Interview with Reliance Franchisee

For a person not from the travel background, Peter Ong has propelled Eton Tours & Travel into a premier tour and travel agency under the Reliance Travel Franchise System within six years after starting business. But it was not all smooth sailing when he entered the travel industry.

He started seeing signs of progress and business growth only after signing up as a Reliance Travel franchisee which resulted in Eton Tours & Travel being shortlisted as one of the Best Franchisee Finalists for 2007 by the Malaysian Franchise Association and thus, boosting Eton Tours & Travel to strive even harder. Franchise Asia finds out more about his company’s successful performance which can be lessons in excellence for other franchisees.

What was the main reason you opted to become a Reliance Travel franchisee?
The prime reason is Reliance’s brand name. As I have spent much of my working career in the financial sector and not in the travel industry, I wanted a company that carried strength and recognition in its name and also an industry that presents some form of easy entry, especially for newcomers like me as I didn’t want to start a business from scratch. Reliance Travel has been in the forefront of tourism and hospitality business since 1969 and is one of the leading travel management companies in Malaysia. It offered a viable, competitive and successful business model that fitted my requirements quite well with an excellent travel franchise programme. Before I came on board, I met many other Reliance franchisees who were already doing well which gave me further assurance that I am on the right path.

I would like to state here that prior to becoming a Reliance Travel franchisee, I operated Eton Tours & Travel independently for six months but found the journey rather tough without proper systems support and industry connections in place. But all of that changed once I signed up as a Reliance Travel franchisee in 2004.

Are franchisees required to solicit business besides sales obtained through retail business?
Of course we have to go out to the market for business. There are around 14 outlets in Klang Valley and we mainly focus on the Puchong community since my office is located in Bandar Puteri Puchong. We also cover Subang, Bangi, Puchong, Kota Kemuning and other areas nearby. There is no territorial restriction in this business. Some of our customers work in Puchong but reside elsewhere. They come to us due to convenience.

How supportive is the franchisor towards your business, and what kind of support or assistance is provided to you?
Since we started Reliance Travel franchise in 2004, our franchisor has been providing tremendous technical support as well as computer systems support. We are also trained in the fundamentals of becoming better sales persons. A very important support provided to us is the proprietary Reliance Travel reservation system which has helped us leverage on technology for online quick response and speed of delivery. The system, costing millions of ringgit, captures real time data to monitor product details, departure dates, itineraries, flights and price breakdowns at any point in time. This directly improves efficiency and standardises package pricings to prevent some franchisees from offering lower package prices to win customers.

Other supplementary supports include printed materials like tour package posters, brochures and catalogues which are constantly updated. Reliance Travel headquarters also organises forum every six months where franchisees from all over Klang Valley converge to discuss and brainstorm new ideas to improve the business. Any shortcomings are also pointed out so that the management can initiate improvements to further strengthen the business.

How much did you allocate as your business capital?
We allocated RM300,000 as part of our franchise fees. A portion of that was spent for outlet renovation, and also for operating cost. RM300,000 is quite sufficient to play the game as franchisee fee per outlet basis. Apart from relying solely on the franchisee fee, other important aspects that need to be looked into include the location which should be agreed upon by both the franchisor and franchisee.

Did you face any difficulties in obtaining financing from local banks or financial institutions?
Eton Tours & Travel has been operating for the past six years and we are pleased to say that we have not approached any financial institution for any loans. I believe we are doing quite okay judging from the new five-year renewal contract signed by Eton Tours & Travel in May 2010 to continue as a Reliance Travel franchisee.

How long did it take you to recover your Return on Investment (ROI)?
Eton Tours & Travel, took around three years to recover the ROI. It could differ for other franchisees according to performance, productivity and location.

What were the challenges you faced before and after you started the franchise business? And what are your future plans?
Before we took Reliance Travel franchise we didn’t have sufficient tour packages to provide to our customers. For example, when a holiday package to Egypt is requested, we had to go out to the market to source for the package which indirectly raised our cost. However as a Reliance Travel franchisee, we have all types of holiday and tour packages sorted out by our headquarters. Through the operational teams at Reliance Travel franchise, a variety of tour packages are prepared and offered to our customers.

As for our future plans, we are expecting to increase our sales to RM8 million within the next two years from the RM6 million sales that we have successfully been achieving since 2004. As staff turnover is high in the tour and travel industry, we are also upgrading our staff training and staff retention systems to encourage our staff to benefit from being part of our team.

What is the most important advice you would like to give to potential franchisees?
Firstly, select your franchisor very carefully. Many franchisors have come and gone – some offering dubious products and services. But the good ones have always stayed the test of time and prevailed.

In addition, franchisees should not shy away from working hard even when backed by a reputable franchisor. Franchisor can only provide guidance and support but all efforts should still come from the franchisee, like attracting customers through localised marketing by offering them irresistible deals and promotions, providing excellent customer service and so forth. Franchisee must have the passion to drive the business and meet challenges head-on.

If you are to describe Reliance Travel in one word, what would it be?
Confidence. Many of our customers, mainly repeat customers, come back to us because of their confidence and trust in Reliance Travel. In fact, every time some adverse news goes around on how holiday goers have been stranded or cheated by unscrupulous tour operators, the trust level among our customers climbs a few more notches. In other words, our customers have come to associate Reliance Travel for reliability.