How to start a Royal Enfield Franchise in Inida?

The motorcycle industry started growing rapidly after Dr Manmohan Singh announced the process of liberalisation in 1991. Indian motorcycles have come a long way since then by bringing in the 21st-century new wave of riders who now needs more from their bikes rather than just two wheels on it. Currently, India is the second largest producer of two-wheelers around the world. One such motorcycle company that the article focuses on in Royal Enfield franchise.

An introduction into the company of Royal Enfield

Royal Enfield is one of the most reputed and oldest motorcycle manufacturing companies in India which is still very much into production. Although the company is 120 years old, you can still see that the company has not lost its charm. Royal Enfield company has always made sure that each and every bike they manufacture is meant to last forever and that is one of the main reasons why people are still ready to wait for months just to get their hands on the bike. The company manufactured the following bikes:

royal enfield franchise
  • Royal Enfield Bullet
  • Royal Enfield Classic
  • Royal Enfield Thunderbird
  • Royal Enfield Continental GT
  • Royal Enfield Himalayan
  • Accessories such as Helmets, Saddlebags, Key chains, Emblems, T-Shirts, Casual Shirts, Ride wear, Leather Jackets, footwear and Denim.

Royal Enfield history

Let us go back a tad bit into the past of Royal Enfield company’s history to give you an insight into what the brand is really all about. Albert Eadie and R.W. Smith started Eadie Manufacturing Company at Redditch in the year 1891 which was later on known as Enfield Manufacturing Company Ltd. That was the era when Royal Enfield began launching motorised Tricycles and Quadricycles. In 1899, the company showcased its very first mechanical vehicle which was powered by a 1.5 HP motor.

In 1955, Redditch combined forces with Madras Motors to form “Enfield India” so as to assemble 800 units of 350cc bullets, a decision Made by the Government Of India. In 1990, Enfield India entered into a strategic alliance with Eicher motors and by 1994 the company redefined its name from Enfield India to Royal Enfield.

Royal Enfield’s USP?

As the name suggests, owning Royal Enfield motorcycle is truly a royal experience making this company’s fan base not only restricting till India, but it has spread the experience of its true craftsmanship across the world. The name “Royal” is not just part of the company name, but it also makes the rider feel “Royal” on a personal level. Currently, Royal Enfield exports its motorcycles to 31 countries like USA, Japan, UAE, UK, France, Germany, Korea, Argentina and many other countries.

There are a few other unique selling features that are highlighted below:

  1. They have effective marketing and advertising capabilities.
  2. The company focuses and emphasises on its research and development department to manufacture motorcycles without compromising on its quality. 
  3. It has established its name in the cruiser market.
  4. The company has an effective marketing distribution channel.
  5. Royal Enfield has created a strong brand identity thereby gaining credibility in the market and making it a desirable vehicle to the people.
  6. Enfield India and Eicher Group merger, have proved the success of Royal Enfield as Eicher group has backed them with their constant support, as they are the world’s leading automotive manufacturers.

Benefits of owning a Royal Enfield Dealership Franchise in India

The article points out a few benefits that you can expect from the Royal Enfield company.

  1. Royal Enfield is a prestigious and well-established brand for bikes in India. Hence their trustworthiness is unquestionable.
  2. The company provides all its franchises or dealerships with any kind of business support that is required.
  3. Royal Enfield allows you to sell spare bike parts in order to boost sales of the showroom even if the bike has not been bought from your showroom.
  4. There is a 24*7 support from the senior zone if there are any business related issues or queries that need to be resolved.
  5. It requires less investment amount when compared to investment in a car franchise or dealership.
  6. It also has long and comfortable seats which makes it more preferable than other bikes. Therefore it also makes it suitable for families because of its comfortability.
  7. No other Indian motorcycle manufacturing company can compete with the standards that are set by Royal Enfield as their designs are classy and innovative every time a new bike is launched.
  8. Royal Enfield is gaining more popularity because of its affordable and attractive price and the strong presence it has in the middle-income group that is present in India.

The Requirement for buying a Royal Enfield company dealership

If you are planning to open up a Royal Enfield franchise in your city these important points mentioned below should be given more focus and importance. There are few requirements that need to be fulfilled prior to applying for a Royal Enfield Dealership.

Area

Royal Enfield requires you to have an area of 4000 Sq Ft to 5000 Sq Ft for your dealership showroom. The land should include a main working area, customer lounge, parking area for bikes and cars and an office and a display area for all the bikes and other merchandise related to it. The more space you have, the more you can showcase multiple bike models which is considered to be a key factor in the motorcycle business.

Skills or Experience

Our staff members should possess the skill to be encouraged and motivated to think independently and put in more work towards their leadership skills. Brainstorm innovative ideas to attract more footfall at the showroom. The employees should also have a flexible approach to work.

Operational regions 

Royal Enfield has over 180 dealers across India and over 100+ authorised service centres. The other countries where Royal Enfield has its dealership showrooms are Argentina, Australia, Brazil, Canada, Columbia, France, Germany, Indonesia, Italy, Mexico, Spain, UK, USA, Vietnam and Thailand. 

