Making Partnerships in India Successful
On this episode we're talking about getting creative in your partnership deals. Reliance Retail is one of the fastest-growing retailers in the world. Learn how they manage multiple deal structures and form successful partnerships in India directly from their President and CEO, Darshan Mehta. Here are some of the highlights:
"In partnerships, grief happens when business is good, not when business is bad. When business is good, and there's a lot of food on the table. That's when these issues come up." - Darshan Mehta
Different Deal Structures
Darshan is very flexible and uses a wide variety of deal structures. He aims for the big brands in India to cater to different types of players in the market and the different appetites for risks. Here is an overview of the deal structure types that they have:
Companies who choose this structure are the people who recognize India as a significant market, but they feel like they need assistance from a known brand like Reliance. Most importantly, they want to keep control of the business in India.
Master Franchise Model
The brand owner doesn't like to invest but is willing to sell you the products and help establish the business. They have a high-level control over the brand itself, and in Darshan's case, Reliance ultimately runs the business and gets all the risks and rewards.
A very loose governance model where you pay the royalty fees for trademark usage, and you are pretty much on your own. You can run the brand any way you want.
Direct to Retail
Direct to Retail is almost the same as licensing but a more holistic partnership. Unlike the licensing model, where you can get a license on a specific product, DTR is about taking the entire business.
Depending on the negotiations, Reliance is also very open to mixed models. Sometimes, they do a master franchise with a potential JV down the line, written in a very detailed master franchise agreement.
When deciding what deal structure to use, it is crucial to understand what the brand owner wants. It starts with how long they want to be operational in the country and identifying the parts of the business they don't want to be involved.
When it comes to hunting deals, they do a plethora of research and data tracking. They are constantly tracking the fashion and lifestyle industry, as well as their customers' wallets, to find upcoming brands that you have never heard of before.