian burger franchise with over 155 outlets in Mumbai, New Bombay, Thane and Pune