WHAT MAKES A SUCCESSFUL FRANCHISEE?
- Dhawal Shah and Dheeraj Gupta

The success of operations of the franchisor lies more in selection of a suitable franchisee apart from a tried tested and proven system, feasible business plan, sufficient profit centres, and motivated employees. We shall discuss the traits that make a franchisee successful.

The characteristics that make an individual, a successful franchisee are that they are prepared to follow the franchisor's tried and tested system, are self motivated, prepared to work full time in the business, capable of managing people and ofcourse a good leader.

Successful franchisees are able to handle high stress levels. Initially, in a franchise venture the factor that determines the success and failure of the venture is the amount of dedication, determination and commitment of the franchisee. If the franchisee just believes in the franchisor and keeps investing his time and passion in the business, he is more likely to be successful.

Belief in the system: Entrepreneurs have an almost irrepressible need to reinvent the wheel based on their incredible optimism and confidence in their ability to figure out how things should be best done to maximize results. Successful franchisees, on the other hand are looking for operating proven systems. They don't want to have to start from the grassroots and try to discover the best way to do a particular thing. They want a proven system that tells them the best way to do anything associated with their line of business. They are willing to learn from others to avoid making mistakes, so they can be more successful more quickly. Being patient is important. Some stores take a little while before they turn profitable. Buying a franchisee is not a license to make money minus the hard work.

Contribution to the network: Successful franchisees that have completely gelled in the system, start contributing in terms of ideas and innovation to get ahead of the competition. As franchising in India is still at a nascent stage, the no. of national players are few. And they face competition from different regional players in different markets. Often, the franchisee is best able to determine as to how he can get the better of the market and along with the strong back-end support of the franchisor can achieve strong results.
Support and Training: Successful franchisees always ask in doubt, they are always looking at ways in which they can increase efficiency and profitability of the business. Franchisees make a considerable investment in the business in terms of time and money; they often have their life savings at stake and hence cannot risk straying away from a set system standards. They constantly ask advice of the franchisor support staff and other successful franchisees and follow the advice

Effective Interpersonal Skills: The most successful franchisees have extremely effective interpersonal and leadership skills. These skills help them create value, enable loyalty and establish trust in the minds of their employees and consumers.

And of course, a franchisee must choose the right company to partner with. Success as a franchisee not only lies in having the discussed qualities but also in selecting the right co. The prospect should evaluate atleast twenty five opportunities, before finalising a particular franchise opportunity. This would ensure that he has paid attention to several details, which may not necessarily be brought to the attention of the franchisee. They are hundreds of opportunities available. He should seek professional counsel from lawyers, chartered accountants and existing franchisees before investing in a franchise to avoid making expensive mistakes.

Dhawal Shah is the Dy. Executive Officer of Franchising Association of India. He can be contacted at fai@vsnl.net and Dheeraj Gupta is the Director at Jumbo King Restaurants Pvt. Ltd. he can be contacted at dheeraj@jumboking.biz

Future of Franchising in India

Franchising is an entrepreneurial alliance. Much like a commercial business partnership wherein the franchisor provides the brand name, manufacturing / service delivery process and access to the system and the franchisee provides the capital and forms the front end of the delivery system. Franchising is based on sound principles of excellent and consistent quality that is associated with a brand name.

Currently, In India not many innovative franchise concepts are available. In this subcontinent people prefer to save some cash rather than go for quality service. This is because people fear to take the risk of deviating from the conventional idea of the concept of business and adopt franchising as a method of business.

Franchising, today contributes roughly about 1% of the total retailing activity in India. This is no doubt a very grim picture for the franchising community. When carefully observed behind this gloomy image India has a very big opportunity. With the internationalization of franchising and emergence of new technology, it is a dynamic method of doing business. It is in keeping with the liberal philosophy according to which without freedom, the human spirit languishes and the economy stagnates. With the issue of global governance, there seems to be a growing trend of drinking water being supplied as a commodity with a profit motive. Though the issue of global governance and water is debatable as the same can be conceived as commodification of water, the possibility cannot be denied that the future may involve corporatization of water and provide opportunities of franchising! As Asian and world economies, grow with the ever increasing

Populations and the move toward free market economies, new franchise concepts will come on the scene and the solid, well-managed existing Franchise companies will continue to grow. The well-known practice of Latin America is of getting a government franchise for a particular business.

