The year 2012 is set to immensely increase the popularity of the concept of franchising. A detailed survey by Francorp brings out the facts and figures about the expected growth of franchising especially in the service sector during 2012. Read on
Franchising business will grow by an estimated 25-30 per cent in 2012 as a sign of high optimism can be seen in both the franchisors and investors alike. To cross check the confidence of the industry stakeholders, brands and investors in franchising, a survey was conducted by Francorp India. The study revealed that 2012 is predicted to be a boom for franchising in Indian service sector with new and exclusive opportunities.
Brototi Sengupta, Vice President, Business Development and Client Relations, Francorp shares: “The way I see 2012 is, big will not beat small anymore, it will be the fast beating the slow. The year 2012 will see a shift towards enhanced capacities and structured approach, accommodating the varied interests of the stakeholders. The focus would be more on efficiency and effectiveness.”
Roaring service sector
This year will see the horizontal expansion of the service sector, with many new and unique services being offered for the first time, on that scale and level. Over 62 per cent brand franchisors in the survey were from the service segment and 48 per cent from the products segment. Amongst the products segment, food and beverage is the single largest segment with over 16 per cent of the franchisors.
Services being a majority segment of franchising in India, it will be a major driver for the industry as a whole. However there are certain categories in this wide service sector which are predicted to be more successful than the other segments. These are:
Education sector: Over 68 per cent of the brands in the survey were related to education sector alone.
Beauty and wellness: Grabbing the second position, beauty and wellness sector saw over 11 per cent of the franchisors.
Business services: This sector followed at the third place with eight per cent.
Health-care: Around over four per cent covered by health-care, this segment is included in the list of top service sectors.
Mohit Ganglani, Business Head of Indian Franchise Association (IFA) shares: “Indian economic growth is expected to rebound to 7.5 per cent in Financial Year 2013 from 7 per cent in Financial Year 2012.The government has taken up initiatives on increasing foreign participation- FDI’s in retails and corporate debt market and these are likely to have a positive impact on Indian economy.”
Brand expansion in 2012
Franchisor of almost every brand had expansion plans with over 21 per cent wanting to expand beyond India into the SAARC and Middle East countries.
North and West India are the favorite zones for investors to invest their money. North India was the top investing preference with more than half of the investors willing to invest there. West India followed the second position with only nine per cent. Amongst the zones, Francorp estimated the major growth to come from metros along-with a blend of tier II and III cities.
The survey also got some insights on the sunrise sectors. Most of these were services like real estate, telecom, gaming, media, entertainment and personalised services such as home cleaning. Along with these few niche sectors like wine and pest control, were top of the list. Francorp estimates a slow growth rate for these with a potential market waiting to be explored.
Foreign brands eye Indian markets
As India opens its market for foreign brands, many of them desire to enter India and are testing water by participating in shows held in India. Foreign brands from various sectors like food and beverages, furniture, apparel are eyeing Indian markets. All of these are positive about the growth of India and wish to become a part and facilitate value enhancement for the Indian consumers.
Boosters for franchise awareness
India’s young population is showing more interest in the concept of franchising. The growth fuelled by rising income and expenditure levels and pushed by the urge to increase wealth has led the youth to explore the opportunity. Almost more than half respondents were from the age group of 21-40.
Francorp survey also estimates that the percentage of the employed people will rise in the coming years. The main drivers for this will be the rising inflation and aspirations. Women investors were still very low with around one per cent of the total number of respondents.
Most of the respondents want to go with the established sectors which have a low risk profile like apparel, food and beverage, education and retail. Not many like to take a pitch into new sectors.
To conclude, the franchising industry in India is set for an above average growth rate in 2012, with the stakeholders confident about the immense potential of the model. Moreover with the recent policy, economic and socio-cultural developments in India there are unbounded opportunities, both for the franchisors as well as the investors.
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February 12, 2012 at 8:02 pm
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