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Dec, 07 2010

Health + Wealth = Wellness

The Indian wellness industry is heading for a healthy growth. International brands making inroads via franchising are leading the market to a much organised mode, making it more investment-worthy.

CALL it the rising health consciousness amongst Indian consumers or the presence of a bevy of international health and wellness brands, the wellness industry in India is heading towards a healthy growth. Pegged at a staggering Rs 110 billion with a growth rate of 30 to 35 per cent, the wellness industry has transformed into the preferred FDI segment for international fitness and wellness brands. The arrival and growth of several foreign brands, especially in the fitness and spa segments through the franchise format, has opened up a plethora of opportunities for entrepreneurs.

Business potential

The fitness market in India is estimated to be worth around Rs 2,500 crore and it is growing at about 40 per cent year-on-year. Franchising is adding up to the growth quotient. Chandra Gopalan, Director, Contours International India, explains, “The fitness industry is waiting to explode. Franchising gives us the flexibility of running our own business while taking the support of an international brand and its tested and proven systems. It minimises one's risk.”

With a distinct shift in the average Indian consumer's choice from beauty salons to spas, the Rs 1500-crore spa industry in India is opening up numerous prospects. As per industry sources, around 30 per cent of the spa business is dominated by international brands. Defining the business prospects for international spas, Guillaume Geslin, General Manager, L'Occitane India, observes, “India is the perfect destination to open spas because Indians are very familiar with products using essential oils and also like to be pampered. Therefore, we intend to open spas in unique locations with partners sharing the same value as us.”

Franchisability

The wellness industry, especially the fitness and spa segments, is rolling out great prospects through franchising. The standardisation of operations through adequate training is one of the essential imperatives in fitness business through the franchise format. Affirms Peter Taunton, CEO, Snap Fitness, “We provide ongoing support through our proprietary online portal, which is accessible to all franchise owners. Once we train the area developer, we allow him to determine the best way to share this information with local franchise owners in India, taking into account any cultural nuances that may need to be tweaked to meet the needs of the international marketplace.” While Gopalan maintains, “Once a franchisee signs with us, we assist him with staff selection and subsequently, training. We do a 10-day training programme in Bengaluru  followed by assessments.

For a spa franchise, having a background in the relevant sector is desirable though international spa franchisors provide the necessary training and support to their franchisees across India. Confirming this, Geslin explains, “We provide to our spa franchisee a complete package that includes spa concept, training, protocol, products and marketing tools and we proceed with constant follow up to make sure that the image of the brand is well respected.” Darpan Sanghvi, MD, Sanghvi Brands, India, who has been awarded the Master Franchise to operate L'occitane Spas in India, shares, “The entire training for the spa staff comes from the L'Occitane team in Hong Kong and Paris. Besides initial set-up training for each spa, team members from Hong Kong come in regularly all year round for refresher courses and audits. In addition to the training and audits from Hong Kong and Paris, we have an internal team set up in India, which also conducts internal training checks and audits every month.”

Whether it's a fitness club or a spa, location is the leading index for opening and expanding across. Shares Taunton, “When it comes to finding a location, marketing to new members and managing member experience, there are certain factors that need to be spearheaded by someone in that market. The key being, a good franchisor internationally isn't telling your partners “this is how you do things” but working together with them to provide proven systems and crafting them to meet their needs.”

Expansion

On the increasing outlets of Snap Fitness pan India, Taunton enumerates, “The expansion of our brand into India has been overwhelmingly well-received, thanks to the tremendous area developer in that region. In just two short years, we've grown to over 20 clubs, including our club in Bangalore, which is the most successful Snap Fitness club worldwide. We have plans to grow to over 200 locations in the next three years, making India one of our most aggressive growth targets.” Significantly, these would be through franchising. States Geslin, “In the next three years, we intend to open spas in Rajasthan as well as in touristic destinations such as Goa and Kerala and also in metros like Delhi and Mumbai.”

Flip side

Lack of trained manpower and escalating real estate prices have been adding to the woes of international brands in India. “For a luxury brand like L'Occitane, it is very important that each spa is a visual spectacle. Finding good real estate that provides a visual spectacle and a price that makes sense is a challenge. The second is the limited number of institutes providing qualified therapists and the high attrition rate amongst therapists. And finally, the high import duties on the product consumed in the treatments put a severe drain on the margins,” avers Sanghvi.

Taunton comments, “The biggest obstacle is the cultural differences in terms of member billing and payments. In the US, 90 per cent of our members pay monthly by an automatic debit. It is easier for franchisees to manage their businesses when they know what their monthly cash flow is each month. In India, over 80 per cent of the members pay in full for six or 12 months. This allows for the franchisee to collect cash up-front and not deal with collections on bad debt. But, they have to be much better managers of their cash.”

Exit option

Exit options are a bit limited in this sector. Gopalan avers, “Our franchisees can sell their business, provided the buyer has been approved by us. We do not offer any assistance in this regard.”

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