Amul has an interesting opportunity for those who wish to start their own business. In a recent release on its website, the diary giant outlined its proposal as “Anyone with a very small capital base and good business acumen can become our franchisee. It requires very little investment and working capital.” But what stands out most about the proposal is that the “franchisee need not pay any royalty or share any revenue with Amul”.
According to the proposal, the franchisee will have a prebuilt shop/space in a good location, which will either be owned or rented. The entire cost of setting up the store has to be borne by the franchisee, which includes the interiors and equipment, but excludes the property cost. Depending upon the format, the investment made into the store needs to be in the range of ₹1.5 lakhs to ₹6 lakhs.
Amul’s wholesale dealers will supply stocks at the parlour and the franchisee will avail retail margins, which will vary from product to product.
“Working capital requirement would be extra depending upon sales volume. Expected monthly sales turnover will vary from place to place depending on location of the parlour. It may be in the range of ₹5 lakhs to ₹10 lakhs per month”.
Amul is offering two kinds of franchisee models. For an Amul Outlet/Amul Railway Parlor/Amul Kiosk, the total investment that needs to be made is approximately ₹2 lakhs. The break-up of the investment is as follows: ₹25,000 will be a non-refundable brand security, ₹1 lakh will be spent on renovations and ₹75,000 will be spent on equipment. The average returns on MRP for products will be 2.5% on Pouch Milk, 10% on Milk Products, and 20% on Ice Cream.
For the second kind of franchisee; An Amul Ice Cream Scooping Parlor, the total investment that needs to be made is of ₹5 lakh, which includes brand security of ₹50,000, renovations of ₹4 lakh and ₹1.5 lakh for equipment. The average returns on MRP for products will be about 50% on recipe-based ice cream scoops / sundaes / floats / shakes / baked pizzas / sandwiches / cheese slice burger / garlic bread / hot chocolate drink (Amul Pro) and 20% for pre-packed ice creams.
Amul also provides additional retail margins, exclusive consumer offers, store inauguration supports, equipment purchase supports and free brand signage to the franchisee. However, recurring expenses such as employee cost, electricity charges, shop rentals etc. would be borne by the franchisee out of the gross retail margins earned.