The dynamics and growth of franchising in India over the last decade has been phenomenal. The total annual investment made by franchisees in India is over Rs 7,000 crore and it is quickly growing at a rate of 25-29 per cent.
FRANCHISING has acted as a fertiliser for the Indian business landscape. Though franchising has been around for over a decade, it hogged the limelight and grew into a more mature model in the last five to seven years only. The beginning of this growth was witnessed in year 2002 and the gradual increase in the number of existing franchisors from mere 200 to 1,200 shows that franchising is thriving. Franchising has not only helped in making the retail industry more organised but has also offered an easy access to international brands and changed the consumer buying habits. Earlier, franchising was seen as a means to earn royalty but today, it is a means to penetrate new markets, earn goodwill and then, have a direct presence in the market. No single brand or multibrand retailing is allowed in India, subject to sectoral cap of the FDI. Therefore, franchising remains the most attractive method of launching a foreign brand in India with minimum investment and guaranteed returns.
As per the Franchise India Research, local as well as international franchisors in India have come up with unique franchise concepts, leading to a productive market. As franchising has evolved, it has given birth to new formats too, now entrepreneurs have an option to take franchise of low-cost business models like kiosks and shop-in-shops and also have an option to become entrepreneurs by taking up the franchise of unconventional business concepts like cartridge refilling, rent a car, old age home, dry cleaning and many more.
Indians have a strong core competency, which is that of very small, small and medium size entrepreneurs and business potential. India has an enormous potential in both capacity and number of people who can join a franchise to start one or few units at a time. This aids widespread penetration in tier II and III cities and ensures an exponential growth in the coming years. In fact, the most significant aspect of growth has been witnessed in smaller towns. International brands are making inroads in tier II and III cities too, which are showing great investment power.
We have also been a part of this franchise journey for the last one decade and have been providing you with a platform to grow. In the ensuing pages of this issue focus, we have provided you an analytical perspective on the decade that it was, A look back, a look ahead.