Advisory Oct, 27 2009

East India - The Perfect Franchise Destination

East India, a highly populated region with a huge potential is gradually emerging as a favourite destination for the US franchisors. Large numbers of national and international franchisors foraying into India are looking forward to capture this untapped m

By Abha Garyali
Sub Editor
East India - The Perfect Franchise Destination

The foray of international franchisors in the East Indian states have brought a gradual change in expansion strategy of the franchisors in India  and abroad. Till a few years back, companies used to franchise business in only developed regions so as to garner maximum profits. However, now, comprehending that the smaller markets can also contribute to the growth and success of the business, they have started franchising business in the less developed states.

East Indian states have a great potential for the untapped market which presents enticing opportunities to the franchisors as well as aspiring franchisees. The Eastern states of India, owing to their wretched terrain have so far remained economically and socially isolated. The states remained engulfed amidst poverty, illiteracy and unemployment and the development remained static. The major business players flinched from stepping into this landscape. But now, with the transition of development in these states, there has been an enormous rise in the business potential in this hitherto untapped region. And in the present scenario, the East is definitely leading the franchise trends, with Kolkata as the market hub.

According to KV Rajan, Executive Director, Veta, “East India is a growing region with multi-faceted cultural diversities which can be developed by a good franchise system by addressing the local ethnic needs of the people.”  Recently, Global franchise Architects (GFA) joined hands with Gama Hospitality, a Kolkata based company to launch GFA food brands all over the Eastern states.  According to Joseph Cherian, CEO, GFA India, “Kolkata and other Eastern parts of the country are rapidly growing markets in India and have not been tapped to their full potential. The food service market is very nascent here and offers great opportunities for new brands to penetrate and flourish.” He further informed, “We would be opening our first outlet of Coffee World and the Cream & Fudge Factory as a combination store. It is indeed of great advantage to have the franchise route for the Eastern region. The franchise partner would have the local market expertise, consumer understanding and execution capabilities, and we would be able to support them with our experience in the food & service industry, in addition to the operating know-how.”  GFA will be opening 35 stores and will include a mix of single brand outlets and combination stores.

Further, looking at the success of the new brands coming up, many U.S. food franchisors are eagerly seeking partnership opportunities in Eastern India to add to the flourishing food franchise industry in Eastern states. Church’s Chicken, CKE Restaurants Inc, the Melting Pot, and Papa John’s International Inc are some of the US brands keen on franchising in Eastern part of India.

Among the players who are already present in these states through the franchise route are Aptech Limited, Koutons, Ferns ‘n’ Petals, Allen Solly, Veta, Pizza Hut, Raymond Apparels, Kwality Walls, Reliance Fresh, Vishal Retail and many more. Rajan says, “The driving force behind our launch in Eastern India was our distant education students from West Bengal, Jharkhand, Bihar, North Eastern states and Orissa who have been in large numbers. Our survey in these areas indicated the need for establishing Veta centres in their respective states.” Franchisees are benefited as there is less franchise fee in these areas as compared to other cities, but they have to consider the location very carefully. As Cherian says, “The success of any food franchise business depends largely on the access to good locations. Right location for a right price has always been a challenge.” All franchisors and aspiring franchisees gear up to enter this inviting market to reap the benefits of franchising.

Related: Reverse Trend: from Online to Offline Stores

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