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Francast Report 2019-11-16

An Ecosystem Driven by Millennials

With its majority of population in the young age bracket, many of whom being in favor of entrepreneurship, India is witnessing a surge of franchising deals

An Ecosystem Driven by Millennials

India has more than 50% of its population aged below 25 and over 65% below the age of 35. These millennials are majorly driving the overall franchising ecosystem both as entrepreneurs as well as consumers. They represent a huge opportunity pool to become both franchisers and franchisees. In fact, 47% of the entrepreneurs consider franchising as the most viable option. Moreover, 53% of the brands offer franchise at a start-up cost of less than or equal to Rs 5 lakhs, thereby addressing the high entrepreneurial drive in the country at the bottom of the pyramid.

Currently, 35% of Indian franchise buyers are first-timers in business. While earlier franchising was mainly done by people who were already doing some business, currently franchise opportunities act as gateway for fresh entrepreneurs. With a lot of professionals from sales and IT background choosing the franchising route to entrepreneurship over the last 3-4 years, the franchising industry has grown manifold.

While the median age of the franchise buyers is around 35 years, most master franchisees are in the age group of 28-45 years. India has around 10% of franchisees under

age of 30.

Franchising in India is driven by the following demographic profile of people:

  • Professionals from middle-income group with high disposable income.
  • High net-worth individuals.
  • Young generation from family business.

Gaining Ground

By 2030, India will add approximately 140 million middle-income and almost 30 million high-income households, according to research by Bain and Company. At 61 million, comprising 21% of existing households today, the number of upper middle-income households will more than double to 168 million — or 44% of the total households in the country in the next 12 years. The 127 million low-income households in 2018, which form 43% of India’s total households, are expected to reduce to 57 million — just 15% of the total — by 2030

The increase in the upper middle-class income to 44% of total households means that the average ticket price would go up drastically. Hence, this is the group which will drive the franchising industry in India. In addition, the franchising ecosystem will be driven by HNIs, which are expected to reach 5,29,940 with a combined wealth of Rs 188 lakh crore by 2021, as per IIFL Wealth Index 2018. The rise in the number of HNIs has also ascertained a level of sustainability in franchising.

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