Economic development is the precursor to social development. The vital component of a progressive economy is the number of entrepreneurs. Franchising clearly offers aspiring,
New business owners the best possible chance of succeeding with the least risk. The major advantage is that the system, the means for distributing goods and or services, has been developed, tested, and associated with the trademark. Within two to three decades or less, franchising in India and most parts of the world shall comprise over 50% of the retail economy, and will employ millions of people and will enable hundreds of thousands to realize their dream of successful business ownership. Programs exist that are designed for low-income individuals aspiring to be entrepreneurs to provide franchise opportunities.

In around mid 2006, India’s GDP (on a Purchasing Power Parity basis) is going to cross the magical figure of USD 3300. After crossing this figure what can be expected is a sudden growth in demand of consumer durables, mobile phones, better utilities and everything that is needed for a better standard of living.

The hotel industry is at the forefront. Brands that dominate the Indian hospitality marketplace. Chain affiliation is the key word. A chain can be effective if its components adhere to brand standards. Customer satisfaction at one member hotel is directly proportional to customer preference for the brand. Networking and teamwork are the positive characteristics associated with success in this field.

Therefore, an environment conducive to franchising seems to be developing. There is a move toward better protection of franchisee rights and over time, this should push more franchisors towards structuring their Relationships with their franchisees in a totally win-win manner. It is a common perception that the current regulatory framework affords little opportunity to small business franchisees to obtain redressal in the event of conflict with the franchisor. The power equation is generally in the favour of the franchisor. The attorney of the franchisor who drafts the agreement could err by overemphasizing the rights of the franchisor and magnifying the obligations of the franchisee. Progressive attorneys now seem to have realized that there should be no room for ambiguity in the agreements. Vague agreements written in bad language underplaying rights of the franchisee can be rejected. This encourages a review of outdated agreements. The best franchisee support structures are provided by franchisors to protect them. The mutual goal is success for both parties. The franchisor contributes his brand, products, mode of operation, system, and marketing. The franchisor also sets the rules, guidelines, and product quality to be followed by all of its franchisees. The expertise of the franchisor and the hard work of the franchisee translate into a strong partnership.

The growth of franchising is inevitable, because of the inescapable logic of the underlying concept. Business owners realize the importance of finding ways of reaching out and creating a distinctive brand image with respect to customers. This synergy creates competitive strength. Franchising to reiterate is a WIN-WIN-WIN. The Franchisor wins by having a presence, whereas the franchisee wins by owning a profitable business and the society wins at large by having superior products and services.

Franchising in this century will be highly influenced by Technology and Internet. Technology improvements, notably in telecommunications, computers and the Internet, are having a major influence on franchised businesses. Technological developments including the Internet are having a significant impact on franchising. The Internet is still moderately new, yet it is rapidly shifting the business environment, changing the way we process information, network and carry out business activities. Several franchised businesses are in the pursuit to be on-line, and to consider an appropriate Internet Marketing and Advertising Strategy

They are looking to make the most of the opportunities this new technology provides (reduced costs, rapid expansion, increased sales), whilst simultaneously attempting to protect themselves from a new class of competitors (e.g., new, often global competitors) accompanying it.
The Internet is threatening the survival of retailers. Brick and mortar travel agents are almost extinct. Consumer centric E-commerce sites are mushrooming the virtual market. Many franchisors have already taken the initiative towards building their brand on-line by establishing and updating a web site. Most provide information to the market for end users of products/services, as well as the market for franchisees and investors. In addition, some franchisees are establishing their own sites

In this era of co-operative competition, Franchisors today are collaborating with competitors and complementary product/service providers to explore co-marketing and other strategic synergetic opportunities. The development of the Internet is also responsible for a new range of challenges to the franchise relationship. While the Internet provides a wonderful opportunity to build sales globally, there are a number of issues between franchisors and franchisees that need be resolved.

