Franchise Diversification Strategies for Delhi’s Competitive Market

Franchise Lawyer in Delhi | Franchise Lawyer in Gurugram | Franchise Lawyer in Noida | Franchise Lawyer in Delhi NCR | Corporate Lawyer in Delhi | Corporate Lawyer in Delhi NCR | Corporate Lawyer in Gurugram | Corporate Lawyer in Noida | Delhi Franchise Business Strategies | Gurugram Franchise Business Compliances | Franchise Legal Compliances Delhi | Franchise Business Legal Compliances Gurugram | Delhi Franchise Legal Advice | Gurugram Franchise Legal Advice | Effective Franchise Diversification Strategies in Delhi | Effective Franchise Diversification Strategies in Gurugram | Legal Tips for Franchise Business in Delhi NCR | Legal Tips for Franchise Business in Delhi | Legal Tips for Franchise Business in Gurugram | Corporate Lawyer in Chandigarh | Franchise Lawyer in Chandigarh |

Diversification is the technique of risk management under which investments are distributed among various financial instruments, industries and other categories. This is done with the intend to get higher returns by investing in various areas which would yield higher and long-term return. Along with gain, this also ensures that loss in one area could be mitigated or balanced by the profit in some other area, which encourages making investments in riskier options as well. Under the franchise business model as well, the strategies of diversification are much prevalent, as they help in mitigating risks, stabilizing income, adapting to changing market conditions, and enhancing resilience in franchise agreements.

Following are the importance of diversification strategies employed by the franchises in detail:
• The customer of today has a wide range of options to choose from, and if a franchise fails to meet or fulfil the demand or preferences of its customers, there are higher chances that they will lose that customer forever. To avoid this issue, the franchises have diversified the products and/or services they offer. This ensures that the particular franchise can capture a wide range of customers or meet the wide needs of the customer at a single stop. For example, McDonald’s franchise has a specialization in burgers, but along with that, they also offer salads, wraps, and coffee to their customers; or Subway, apart from regular subs, offers its customers healthier and fresher vegetables in customizable subs to meet the demands of health-conscious customers.
• Through diversification, the franchises get to capture new geographical locations which were previously untouched due to one or another reason. This helps them gather new customers and reduce their overreliance on a single marketplace. This way, the risk also spreads over different economic environments. For example, Zudio understood that people in tier-II and tier-III cities were more conscious of price and good quality clothes than tier-I cities’ people. Thus, to capture this opportunity, it mainly targeted tier-II and III cities only and introduced clothes with a large variety and quality at very affordable prices.
• Diversification allows the franchises to introduce a new range of products and/or services which are less correlated with their core business. It opens additional revenue streams for the franchise, increasing the overall value proposition of the franchise. For example, Amul was initially a dairy cooperative with a business and franchise in milk, but with time, they diversified themselves by entering into various processed food products like ice-cream, chocolates, curd, paneer, and beverages. Also, 7-Eleven, apart from offering convenience store items, offers various complementary services like bill payment, ATMs, and fresh food offerings as well.
The trend of sustainable development is also on the rise in today’s market, and thus customers also prefer to choose businesses which not only operate with a profit motive but also contribute something back to the society. This forces the businesses to go for green consumerism and adopt practices which make their customers believe that they also care for the environment and the future.

Some examples of franchises that focus on sustainable development in their work culture are as follows:
• IKEA promotes sustainability by offering their customers, who wish to return their old items, the option to opt for furniture recycling services, by which the customers could bring their used furniture items and get them recycled and make them in a condition fit for use.
• Walmart is making significant investments in solar energy installations across its stores and offering energy-efficient products.
• Tesla consistently allocates resources to R&D so as to advance the efficiency and sustainability of its electric vehicles and energy solutions.
The franchises opt for the strategies of diversification not only because they get additional benefits from these techniques but also because they provide safeguards against various economic downturns and disruptions as well.

Some safeguards in relation to this are discussed below:
• During pandemic situations like that of COVID-19, franchises with diversified businesses were able to survive and also generate profits in those tough times. A successful example of this is Amazon, which evolved from a simple online bookstore to diversifying by providing cloud computing streaming services and fresh groceries. This allows Amazon to stand-out in the market and survive those times when people couldn’t approach the markets due to unavoidable restrictions.
• Diversity doesn’t always mean dealing in products or services related to the business. The franchise could enter into completely different markets as well, which could help them mitigate risks by avoiding putting all the eggs in one basket. Starbucks understood this strategy very well, and apart from selling the coffee in which it has specialization, they also sell branded merchandise to diversify their avenues of earning.
• Franchises which prefer to go for diversification are considered more flexible. Those franchises adapt more quickly to the new markets as their focus remains only on making their space in those markets. For example, McDonald’s, to make its special presence and grab attention in the Indian market, launched its first fully vegetarian store in India in Amritsar.

Diversification allows the franchises to form partnerships with different businesses for joint growth and innovation. These allow different franchises to share their resources, trade secrets, and technologies with each other.

Some examples of different franchises making partnerships and alliances are as follows:
• Three decades ago, in 1994, PepsiCo and Starbucks entered into a partnership to form the North American Coffee Partnership (NACP) to distribute ready-to-drink (RTD) coffee beverages. This collaboration, which was made to market, innovate and develop the RTD category of coffee has now captured approximately 97% of the market share in RTD coffee with an above $1.5 billion retail business. The most famous innovation under this partnership is the Frappuccino beverage.
• Seeing the health and environment conscious among the people of today, the Beyond Meat and Taco Bell franchise in Dayton, Ohio, partnered to bring a sort of meatless steak called the Beyond Carne Asada Steak Quesadilla. These sorts of partnerships enable innovation in different sectors, which ultimately benefits the customers.

In conclusion, it would be correct to say that franchise diversification strategies are important for building resilience and long-term success. To shield against economic volatility, regulatory shifts, and changing consumer tastes, franchises can diversify their product and service offerings, tap into new markets, and create complementary business divisions. Along with this, the risks associated with running the franchise also get distributed among various areas, which strengthens the financial position of the franchise and opens vast opportunities for entering a dynamic market.
Authored by: Adv. Anant Sharma & Sahil Arora
#FranchiseDiversification #CompetitiveMarket #DelhiBusiness #FranchiseGrowth #BusinessStrategy #MarketExpansion #DelhiEntrepreneurs #DelhiNCRUpdates #ChandigarhBuzz #IndiaBusiness #DelhiLife #GurgaonBusiness #ChandigarhMoments #IndiaBiz #NCRUpdates #FranchiseGrowth #DelhiMarket #BusinessExpansion #LegalAdvice #FranchiseSupport #DelhiFranchises #DiversificationStrategies #FranchiseSuccess #MarketCompetitiveness #BusinessInnovation #DelhiNCRFranchises