Titan has decided to lower the incentives granted to franchisees for Tanishq jewellery stores. This is to assist them increase and maintain their profit margins as competitors get more aggressive. Incentives for company-owned or COFO stores have been reduced by 50-60 basis points, while commissions for franchise-owned FOFO stores have been slashed by roughly 100 basis points.
Over the next two years, this move is predicted to boost Titan‘s EBIT (Earnings Before Interest and Taxes) margin by around 50 basis points. Tanishq will also benefit from the operating leverage of L2/L3 franchisees as a result of the shift. Titan’s sales climbed by 25% in the March quarter, despite severe economic conditions, with its jewellery business expanding by 23%.