One key question is who can develop what? It appears most franchisors want to control Internet developments centrally, and do not want franchisees starting their own web sites. There are exceptions, however with others believing multiple sites help build brand awareness. However franchising is synonymous with uniformity and ensuring uniform websites would call for a different set of rules.

Another question involves who bears the expense for setting up the website? In addition, critical to this is yet another - how are profits distributed? These are particularly pertinent issues given the company's web site may compete for customers in the franchisees territory. Some franchisors want to keep profits for themselves, claiming that while the web site may take some sales, the increased awareness it provides to local franchisees far outweighs this. Franchisees argue however, that such web sites cannibalize sales and diminish the value of the franchise.
Technology and Internet has led to a whole new set of franchised businesses. An Internet company, World Sites assists small and medium businesses establish affordable websites and a wide range of other services. It would be difficult to imagine such unique concepts without the role of technology. Overseas, the number of Internet related businesses has been growing consistently, the same trend can be expected in India, in the coming years.

Franchising in Niche Markets
Niche markets are developing around a new set of consumers. These consumers are small in number and look at specific services. Eg. Senior Care services are popular globally, however they have not yet penetrated in India. These consumers are over 55 years of age, and affluent and they are now looking at enriching their lives by being involved in their hobbies, they would not want to be involved in trivial day-to-day activities.

As a consequence, more franchised businesses are developing marketing campaigns specifically for them. Some have gone further and added new products and services. In yet a further illustration of the importance of this segment, whole new franchise concepts are emerging. Further growth in these areas seems inevitable. Such franchise business flourishes here by catering to a few, but very profitable consumers.

Competition, Franchisors face competition in every segment, and it is going to intensify. Also indicative of the potential for increased competition are the plans of strong overseas franchise systems. Most international franchise companies are bullish on the potential of franchising in India and are willing to invest for a long-term basis. Many seek additional growth and believe their home markets to be nearing saturation. Further, many in fact need growth, in order to satisfy analysts following their stock.

Mergers and Acquisitions
M & A activity in mature markets like US and Canada is rampant. In India, M & A would happen when the markets develop and when growth seems difficult.

Large well-known systems have often purchased both individual and groups of offices, in areas they aren't represented to build market coverage more quickly, then franchised them later.

To conclude, the future trends involving franchised businesses are varied. The local franchising industry can expect a colorful future. On the one hand, franchisors and franchisees have some exciting possibilities to pursue, while on the other, there is a range of new threats to contend with. In my view, the future brings increased complexity to the role of franchise system management. This complexity will also lead to growth and further penetration of this amazing WIN-WIN PARTNERSHIP. Franchise strategists will have more options and to consider and at least some of these will require specialists skills to evaluate, progress and prosper in this rapidly changing evolving market.

Dhawal Shah, Dy. Executive Officer of Franchising Association of India. Dhawal Shah is described as a franchise enthusiast. He has always been intrigued by the power of franchising. Based in Mumbai, he constantly reads and writes on franchising and its enormous potential in India. He can be contacted at dhawal@mail.com

The Benefits of a franchised business vis-a-vis a Standalone

Starting up a new venture can be a risky affair. You can painstakingly explore and research your market, time the set up to perfection, open your business where demand is high, outdo the competition, offer the best range of products and services available, advertise in the right places and still your business can fail. In fact global Small Business Statistics indicate that one half of new businesses close within the first 3 years of trading. When describing exactly what a franchise is, the important thought is “the right to do business in a prescribed manner.”

Recently, franchising has been enjoying more acceptability vis-à-vis an independent business.
There are inherent benefits in the franchising system, which make them more competitive in the market place. Apart, from the inbuilt benefits in franchising You can be your own boss, you're operating under a trademark that has instant brand recognition, and the failure rate for franchises is lower than it is for mom and pop businesses."

As we further analyze these two different ways of being in business we are confronted with a dilemma. Both have its positives as well as their downsides.

The Success Factor / Risk
Risk is a critical factor affecting any business plan. It has to be evaluated. This age is characterised by massive competition. It is no surprise, therefore, that entrepreneurs who want to run their own businesses but also keep their exposure to risk to a minimum often choose to buy into a business which has already proved to be commercially viable.

