Check this blog to know in detail about COCO Franchise Model.
The franchise business models are among the best choices for a franchisee and a franchisor.
Establishing franchisees in different geographies leads to brand expansion and economic growth and also creates employment.
Many brands operate successfully in various sectors and work via franchise business models.
Know about Franchise Business Models
Franchising is business operations operated or owned by the same third-party procuring the license from the leading Company, allowing the licensee to start using the brand name, licensor products, and various operational procedures.
Many brands use franchise models to mark their presence in the industry and market their shares in this fast-paced world.
Let us know about the various benefits you can avail yourself for franchising to the brands:
- Higher investment return
- Rapid expansion due to well-known brand name
- Reduced operational and capital expenditure
- Penetrating new geographies by engaging in partnerships with the natives
- Low risk of exiting
- Enhancing brand presence and value
What is COCO Model?
The Company initiates operations with the Company Operated and Company Owned business model, also known as COCO.
Still, once the brand becomes successful and well-established, the venture enters into the franchise model to reduce capital cost operational cost and increase the ROI via brand value created by the Company.
COCO is the abbreviated form of a Company-owned Company operated franchise system.
The model here refers to the corporation responsible for managing and owning the enterprise in a particular location.
The corporation is held accountable for all spending on the operational expenditure of the business.
The COCO franchise model is the best for the corporation because of the below-listed features:
- Many franchisors keep searching for a corporation to provide a franchise for a fee as the location has excellent potential. But the lack of options left them secluded, and they took the initiative and started independently.
- Individuals or corporations can start working if their ideas are unique or have a loophole in a market that they can fill. The initial stores are called COCO.
- If the franchisors have great money and are in no mood to share it with anyone.
- It is a common phenomenon for various franchisors to start their flagship store as it makes it possible to set up the complete infrastructure to explore future options and experience the ambiance of the outlet.
All the Company owned outlets are the perfect examples of COCO and exist across the sectors.
The COCO business model has flourished well in every industry, from computers to fashion to jewellery.
Advantages of the COCO Franchise Model
Various benefits of starting a COCO Business Model are –
- The COCO business model showcases the product range and outlets to prospective franchisees and their clients.
- The corporation enjoys all the money earned as no channel partner is involved.
- It also helps the Company in the expansion plans to reach out to unconquered lands.
The COCO model works quite well often, especially when the Company is into consumer durable or hospitality for business investment.
Also, at the COCO, franchise ventures run better than any other franchise model. The franchisor operates the COCO franchise model, and the franchise partner owns a stake in the brand.
The franchise partner receives a guaranteed return on his investment and does not have to work daily; investment is the only thing required from the partner.
COCO offers the franchisees a fixed return for investing in unique opportunities from a well-loved and established brand.
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How does the COCO Business Model work?
The main advantage of the COCO business model is that every procedure outlined is followed closely, and there is no false commitment.
The client receives first-hand experience with the Company. The COCO model allows the brand owner to offer the same branch offerings.
These owners never wish to make any wrong promises to their clients and do not like any deviation or experimentation from their product definition or predefined model.
USP of COCO Franchise Model
The COCO model is devised so that a particular revenue should be earned regularly, so the store remains self-sustained.
The location factor here becomes crucial as the rent in premium locations is usually high.
There is often a situation when profits are not coming through, and the brand has to run the business, or the brand will earn a bad name on outlet closure.
For COCO models, the outlets are often looked after by the staff trained at the brand headquarters.
The brand handles hardware, fixtures, furniture, infrastructure, renovation, interior, operation costs, etc.
In the COCO franchise model, the franchise partner is only concerned about the money he is investing as he receives guaranteed returns but no say in any other operational activities.
The COCO model opens many branches in other cities to expand into different geographies. A few of its examples are Lenskart, Big Bazar, D-mart, Reliance Jio Mart, Relaxo, etc.
Example of a COCO Franchise Brand: Relaxo
Two brothers, Ramesh Kumar Dua and Mukund Lal Dua, started their footwear business in 1976, known by the name of Relaxo, and is one of the leading footwear companies in the country.
The brand has eight manufacturing units and is headquartered in Delhi. Relaxo is known to be producing six lakh pairs every day.
As the years pass, Relaxo has launched many sub-brands under its portfolio, like Relaxo Hawaii, Schoolmate, Flite, Sparx, and the Bahamas.
The footwear industry ranges from about Rs 55,000 crores now, and the organized brands are Rs 10,000 crores, and Relaxo has 20% of the market share.
The brand has more than 250 stores in India, and all of its stores follow the Company owned and Company operated business model. The brand plans to go out for franchising models to expand their presence in the market.
Relaxo brand already has a strong presence in Maharashtra. Nowadays, they are also exporting their footwear to Gulf countries.
Relaxo is selling their franchise through us; check details of the Relaxo Franchise here.
The brand also sells its products through other online marketplaces like Snapdeal, Amazon, Flipkart & its website.
The online store is bringing 5% of the business to the brand, while the online marketplace Flipkart sells most of the footwear.
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COCO Franchise Model – Conclusion
The COCO business model allows franchisee partners to own a business, but they do not have to worry.
In most scenarios, the parent company looks for the franchisee partner and signs a trust bond, offering a guaranteed profit and ROI.
Only calculated risk is involved. Being the oldest business model, COCO still has a firm grip on the market.