Pioneer in organised beauty services in India, Lakme Lever is being increasingly deserted by its franchisees. Lakme has around 130 salons, of which around 110 are run by franchisees.
The company had recently increased its royalty fee from 15 per cent to 18 per cent. The company’s insistence on royalty fee from the beginning of the operations has irked franchisees.
“A salon takes one to two years to break-even, depending upon the locality. During this period the franchisor has to support the franchisee, instead Lakme demands royalty fee from the very first month apart from the upfront fee. As Lakme charges 30 to 40 per cent higher than unorganised salons, it needs a longer gestation period… I discontinued the operations after 15 months,” Venkatesh Bagur, who used to run a Lakme salon in Mysore said.