Franchised businesses are more likely to succeed that many other startups because they have a proven track record and have established and effective processes in place.

Training and Support
By buying a franchise in such a firm, the new business owner can get a head start in the market, benefiting from the experience, support, market presence, buying power, research and innovation of the host business (franchisor). He does not have to reinvent the wheel and discover the various problems he will encounter while running his business. He does not have to spend precious time and time in trial-and-error way of learning.

Access to an Established System / Successful Business Formula
The franchisor will have put processes in place that act as a map showing the franchisee the route to business success. This business formula will have been tried and tested and should be clearly defined.

The real difference between franchises and independents businesses is not what they do but how they do it.

Aspiring entrepreneurs choosing to become franchisees certainly expect to improve their chances of survival during the turbulent early years of business startup and operation.

Only 10% of new businesses reach the 10th year of business operations, whereas 90% of the franchise operations are successful. This success rate can be attributed to the Established and Proven System.

Economies of scale
Being a franchisee also enables you to operate in a larger business arena than you would be able to if you were a standalone firm. This wider commercial environment means that you can benefit from economies of scale and better business deals and it may enable you to recruit higher-skilled staff and offer better employment benefits.

Franchisees contribute towards a common advertising fund, which enables them to spend on important medias. This expenditure would not be possible had it been for a standalone.

Alignment with a franchisor parent company offers the franchisee managerial assistance, access to financial capital, and access to markets

THE DIFFERENCE
In the beginning, a prospective independent business owner chooses a name, then an identification scheme for the company vehicle, letterhead and business cards. A yellow page ad that complements a marketing plan is developed, and a sales procedure to communicate a positive message to the buying public is created. In addition, a decision must be made as to the cleaning procedure the company will deliver to its customers before the machinery and cleaning solutions are purchased to support that decision.

On the other hand, a prospective franchise owner investigates the various franchises available. When the choice is made and the franchise is purchased, a complete business system is delivered. The patented equipment and proprietary cleaning solutions are only a small part of the package. Business cards, letterhead, truck signage, advertising pieces, technical/management/sales manuals, customer invoices, and business software may also be part of the initial delivery. Lack of Independence / Freedom

A Franchised Business is may not be suitable for maverick entrepreneurs. Franchised operations call for uniformity, they do not encourage system-wide creativity and innovation, as it may lead to differing products and services. Freedom is severely curtailed.

The contractual obligation binds the franchisee to follow the stipulated guidelines as documented in the Operations Manual. If you value your independence, buying a franchise is probably not for you.Agreements vary from business to business but many franchisors will only allow you to sell the products that they approve and normally supply. You may have no flexibility to modify your product range or service to suit your market.
Suffice it to say that an independent business offers freedom of choice, but the franchise offers the security of working with a known product or service and the guidance of the franchisor.

Greater Investment / Less Profitable
Franchise operations are no doubt, larger scale, better capitalized young firms, however in certain industries especially consultancy services, the independent business startups are found to be more profitable and their survival prospects are better than those of franchises. As a franchisee is bound to pay royalties and make regular contributions to the Advertising Fund.

Buying a franchise can be expensive. You will probably be required to pay an upfront fee to buy into the franchise as well as pay royalties on sales or management fees. You will probably be required to buy all your supplies and raw materials from the franchisor or his favoured supplier, even if it is not the cheapest supplier available. All these fees are on top of your usual operating costs.

Dhawal Shah, Dy. Executive Officer of Franchising Association of India. Dhawal Shah is described as a franchise enthusiast. He has always been intrigued by the power of franchising. Based in Mumbai, he constantly reads and writes on franchising and its enormous potential in India. He can be contacted at dhawal@mail.com

Before you start Franchising

Developing a franchise module requires a great investment of time and money in brand building, training, advertising, expert guidance etc. So if you have decided to get venture into franchising here are some guidelines.

The Prospective Franchisee: An important aspect of developing a franchised business is the identification of franchisees. The franchisor should realise the necessity of developing a methodology to predetermine some method for choosing perspective franchisees. The franchisor should not just focus on individuals with adequate capital but also on those that possess the moral character to be strong franchisees, as the initial franchisees play a pivotal role in the long term success of the chain.

