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