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Food and Beverage 2009-12-04

Forecast of food franchising

By Abha Garyali Sub Editor

With the rapid growth of the Food and Beverage industry in India, franchising in this sector has also increased tremendously. In an interview with FIHL, Mahmood A. Khan, Ph.D, R.D., F.M. P., Professor, Department of Hospitality & Tourism Management, Pamplin College of Business, Virginia Tech shares his views about the food franchising industry in India.

Abha Garyali (AG): Tell me something about your career.

Mahmood A Khan (MAK): I am a professor at Virginia Tech’s Pamplin College of Business. I have been teaching franchising to MBA and Ph.D students for the past twenty years and have had the privilege of teaching at the University of Illinois and Virginia Tech. I am author of six books including a book on restaurant franchising, which is the first book of its kind.

In addition to my academic ventures, I have been consulting several companies in different parts of the world, most recently in Malaysia, Singapore, Middle East, India, Korea etc. I have put my expertise in the concept development for franchising, acquiring international franchises, franchising documentation and all other aspects of franchising, particularly in restaurant and hotel franchising.

AG: What according to you is the future of the franchising industry in India?

MAK: In India, franchising holds great promises for future. If you look at the United States, which is a leader in franchising, the economic development provided the impetus to develop franchises. With the development of highways, all kinds of franchises, particularly hospitality franchises grew tremendously in India.  In addition, the availability of disposable income, up surging middle class segment, growing demands of luxury and comfort and increased use of technology in India are few of the prominent signs of growth.

AG: Can Indian brands reach the level of international brands through franchising?

MAK: Of course, Indian brands can reach and compete with international brands.  The only aspect that needs consideration is that the concept should be thoroughly suitable and appropriate for the target market.  There are several potential Indian brands which can compete with international brands and can be successful.

AG: Please share your views about the Indian food franchise industry.

MAK: Indian food franchise industry is in its infancy at this point.  With the growing population and changing lifestyles, the potential for the success of any food franchise is tremendous.  There are several concepts that are waiting to be developed.  In this regard Indian food franchise industry is a “sleeping giant.”  With the rich heritage and variety of foods and beverages, India has a wealth of recipes which can be converted into a wide variety of franchises serving different market segments.

AG: What are the challenges faced by India in terms of food franchising?

MAK: One of the major challenges faced by the Indian food franchises is the influx of foreign franchises.  The ‘first mover advantage’ will restrict the development of local franchises.  Such random pursuit of foreign franchises is creating a major challenge which if not taken care of can prove fatal.  It is advisable to all the entrepreneurs to think seriously and move cautiously into the arena of franchising.

AG: How are the US and Indian market similar in terms of food industry? What are the dissimilarities?

MAK: United States is a pioneer in franchising and there are over 200 food franchises. The laws and regulations are very well established in the United States so both the franchisors and the franchisees are adequately protected from legal interventions.  The market demand in India is almost similar with the changing trend of food preferences of Indian customers. Another similarity is the use and implementation of advance technology for business purpose. The dissimilarities include the rudimentary knowledge of franchising among many business men, lack of know-how related to concept development, lack or insufficient legal protection and bureaucratic steps involved in business.  However, all of these hurdles can be overcome with time and as better knowledge of franchising is disseminated.

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