Being a franchisee of a well known travel brand provides a rewarding business prospects with least risk and higher success rate and share of the brand equity of an established player. The article discusses the dynamics of the travel franchisees. Read on t
Thriving Indian economy has put the travel and tour market in India on the growth trajectory and travel industry offers immense business scope to cash in. India holds 68th position in the world, as per the Travel and Tourism competitive index. The growing Indian travel and tour industry is likely to spawn US $ 128 billion by 2016.
As per estimates, the industry growing at rate of 8.1 percent per annum will expressly pitch in two per cent in the GDP for 2011-2021 and its total contribution is pegged at 4.5 per cent of GDP. Further, the annual growth rate of the industry is expected to be 8.8 per cent for 2011-21 comprising 4.9 per cent of GDP.
Franchising in travel industry
The above numbers are the testimony that travel business is booming and with thriving Indian economy, rising and discerning middle class has increased its revenues. The current travel scenario with escalation in both the inbound and the out bound travel offers optimum opportunity to cash in the scope of the industry by owning a franchisee of a well known brand of the travel industry and earn profits by operating a lucrative business.
The existing players who are among leaders in the travel market and also offer franchisees are SOTC Tours, Cox & kings, Raj Travel World, Thomas Cook India, Club Mahindra Holidays etc.
Taking up a travel franchisee
A travel franchisee owns and operates the trademark business format of the travel company (the franchisor) by obtaining its license and leverages the brand equity of an established player. It is required to choose the right outlet, appoint the workforce according to franchisor’s guidelines and take care of the operational expenses such as rental, telephone bills, salaries conveyance etc. A travel company appoints franchisees to augment its reach and client base there for the latter is expected to achieve sales target with help of sales team. A franchisee has a range of products to sell as per the product portfolio of the brand. Generally speaking, there are several business segments like adventure, pilgrim and leisure, business and corporate travel and tour. The franchisee can cater to the travel needs of the clients and offer one stop solution by selling various travels and related products like ticketing (rail, bus and air), Visa, travel and holiday, insurance and foreign exchange. To take up a franchisee prior experience in the travel industry is not mandatory as the franchisor helps to start and manage the business. Also, the franchisor may offer a time bound agreement requiring renewal after the expiry of the validity period.
The qualities which the travel companies look out for in their prospective franchisees include passion for travel, reliability and orientation for growth. Other core competencies include well equipped retail outlet (own or rental) at key location, operational facilities like electricity, telephone/fax, courier, PC/laptops, Broadband Internet, local conveyance, photocopier and housekeeping and refreshments etc.
Karan Anand, Head, Relationships and Supplier Management, Cox and Kings Ltd while informing about his company’s franchisee selection criteria, says, “Our plan is to partner with entrepreneurs who have the drive to take advantage of the growing travel market in India. We aim to have at least 200 franchise outlets by the end of this fiscal year. We have different criteria based on type of cities and towns in India. The criteria for Mumbai or Delhi will not be the same as for Indore or Ranchi. It is tailor-made depending on the location and the potential for business.”
The capital in terms of money and space required to start a travel franchisee varies from company to company. It is based on various factors such as company’s own policy, city/town potential, size and location of the outlet. Anand while sharing the investment requirement informs, “The entrepreneur should have a space of 250 to 500 sq.ft in certain locations. While in others, it should be of 500 to 1, 000 sq. ft. The initial capital investment in tier I cities is between Rs 10-15 lakh exclusive of the set up costs. These are some of the main requirements.”
And Shreya Gupta, Regional Manager, Gujarat , Raj Travel World says, “Each company has individual norms, as far as RAJ is concerned, we ask Franchise Agent to pay Rs 52,000/- per annum its Brand Royalty fees+ Rs 5,00,000 deposit. An operational business space of minimum 200-250 sq.ft and premises should be under ownership and on ground floor in prime location with provision of a sign-board which is clearly visible.”
The franchisee may require paying standard non refundable franchise fee to access the marketing support lent by the franchisor.
Training and support
The travel company provides planning support to the franchisee to set up the outlet, marketing and promotional support to form brand awareness and produce customer enquiries. It also extends its training and tactical support for client servicing. And Gupta comments, " In Raj Travel World, before appointing person or franchisees we put certain norms & requirements if they fulfill the same, we appointment them, once the agreement is done proper training is given to them department wise. It is important that the franchisees have brand name with them and our total experienced team to support them.”
Also, franchisor regularly monitors franchisee’s performance to ensure superior ROI and dispenses information about the prevailing trends in the travel market.
The current travel business scenario is lucrative due to rising domestic and international travel. A prospective entrepreneur can pick his/her profit generating franchise opportunity powered by recognised and well known travel brand and needs to handle business as well as clients ably and maintain passion, knowledge and visibility.