A beautiful, profitable concept

Before franchising, Avon Malaysia only had 15,000 dealers, but after franchising was introduced in 1994, the number grew to 380,000 today, says its regional head

AVON Cosmetics (M) Sdn Bhd (Avon Malaysia), which celebrates its 31st anniversary this year, has proven that the franchise concept contributes to growth and profitability.

Avon Malaysia, which is part of the 121-year old New York-based direct seller of beauty products, is now one of the top six Avon companies worldwide.

Avon Malaysia, Thailand, Vietnam and Indonesia president Mansoor Wan Abdullah said there are 176 Avon franchisees in Malaysia.

Of the total, 65 per cent are owned by Malays, while the remaining 35 per cent belong to Indians and Chinese.

"Before franchising, we only had 15,000 Avon dealers, but after franchising was introduced in 1994, the number of dealers grew to 100,000 people.

"In 1998, it doubled to 200,000 dealers and today, there are 380,000 dealers, of which 95 per cent are women," he told Business Times in an interview in Petaling Jaya recently.

Mansoor said Avon Malaysia has helped create many successful entrepreneurs operating Avon boutiques as franchisees.

He said Avon boutiques, called Avon Puteri, can be found in shopping malls, where rent ranges between RM4,000 and RM8,000 a month.

For boutique operators, they don't have to invest in stocks because Avon Malaysia, as a franchisor, provides stock consignment to its franchisees.

Avon Malaysia also provides credit sales to its franchisees and dealers without collateral.

Mansoor, who became head of Avon Malaysia in 1992, said before Avon Malaysia started franchising the business, the company delivered products to dealers through the post.

"Now, there are Avon boutiques supplying Avon products to Avon dealers.

"Each boutique supplies products to between 2,000 and 3,000 dealers," he said.

According to Mansoor, the franchise business is Avon Malaysia's own initiative.

"We are the only Avon in the world that practises franchising," he said, adding that Avon in other countries are still using the old system of delivering products through the postal service.

He said Avon companies in some countries have visited Avon Malaysia to study the franchise system.

"Some of them have started a branch system," he said.

Mansoor said Avon's franchise business benefits from Malaysia's vibrant economy, stable political environment, good Direct Selling Act, a well-defined direct selling association as well as the government-backed Malaysia Franchise Association.

He said the start-up cost for Avon franchisees is not burdensome as it is only between RM120,000 and RM150,000, depending on size and location.

"The franchise fee is only RM15,000, and there is no renewal fee, while 50 per cent of the fee is refundable," he said.

Currently, there is one Avon Puteri for every 50,000 and 60,000 women in Malaysia.

Mansoor said Avon Malaysia is now looking at new growth areas or new townships to set up Avon boutiques.

He said anybody interested to be an Avon franchisee can write to the company or wait for the company's advertisement.

After an interview, Avon Malaysia will provide three-week training for potential franchisees.

Mansoor said a lot of Avon dealers are single parents or those who want to have extra income.

"Avon's proposition is not to create billionaires, but rather to supplement income.

"Our vision is to make women happy and provide earnings opportunities to them," he said.