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Nov, 01 2011

PROTECT PROFITS, CUT RISKS

Low-cost franchise business opportunity is an apt option for many first-time investors, who don't want to take high risks, but are willing to grow step-by-step, thus most low-cost businesses are easy to manage.

GONE are the days when big business brands were owned by rich and high profile businessmen. The big bet now is low-cost franchising. Any business which is less than INR 10 or 15 lakh can be categorised as low-cost business opportunity, which has opened doors for many small investors who don't have surplus capital.

Due to low investment and a brand name attached, it gives an opportunity to be your own boss for maximum investors in most geographical regions of the country. Even the high investment brands are coming up with small formats to attract maximum investors and to increase their consumer base. For instance, F&B casual dining into kiosk/QSR, retail shop to shop-in-shop (SIS) models and physical formats to web-based models.

As already proven that franchisees will have high rate of success than the privately-owned businesses. However, lets understand the benefits of low cost:

= Franchise means the business model is already successful with good revenue.

= No need to reinvent the wheel, i.e. operations and training systems are in place. Own businesses operations means more time and money for small business owners; where as low cost franchising is more organised from the start of the business.

= Quick returns is possible; with the availability of more opportunities an investor can choose better returns.

A quick look at some of the different industry or sector-specific opportunities in low-cost franchising:

F&B: Due to product-specific demand than the value added services in F&B sector, brands in this business are coming up with small formats such as kiosks, mobile shops, shop-in-shop formats. These formats also help as testing markets for most brands. Some of the brands include Juice Lounge, Mr Orange, Coffee Day Xpress, Café Desire, Brewers, Idly Junction, Monginis, Waffle Express, Sweet World, Muffins Bakery, Brownie Xpress, Baskin & Robbins, Hot Chops etc

Business services: Low-cost franchises in this include Fast Clean, Syneresis Recruitment, Blazeflash, Cartridge Express etc.

Financial services: Consumers are spending money in different formats such as cash, credit/debit cards, electronic transfer, all this leads to demand of financial services for the convenience of consumers to go an extra mile and brands are competing with each other. With low-cost franchise models, once unorganised agents, brokers and real estate dealers are now becoming organised. Some of the brands include Quest Securities Limited, Motilal Oswal Securities Limited, Skyes & Rays Equities, Sushil Finance, II&FS Invest Smart Ltd etc.

Consumer services: Services like, dry cleaning, matrimonial alliances, tour and travels fall under this category. Brands in dry cleaning include White Tiger, Wardrobe etc, in matrimonial services- Shadi Point, Shadi Lagn etc and next big opportunity for the overall economic development through low-investment is travel business, brands include Makemytrip, SOTC, Mystic Mountain Camps, Indo-Medical Tourism etc.

Retail franchise: Products with less space occupancy and low investment, but a hit with brand consciousness customers are capturing the retail franchise opportunity through low investment. For instance US Dollar, Ozone, Firefox, Welspun Retail Limited, Crystal Mirage, Appejay Oxford Bookstore, Intex Technologies etc.

Other businesses in low-cost include home-based- Amway; fashion jewellery- Lencia; home decors- Luxus; florist- Ferns N Petals etc.

Bottom line is that though service-oriented businesses dominate the low-cost businesses, but with new franchise business models even the product businesses are giving excellent opportunities for investors with their brand support and affordable models.

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