Focused On Franchising Excellence
Ask anyone to name the leading optical shop in Malaysia, and in all probability Focus Point will be top on the list. This is because Focus Point has already etched itself in the consumers’ minds as the foremost eye-care specialist in the country after two decades of offering excellence in optical related services.
Focus Point celebrated its 20th anniversary last year sustained by a vision ‘to be the leading vision care provider in Malaysia.’ As a bonus to its profound contribution in the eyewear-retail industry for the past two decades and as a testament to the successful franchise programme it initiated, Focus Point was awarded the prestigious “Franchise of The Year” for 2009 complemented with “Best Homegrown Franchisor” and “Best Outlet Growth” awards from Malaysian Franchise Association (MFA). Franchise Asia spoke to CEO of Focus Point, Dato’ Liaw Choon Liang on how he keeps the company looking ahead.
Can you tell us briefly on the background of Focus Point?
The first Focus Point outlet, well I can’t say it was an outlet, as it was a small counter, was started by my brother and I back in 1989 in Muar, Johor. It had neither an elaborate arrangement nor a comprehensive product range. At that time we did not envision that our company would one day grow to become the leader in the eyewear-retail industry in the country. Our first shop was doing well, which gave us the confidence to open another two outlets within a span of three years which proved successful as well. After more than ten over years of experience operating around 40 outlets, we ventured into franchising as part of our growth plan.
Did Focus Point plan to franchise the business from the start?
Not really. Our business was growing organically for over ten years or so, and naturally we bounced off ideas on how we can grow our business further. An easier and much faster way would have been to get the investors in. The other option was to go into franchising. We know it would have been expensive for every franchisee to employ a qualified optometrist (as Optical Act Malaysia 1991 requires this) at each outlet. After much thought, we asked ourselves, why not develop our business holistically by nurturing our employees who are already qualified optometrists or opticians themselves into our franchisees. Our greatest resource has always been our employees who have been with us through thick and thin. And it’s our responsibility to create a good future for them. So we modified the franchise programme, and instead of offering to the public, we offered the franchise option to our qualified staff to inspire them to become entrepreneurs themselves. We know it would not be easy for someone who is just starting out now to achieve a similar success like ours. This is our way of repaying our staff for their sacrifices by distributing the wealth and opportunities. We applied for a franchise license in early 2000 and officially launched our franchise programme on 3rd April 2003. We promoted the programme aggressively from 2003 to 2004, with many staff taking up the offer and within just six years, we opened 74 franchise outlets.
Were there challenges in becoming a franchisor when you first started?
There were many. The success of our first three franchised outlets, which were basically converted from company owned outlets were pivotal in convincing our staff to become Focus Point franchisees. The overall response was so overwhelming although we know the investment for a franchise outlet is almost RM300,000 to RM400,000 to operate, inclusive of renovation and merchandise. We understand the amount was beyond our staff’s financial capacity and to ease their financial burden, we approached Malaysian Franchise Association (MFA) who introduced us to Perbadanan Nasional Berhad (PNS) and Permodalan Nasional Berhad (PNB) to develop some form of financial schemes to assist the new franchisees, especially Bumiputera franchisees. We also sought the assistance of other financial institutions to offer better credit terms for non-bumi franchisees. In addition we also offered our own easy payment schemes to our franchisees.
Another major challenge faced was the ‘mindset change’ where we found it extremely difficult convincing our employees to become business owners overnight. When we started our franchise model in 2003, many were reluctant in the beginning as they felt it was a major risk to have to juggle so many new tasks as a business owner, e.g., rental, inventory, employees, etc. Pulling someone from a comfortable position into an unknown territory was not easy. Our first three newly converted franchise outlets which became extremely successful motivated the employees greatly to become Focus Point franchisees. Now we have a long waiting list.
Does this mean any Focus Point staff can become a franchisee?
Not so. To become a Focus Point franchisee, he or she should be a qualified optometrist or optician as required by the law to operate an optical outlet in Malaysia. They need to be hands-on, with high levels of experience and product knowledge, good communication skills, high amount of passion and commitment to create a successful business out of Focus Point. All our outlets are manned by highly qualified optometrists/opticians as required by the Optical Act of Malaysia 1991 as opposed to many optical shops which are often operated without any qualified professionals due to lack of enforcement.
We also analyse our employees’ track record in operating our company owned outlets before we qualify them as franchisees. If they have at least three to five years of experience and have proven themselves at Focus Point, then we are confident that they can manage franchise outlets. This is very important as we believe that only through working with us for some time can they imbibe our company culture, management’s working style and expectations – something which cannot be expected from investors. That is not all, once our franchisees prove themselves with a single-unit franchisee, we encourage and support them to manage multiple-units if they are ready.
How many Focus Point outlets are company owned and how many are franchise outlet? What is the difference in managing them?
Currently 60 outlets are company owned and around 70 are franchisee owned. There is a big difference in terms of managing them. For example, an employee may not go out of the way to complain to the management if for example, when stock arrives late, or not up to their expectation, fearing a repercussion but a franchisee will do it as his or her business is dependent on timely intervention, or the business suffers. In short, we deal with employees for company owned outlets whereas business owners for franchised outlets.
