Pioneering franchising

The inception of Koutons as a family business and the benefits it reaped from franchising, DPS Kohli, Chairman, Koutons Retail India Ltd shares his success story.

Neha Malhotra (NM): Tell us about the inception of Koutons?

DPS Kohli (DPSK): The Koutons journey started 18 years ago when I and my brother-in-law, BS Sawhney had set up Charlie Creations for garment manufacturing and exports. In 1994, Charlie Creations was converted into a private limited company under the name of Charlie Creations Pvt. Ltd. Its denim apparel under its flagship brand, Charlie Outlaw, went on to become a rage among the youth in the country.

In 1999, we recognised the tremendous opportunity that lay in the emergence of a strong middle income group in the country; a group that was both brand conscious and aspirational and so, set up Koutons Retail India Ltd. In doing so, we expanded the Koutons portfolio beyond denims.

NM: When and how did the company decide to opt for franchising?

DPSK: In the year 2001, we decided to adopt a model comprising of a mix of company owned and franchise stores. The research that we undertook before taking this decision indicated that the cost effectiveness of this model would not only help us in accelerating our expansion process but also in strengthening our customer base since we could now easily pass on the benefits to our customers through low prices.

Apart from this, franchising benefited our business in other ways too. It led to greater returns due to a more concentrated effort on the part of the franchisee to sell our product. Today, 90 percent of our expansion is through franchising and in 2009 itself we have become bigger by over 200 stores, thanks to franchising.

NM: How many outlets do you have at present and how many of these are franchised?

DPSK: We have over 1400 stores operating across the length and breadth of the country, out of which over 1341 stores are franchisee stores.

NM: What all training and support do you provide to the franchisees?

DPSK: We, at Koutons, believe that our franchisees are our equal partners when it comes to maintaining our brand value and so, the franchisee is provided with all the expertise that he may need in running the store right from customer management to maintaining the look and feel of the store. Regular training modules are conducted for the franchisee and his staff. The training usually revolves around the following- visual merchandising, store upkeep, personal grooming and customer dealing. We have a regular quality check too. We want all our customers to have a same experience at every Koutons store across the country, and we ensure this through our regular training modules and quality checks. Drawing from our expertise reaps benefits, not only for us, but for our franchisees too. Also, Koutons offers its franchisees minimum guaranteed payments covering lease rentals, employee costs and other establishment costs apart from sales incentives which provide them with a sense of security and belongingness.

NM: What are company’s future plans in terms of expansion?

DPSK: Whether opt for franchising or for company owned outlets depends on a host of reasons and is a decision taken after much research and deliberation. Having said that, ninety percent of our expansion is carried out through franchising, we intend to keep the same trend.