Prospective franchisees will see the franchise as a much more credible and attractive proposition if it is affiliated with a credible non-profit worthy institution like Confederation of Indian Industries, Franchising Association of India etc. Mr. C. Y. Pal, President, Franchising Association of India adds that as franchising being at a nascent stage and the markets currently unregulated, there are several cos. which may not function in the most transparent manner, and thus, such associations are of great value.

Before designing the functional components of the franchise, the service being franchised must be clearly defined. What is the product / service? How will it be delivered? To whom and by whom? And under what circumstances will it be delivered? All aspects of franchise operations should be field tested and optimised before expanding the network. Franchise managers need to remember that franchising is, by definition, a mechanism for rapidly expanding a proven business model. The entire franchise system is at risk of failing if its business model is flawed. The franchisor should have atleast 2 – 3 successfully running, company owned outlets in different localities. The only way to prove the viability of the model is to test it. Before franchising a service, the service delivery model and all its functional components must be developed and tested to ensure that they can be operated feasibly and that, taken together, they bring about the desired result. Only then should franchise expansion occur. The company owned outlets are live examples for the franchisee to visualise the role they would be playing.

Initial buy-in and endorsement of key franchisees lends credibility to the franchise chain and facilitates its growth. Involving franchisees in the initial design phase of the franchise is key to obtaining their buy-in. Franchisees also provide invaluable inputs. Franchise managers should ensure that they identify and consult with their franchisees from the outset and that they involve them in key design issues. It is also important to obtain the endorsement of a locally recognized and well-respected institution. Franchisees need to be consulted and convinced before decisions are made. Decisions cannot be forced upon them.

Clear guidelines should be given covering all aspects of service delivery. These guidelines help both the franchisee and the franchisor understand precisely what it is that they are marketing to their customers, i.e. what consumers can expect from franchisees. Only after defining the product should components of the franchise, such as training and evaluation, be developed.

A fully functional and reliable Management Information System must be in place before implementing the franchise so that data can be recorded accurately from the beginning of the project and proper monitoring and evaluation can occur. The MIS should be designed to adapt to changing data requirements over time. Reasonably reliable data are essential to evaluate a program and its effects. While the need for a sound data system seems obvious, experience has shown that it can be very difficult to achieve. The system must be based on a thorough needs assessment and must respond to the development and use of well-designed paper records and data models at appropriate decision points in the program’s life.

Additionally, program staff must understand and have confidence in the MIS. If they do not, they will create their own independent systems for record keeping. Reliability problems with MIS may result in training, sales and finance staff maintaining different, overlapping data systems (in addition to the MIS). Not only is this inefficient, but it also results in conflicting information that is difficult for program managers to interpret and manage. The importance of reliable and coherent MIS data cannot be overstated: information is the basis of the feedback loop that allows the franchisor to monitor franchisee performance and thus maintain appropriate control of the franchise.

Data also provide the basis for evaluation, which is critical to assessing and improving the services franchisees provide. Finally, the MIS must perform a variety of different functions efficiently, such as tracking sales and quality of service, and still yield systematically consistent results. Gradually, new parameters to the MIS can be added to improve measures of quality, keep track of changes in providers.

The franchise agreement is a legal document that clearly stipulates the roles and responsibilities of franchisor and franchisee and that outlines the mechanisms used to enforce contractual compliance is necessary. A strong contractual agreement should be balanced with the need to make the alliance more appealing. It should also stipulate the duration (generally 10 to 20 years) of the franchise agreement. Because of the complexity of these documents, it is recommended that the start-up franchisor find a lawyer who has had experience in the franchising field.

A strong franchise support team large enough to cover franchisees adequately and with appropriate frequency is necessary to offer on-going training, follow up and support and also control the quality of the service provided.

This can prove to be one of the most beneficial features of the network.
Having company executives follow-up with franchisees is clearly an important contributor to the franchise module’s success. But the training course is only the beginning of a very long process . providers need to feel comfortable with their work and stay motivated over the long run. This is exactly what this system accomplishes. During site visits, the monitoring team give franchisees the opportunity to ask questions and discuss concerns. As this team has personally recruited and trained the franchisees, the comfort level with these franchisees is high.