What are some of the ways Focus Point support its franchisees?
Besides financial support and easy payment schemes mentioned earlier, we offer them low cost price on merchandise purchased directly from our manufacturers in Italy, France, Japan, USA and other countries. The fact that these manufacturers are willing to deal directly with us is indicative of their confidence in us, even though they have an appointed local distributor in Malaysia. By dealing directly with the manufacturers and purchasing in bulk, Focus Point is able to cut down the cost of the merchandise by almost 40%. The savings allow our franchisee to enjoy a higher profit margin, and pass down better discounts for customers to enjoy.
We also undertake aggressive advertising and PR campaigns to promote the Focus Point brand, which benefits our franchisees. We also invest heavily on Research & Development (R&D). The best part of it all is that our franchisees can capitalise on all our company resources including R&D, branding, business know-how, expertise, market research, industry data, etc. for the 5% royalty fee that they are charged for. We take the bulk of the risk and don’t mind the small percentage of royalty fee earnings as we see our relationship with our franchisees as a long-term investment.
We also have long standing close business relationship with hypermarkets and big chain stores like Tesco, Carrefour, Jusco, etc, where we are always given the first priority to select shop lot spaces of our choice which our competitors or even single optical shop operators could not enjoy. The strategic location of Focus Point outlets at high-traffic shopping areas offers a steady or even highly profitable business earning opportunities for our franchisees.
What are your tips to become a top franchisor and franchisee?
Nothing takes the place of working out a win-win relationship with your franchisees. If you are cutting corners, eventually your business suffers. A franchisor should be sincere in assisting the franchisees to grow while a franchisee should have the passion and commitment to the growth of his or her franchise. Also at this point I would like to reiterate the need for franchisee to understand the franchise agreement and be obligated to settle the royalty and franchise fees on a timely basis so that the franchise programme can progress without interruption. It is a small price to pay for all the product knowledge, business know-how, market research data, and franchisor support, which a non-franchisee would not be able to obtain single handedly.
As Malaysia’s foremost eye-care specialist, what is your strategy to maintain your leadership?
We acknowledge that there are many industry players out there.The optical related market is highly competition with many players vying for the top spot. At this point, we are very proud of the fact that there is a Focus Point outlet in every state in this country except Perlis and Sarawak. Focus Point will be launching an Initial Public Offering (IPO) in the Kuala Lumpur Stock Exchange by mid this year and we are certain that the money raised through public shares will fortify our position to maintain our leadership further. I would also like to restate that being a leader is not permanent. The moment we slack off or take our eyes from our vision, someone is there to take over our place. To maintain our position we continuously innovate, reinvent ourselves and stay one step ahead to meet consumers’ needs.
What is Focus Point’s Expansion Plan?
Currently we have around 135 Focus Point outlets in the country, and target to reach 200 by end of 2010. After which, we plan to open around 20 to 30 shops per year the next two to three years. We also have plans to expand our markets by venturing into countries like Vietnam, Cambodia, Indonesia, Singapore, and few others. Again we have to be cautious as we would be dealing largely with investors rather than our own franchisees. We are also working out some plans of having our staff or franchisee there although no plan has been finalised yet.
We are also diversifying our product range by updating technologies and further enhancing our professionalism in the industry. To cater to the demand of the high-end market, we launched a new line of eyewear under the new brand, Opulence in 2008 to bring in luxurious and sophisticated international eyewear brands; and Zania Optical which focuses on trendy eyewear. Currently this range of outlets is company owned and we will look into franchising them in near future.
Focus Point won the prestigious 2009 “Franchise of The Year”, “Best Homegrown Franchisor” and “Best Outlet Growth” Awards from the Malaysian Franchise Association last year. What winning these awards means to you as a franchisor and what are the significant factors that made Focus Point stand out from other franchisors to win these awards?
We are extremely proud of the achievements. It is a great honour and encouragement for all our efforts in playing our part in the franchise industry. We believe this will spur us further to develop more franchisees to meet our target of 100 franchisees from the current 74 by end of this year. But again, the awards are just encouragements for us not to lose sight on our vision and goals. We have to constantly innovate, be professional and take extreme care of our franchisees and customers. In becoming a franchise leader, we have been working closely with MFA, PNS and PNB as far back as 2002 by attending franchise seminars, programmes, networking sessions to learn the fundamentals of franchising excellence.
Even though we were pitted against some leading franchise companies, we know we also deserve to win the awards for all our hardwork and commitment we had emphasised from the beginning. There are many factors that made us stand out from others. I believe some of the obvious ones are the way we supported our franchisees in our growth. We take painstaking efforts to create success for our franchisees by selecting strategic locations of their choice or one selected by us. In addition our panel of experts conducts market research, or outsource to market research groups, to obtain the latest information and data that are shared with our franchisees. This helps them to stay ahead of the competition and build a successful Focus Point franchise of their own, which in turn help maintain our enviable position as the leader in the eye-care retail industry.
As an experienced franchisor, what’s your view on the future of franchising in Malaysia?
The potential is tremendous. I strongly feel we are still in the infancy stage of this exciting industry. Take another 10 years
and franchising will play a similar role like that played in the US and Japan economies.