Royal Enfield has also announced the formation of its first subsidiary in the Asia Pacific region, in Thailand that plans on opening its first assembly plant outside India in the month of June 2019. The company has an extensive plan to expand its reach to about 15 standalone dealers and 25 authorised service centres by March 2020 which will provide its customer’s further access and more convenience in areas like Bangkok, Greater Bangkok area, Pattaya, Phuket and Chiang Mai.

Training programs

Royal Enfield provides all the necessary required training to all the franchise staff members on a continuous basis on how to sell a bike or motorcycle in India. The franchise training is provided by the company in Chennai and Chandigarh.

The trainers at Royal Enfield monitors employee development by monitoring competency grids and identifying training needs for skill development and upgradation.
The training centre designs and customises training programs to ensure that the programs are well aligned with the company’s goals by utilising contemporary pedagogy, learning tools and methodology.

Minimum staff requirement

  • Around 10 employees are recruited for the showroom to interact with the customers and help customers with the bikes on display.
  • Around 4 employees are recruited for back office work.
  • Around 4 employees are recruited at the delivery station I.e to delivery the bikes once they are serviced.
  • Around 2 security guards are recruited for morning and night shift.

How much does it cost to start a Royal Enfield Franchise in India?

Investment

Another important requirement is the amount of money required to open up the franchise dealership. The main cost may vary from place to place. It is always going to cost you more if you plan on opening the franchise showroom in a commercial area when compared to opening up the showroom in a residential area or somewhere deeper into the market area.

  • The overall investment estimate that is required is 50 lakhs to 1 crore INR.

  • Rs. 1 lakh is the cost of a Royal Enfield Franchise which is over and above the 50 lakhs to 1 crore INR amount that needs to be invested in the showroom.

  • In addition to this amount, there is also a 5% royalty fee that needs to be paid to the company from the gross sales amount every month.

Franchise terms and conditions

The franchise dealership agreement is signed for a minimum period of 5 years wherein the owner of the franchise has to follow all the terms and conditions mentioned in the said agreement. The company can always change the agreement at any period of time. A renewal of the agreement can be done after the 5 year period is over by contacting the main authority at the Royal Enfield head office.

What are the documents required while applying for the Royal Enfield Franchise?

Like any other franchise, you need to submit certain important and mandatory documents that can be verified by the Royal Enfield team. They are:

  1. Bank account details with the latest statement of transaction
  2. PAN card and Aadhar card as an identity proof.
  3. Land papers from the original owner if the showroom is being built on a rented or leased property.
  4. Demand draft from a bank for security deposit and one-time franchise fee.
  5. Address proof such as Ration card, electricity bill, etc for address verification.

Along with these documents an application needs to be filled out by visiting the official Royal Enfield website www.royalenfield.com. Download the form and fill out all the required details such as a brief description of your current business. Once your form has been verified and selected you will get a call from the company approving your Royal Enfield Dealership franchise.

How much profit does a company A bike dealership make in a month?

Hypothetical example:

Total investment – Rs.50,00,000 (incl. one-time franchise amount)

EXPENSES INCURRED ON MONTHLY BASIS

  • Rent expenses for 4500 Sq Ft land – Rs.2,00,000
  • Total amount of salaries given to 20 employees at the showroom – Rs. 5,00,000
  • Miscellaneous expenses – Rs. 75,000

Total expenses incurred – Rs. 7,75,000

Income or Revenue Received on Monthly Basis

Hypothetically if the company has a footfall of 20 people entering the showroom out of which 5 people are interested in buying Company A bike and another 7 people are interested in purchasing their merchandise and another 3 people are looking to buy spare parts for their bikes bought from Company A. So let us further break-up the income received.

If 1 customer purchases a motorcycle for Rs.2,00,000. According to the hypothetical footfall in the showroom, 5 customers purchase bikes worth Rs.10,00,000.

According to the hypothetical footfall for purchasing merchandise such as gloves, riding jackets, helmets, multifunctional headgear, boot cover, etc.. 7 customers bought products from Company A worth Rs.1,00,000.

3 customers who were looking to buy spare parts for their bikes such as compact engine guard, machined alloy wheels and passenger backrest kit amounting to Rs.10,000.

Total income earned in a month – Rs.11,10,000.

Total profit = Rs.11,10,000 – Rs.7,75,000 = Rs.3,35,000.

Total profit earned in a month = Rs.3,35,000.

Conclusion

The journey of Royal Enfield since 1901 as truly been a royal journey for the company as well as for its customers. From manufacturing bicycles to Cayla Riva, an 18 year old bike racer from California, who set a new land speed record in 2018 of 157.053 mph during Speed Week at the Bonneville Salts Flats on her Continental GT 650 twin bike, the company has showcased in many ways the different experiences it offers to every customer while providing its signature Royal Enfield riding pleasure. 

2 thoughts on “How to start a Royal Enfield Franchise in Inida?”

  1. your figures above are misleading and very wrong. Five bikes purchased for 10lakh is turnover NOT income. I believe the profit on each bike to be about 2- 3 k rupees only. The same with apparel purchased, your figures are for turnover NOT income!

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