This team helps franchisees maintain their motivation and boost their morale when their business volume is not high. Finally, a strong monitoring and support team is required to ensure that franchisees adhere to the specified norms and maintain appropriate records.

A quality training program is crucial for the success of the chain. To the extent possible, the training program should be developed in-house so that the franchisor has direct control over the quality and scheduling of training. In-house training development would no doubt be an added expense, but it pays off in the long run. It is well worth as compared to the benefits of having greater control over the quality and scheduling of training.

The process of creating training programs involves identifying training needs; developing training curricula to address identified needs; writing a trainer preparation course; recruiting and training master trainers who would be responsible for developing new trainers. The thoroughness and effectiveness of the training program is an evolving one.

The franchisor also needs to prepare a formal and comprehensive evaluation of these training programs. The program should be evaluated by the trainer (whether it is effective with the audience) and also by the franchisee (if some aspects are overemphasized / not taken care of)

Financial feasibility should be thoroughly assessed. In addition, before franchising, it is important to determine, through the development of pro forma financial statements, the feasibility of the entire operation. The proper franchisor cash flow statement should illustrate to the franchisor and possible investors the actual start up costs and returns that the franchisor will incur. Most franchisors will incur a loss during the first and second years. Many franchisors hope to overcome this loss during the second or third year or operations. The proper pro forma cash flow and balance sheet should give a proper picture and illustrate the financial hopes of the organisation.

A franchisee is convinced about a particular franchise opportunity, if it is lucrative (in consideration with his investment). One of the most important aspects of developing a franchising program is taking the proper steps to develop a Business Plan. The franchisor should ensure that the franchisee fee charged is just right. If the free he is charging is low (his brand will be perceived to be a weak one) and if high then it may shy away prospects. The royalty being charged should be nominal, so that the franchisees view it as a viable and lucrative proposition.

McDonalds is synonymous with successful franchising, for the fundamental reason that it allowed its franchisees to prosper first and then due to strong evangelism, more franchisees were convinced to join McDonalds and simultaneously, McD benefited from the economies of scale.

To the extent possible, community-based activities should be incorporated into strategies to create demand. These activities should involve the franchisees. For maximum leverage these initiatives should be related to the product / service provided. It should benefit your target audience. More in-depth information (pertinent to its service) should be disseminated, so as to create future demand for services. The franchisor should try to reach more potential clients through direct public contact.

Care should be taken to provide ongoing motivation to franchisees. While involvement in the franchisee’s operations would benefit franchisors economically (through increased clientele) other incentives must be built in to the partnership to keep franchisees motivated (especially in times when business is low) when they do not see immediate or clear economic rewards.

The franchisor needs to be able to properly identify the target market, the product being offered, and the advertising program which will be used in the franchising units. Additionally, many franchisors strive to develop a proper franchisee profile which delineates the characteristics of the franchisees whom they seek as partners in the franchising business. A manager profile is often also developed which franchisees may then use to screen or hire prospective managers for the organisation. It should also be noted that different form letters, paragraphs, and packages should be developed by the marketing people before the franchise is actually up and operating.

CONCLUSION
The franchising program is an evolving one, and a successful franchising organisation should be flexible and continuously fine-tune and refine its module and address the various challenges arising with respect to legal, financial, sales, administrative, and marketing areas. Franchising is a vibrant and exciting opportunity for businesspeople that desire to expand their operations through this method of doing through this method of doing business. Franchising is the wave of the future.

Dhawal Shah, Dy. Executive Officer of Franchising Association of India. Dhawal Shah is described as a franchise enthusiast. He has always been intrigued by the power of franchising. Based in Mumbai, he constantly reads and writes on franchising and its enormous potential in India. He can be contacted at dhawal@mail.com

The potential of International Franchising in India

The Indian economy grew by 6-7% in the 2005, thanks to continued reforms The middle class has never had it so good, with plenty of options and credit available in abundance at a competitive rate. There has been a change in mindset; a flamboyant generation is gradually replacing the debt-cautious.

