Advisory Dec, 03 2009

India the land of prosperity for western brands

With growing economy, disposable income growth and increasing brand consciousness, a number of western brands are heading towards India through franchising. Associating with western brands can bring lot of business perspectives to the aspiring franchisee

By Ramanjit Kaur
Feature Writer
India the land of prosperity for western brands

India with globalisation has emerged as one of the most potential countries in the world. The concept of franchising has become hugely popular in India as it has led to the rise of economic standards of the people and has provided job opportunities to the masses. Thus, with such global change, the western brands are targeting India as a land which has both business prospects and potential customers.  According to Babette Marzheuse-Wood, Senior Consultant, FFW Consultancy LLP, “Most western brands are attracted to the Indian market, as they see India as the engine of economy for future. The upcoming western brands prefer expansion through franchising as it provides access to local expertise (by associating with a local franchisee).  Also, As Babette says, “The local partners contribute local market knowledge and access to local real estate. They also provide local infrastructure which lessens the risk of franchise failures.” These are few basic requirements for expanding in a foreign country or an altogether different state. Apart form this; western brands usually look for aspiring development partners rather than a single unit franchisee.

So, for an aspiring entrepreneur, it can be a wonderful opportunity to be associated with a western brand by taking up its franchise. There are a number of ways through which a western brand can enter India. These are –

  • Direct franchising: It simply means when a franchisor directly selects his/her franchisees from the targeted local market and grants them the right to utilise his/her intellectual property to expand the franchises.
  • Master franchising/ Area developer: It is a popular way of entering a foreign market. The franchising brand enters the market by using a countrywide master franchise or area developer.
  • Joint ventures: This approach allows the franchisor to participate in the equity admiration of the partnering company while providing it with an ongoing revenue stream, which is generally based on gross sales.

Well established western brands

A number of western brands from various sectors have established themselves successfully in India through franchising. For example:

  • Apparel industry: Levi Strauss, Reebok, Adidas, Nike, Pavers England and so on.
  • F&B sector: Subway, Yo! China, Baskin Robbins, Pizza Hut, Dominos, and many more.
  • Luxury market: Gucci, Versace, Benetton, Valentino, Louis Vuitton
  • Hospitality industry: Holiday Inn, Best Western Hotels, Accor Hotels, Hyatt Hotels and so on.

These are all well recognised brands in India and they have plans to make prominent place in India. So, if you have ever dreamt of partnering with a western brand to start your own business, then it is the right time to give wings to your dreams.  Here we enlist a few pros and cons of associating with a western brand.

Advantages of taking franchise of western brands

Partnering with western brands has innumerable advantages for an entrepreneur. These are as follows:

  • Well recognised brand name
  • Tried and tested franchise system.
  • Intensive training and regular update sessions, advertising, and marketing support to the franchisees.
  • Innovative ideas and effective strategic tools for successful business  

Disadvantages of associating with western brands

While on the other hand, there are a number of disadvantages associated with a western brand that includes:

  • The first and foremost difficulty that a franchisee can face is the inflexibility of western brands in terms of executing the franchise operations. They want everything to be done the same way as done in the West.
  • Also, the western brands most often fail to make any alteration in their brand.  This can create problem as the same concept may not work efficiently and effectively in the Indian market as well. So, negotiating to compromise with their brand can be a major hurdle to overcome.

So overall, one can say that taking up a franchise of a western company can be beneficial in terms of making profits and owing success.

Related: How can entrepreneurs have direct Access(ories) to profits?

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