Want to know business prospects for 2012? We are here to make your task easier! Read the top-most cutting-edge franchise trends of 2011, which is sure to give a new start to your new year.
WITH time, franchising has played a significant role in augmenting its horizon across numerous verticals. With the industry heading towards an organised route, trends play an important role- be it from investor's point of view or from the point of expansion. After a dissection of views from established franchise brands as well as experts across the fraternity, we have hand-picked a few emerging franchise trends for you to rake in moolah.
1. No-royalty fee model
Casting a spell on new-age franchisors, this model has been adding fuel to the fire in the franchise business. GenNext franchisors believe that paying a royalty fee is a passé. Supporting this as one of the most accepted and 'here-to-stay' trend, Hello Kids Education Inc's Director Pritam Agrawal says: “Considering the industry trend of the past six years, we have observed that majority of franchisees are either not paying royalty after a few months or years or they don't continue with a brand. The reason being the support that they require is just for updated curriculum, material and marketing.” No royalty fee model, in the present scenario, has turned out to be a boon for franchisees and is expected to grow in a big way in the years ahead. All in all, to strengthen one's position in this competitive market, innovation such as this is touted as the next big leap for the franchise fraternity.
2. No-franchise fee model
With stiff competition, franchisors are abolishing the payment of one-time fee and experts believe that this trend is going to grow bigger. Comments Asheeta Chhabra, Head - Business Development, Chhabra Triple Five Fashions Pvt. Ltd: "Many franchisors are now shying away from charging a franchise fee in order to reduce the initial financial burden on the franchisee."
3. Franchisee seeking PE funding
While most franchisors take to PE funding for growth and development of their brands, franchisees, too, are following the suit. According to Sandeep Aneja, Founder and MD, Kaizen Management Advisors, asserts: “Just like franchisors, franchisees, too, need a lot of PE funding, as this helps in the overall capital reduction from a franchisor. Hence, PE firms are also looking at franchisees' funding part to help them in expansion as well as in cost-cutting.” As per experts, a handful of franchisees, who are looking at growing beyond their territory are considering PE.
4. Transit point franchise
Experts believe that malls and high streets will soon be outdated. With airports transforming as the new-age 'point of retail' in India, franchise brands are making a bee-line to set up shop at this place. Confirms Vikas Punjabi, Managing Director, The Chocolate Room India Pvt Ltd: “By 2012, we are planning to be present at Mumbai, Delhi, Bengaluru, Hyderabad and Ahmedabad airports. Some of these will be through franchising, while others will be company-owned. Commenting further on airports as the future point of growth for franchise brands, he said: “Airports are a good place for branding, as thousands of travellers come to know about the brand.” Brands like Pavers England have also launched their franchise outlet at the domestic airport in Mumbai.
The need for accessible, affordable, quality healthcare in India has never been greater, which gives way to a novel concept of 'retail clinics' for the Indian healthcare market. Also, known as walk-in clinics or Convenient Care Clinics (CCC), a lot of healthcare players will require two key skills- medical manpower and highly-efficient delivery network that puts operational challenge for any player to scale up. This is where lies an opportunity for franchising!
So, a crippled primary healthcare system, coupled with transformation in lifestyle and consumption patterns make way for engineering a structure like retail clinic that will assure healthy benefits for patients and franchisees has started making a mark already!
6. Target youth
With the youth segment providing much impetus, several franchise brands are now cashing in on this boom. Picking up a market trend vis-à-vis customisation for the youth has been imperative for both franchisors as well as franchisees.
Leaving no stone unturned, brands are joining the bandwagon, wooing this mammoth section of consumers.
7. Look for e-discounts
'Go, going and gone' is the buzz that's whizzing across e-consumers as well as the franchise community. So, what is it that is making franchisees go gaga over e-commerce sites? For instance, Shahnaz Husain Signature Salon is on Snapdeal.com. Commenting on this trend, Shafaqh Khan, a franchisee from Chandigarh, says: “It's highly beneficial to get information. To grow a business in today's world, one needs right connections and networking through this site has helped me a lot.”
8. Specialty retail pie
Considered to be crème de le crème of the organised retail sector in India, specialty retail accounts around five per cent of the Indian retail market. This shows humongous growth potential in this sector. Specialty retail category takes the front seat in organised retail sector, as business opportunities in this sector are selling like hot cakes.
Following this trend are consumer durables like books, music and gifts, home furnishings and pharma brands, mobile handsets and health and beauty products. The growth trajectory of these brands has been an onus itself for industry experts!