Banks have identified India as the fastest growing retail market. Banks and financial institutions have disbursed loans of over Rs. 100,000 crore (USD 20 Billion).
Franchised operations are becoming more popular in geographically vast and culturally diverse nations like India, as franchising helps to overcome the difficulties posed by having a chain of company owned outlets.

The earliest franchises date back to the Middle Ages when the Catholic Church granted them to tax collectors, who retained a percentage of the money they collected and turned the rest over to the Church. Current franchise operations as we know them are not very old. The boom in franchising did not take place until after the World War II and it has not abated this.

The Franchising Industry received a fillip in during the 1990s due to the opening up of the economy. Since, then, sales from franchised business have grown at an average rate of 20 – 30% compared to an economic growth rate of 6-8%

Today, International franchising in India is one of the most exciting areas in the franchise industry. TODAY, GLOBETROTTERS ARE MORE LIKELY TO DO THEIR SHOPPING IN FRANCHISED STORES. GLOBAL FRANCHISE ORGANISATIONS LIKE PIZZA HUT, MARKS AND SPENCER, MCDONALDS, SUBWAY, HP, HOLIDAY INN, MEDICINE SHOPPE, MARRYBROWN, DOMINOS, GOLD’S GYM, KODAK, KENTUCKY FRIED CHICKEN ARE BULLISH ON THE POTENTIAL OF FRANCHISING IN INDIA and have started their franchise operations. It is advisable for international companies wishing to make a presence in India , to divide India into different zones and appoint master franchisees for each of them or they can also opt for a national master franchisee

India is a self-governing and competitive territory for doing business. Franchise companies enjoy economies in scale. India also has a vibrant, vigorous and vivacious media, a pool of high skilled and technologically sophisticated labour, an independent and impartial judiciary and a robust legal infrastructure. Based on the successful companies that have enjoyed financial gain since the silent franchise boom during the 1990s, the future of franchising is positive.

We, at Franchising Association of India (http://www.fai.co.in/) predict that the introduction and penetration of new technology will create new opportunities for franchises. Mergers and Acquisitions will increase as larger franchisers take over smaller ones. These factors combined with the low rate of franchise failure and considerable return on everybody’s investment, have made franchising a major force in the Indian economy at this point.

Dhawal Shah is a franchise enthusiast based in Mumbai, he is presently the Dy. Executive Officer of Franchising Association of India (http://www.fai.co.in/) he regularly studies trends in Business, Franchising and Entrepreneurship. He can be contacted at dhawal@mail.com

Starbucks evaluating the Indian organised coffee retailing market.

Starbucks could be in talks with six potential partners and is considering a joint venture with Indian firms from the retail and lifestyle sectors. The news comes after the announcement at the start of the year that Costa Coffee intended to build a portfolio of 300 sites in India using a local franchise partner.

The organised coffee retailing Market in India is rapidly evolving. Existing players include Barista, Amalgated Bean Company (Café Coffee Day and Coffee Day Xpress), Global Franchise Architects (Coffee World), Qwikys, Impresario Entertainment (Café Mocha). There are several new players who wish to enter this segment which include Costa Coffee, Starbucks, Tata Mr. Bean Coffee Junction and Barnie’s We are seeing an increasing no. of International Brands willing to enter the Indian market. Starbucks has sensed huge potential in the Indian food retailing market. Much of these companies are banking on growth through both a mix of company-owned and franchisee stores.

Specialised café formats are now emerging, the two current largest players, Barista and Café Coffee Day are now experimenting with Bookshop Cafés, similar cafes like garden cafés, fashion cafés, sport cafés even singles cafés can be expected in the future.

Such cafés will become more of a community frequented by intellectuals, pop lovers, pizza lovers and will be more of discussion groups. A coffee company before franchising such a model, would have to demonstrate that such models can be successful. Such cafés do lead to an additional income stream but with additional investment.

However, as several coffee companies are aggresively expanding in new markets, prospective franchisees can expect better business opportunity selling that cup of coffee.

Awaiting your comments.