Today, the term 'incredible India' is no longer restricted to the exotic locales of the country. The brand 'India' is all booted and spurred to show its credibility in the foreign land with the patronage of the franchise industry. Here is a glimpse of how
THE time seems to be ripe for Indian brands to tap the international market that is shining with the success of the franchise industry. A clutch of brands like Go! Chaatzz.., Amrapali, Raymond, Manyavar, Da Milano and many others, are rapidly expanding their presence and going global via franchising.
Indian brands go global
The adulation Indian food receives from foreigners visiting India has been perceived by Indian brands as an opportunity to foray into international markets. It has allowed them to aspire for business success beyond the boundaries of India. That's why Go! Chaatzz.., a brand of Yes India Hospitality Services Pvt Ltd (YIHSPL), an ambitious foray by the promoters of Raddison Hotels and TGI Fridays’s in India, is ready to set up its first outlet in Fremont, California (USA). The brand's move is strategic, as after gaining a strong foothold in India, Go! Chaatzz.. is seeking its foremost global expansion in California that has a large Indian population. Excited over his first global venture, Sameer Akhil Kachru, CEO, YIHSPL, says: “What you get in India is what you will get in the US. Identical flavours and identical presentation; nothing changes.” The company is opening a 4,000 sq ft unit in Fremont as a starting point, which will be a marquee store of the brand for the US. Other locations that Go! Chaatzz.. is targeting are Singapore, Malaysia, the UAE, the UK and Australia, along with other West European, ASEAN and GCC secondary markets. Three of its international units (4000 sq ft) are under construction. The company operates through all kinds of formats, namely kiosks, small-sized, mid-sized and large-sized formats.
A liberalised policy regime has also strengthened the will of many Indian companies to compete internationally. One of them is Kaati Zone that holds a significant place among Indian quick-service restaurant (QSR) brands and is also contemplating expansion overseas. Sharing his views on the franchising sector, Kiran Nadkarni, CEO, Kaati Zone, says: “Franchising has helped us in many ways: We have been able to generate momentum in expansion quickly. Since we are planning to set up a large number of stores, franchising is the best strategy for growth. In the next five years, we would like to have a footprint in major cities across the country and a presence in at least one international market.”
Another brand in the food and beverage segment is The Yellow Chilli, an Indian casual dining concept that has also forayed into the Kingdom of Bahrain this year. The brainchild of globally acclaimed celebrity chef Sanjeev Kapoor, The Yellow Chilli boasts of a variety of North Indian specialties.
Another sector that is a major contributor to India's export earnings is the gems and jewellery sector. According to industry sources, the total size of the gems and jewellery sector (both domestic and exports) is about Rs 4, 15,000 crore. Basking in franchise glory is Amrapali Jewels, a jewellery brand from Jaipur, started by business tycoons Rajesh Ajmera and Rajiv Arora. The brand has expanded across the globe via franchising to Sri Lanka, Nigeria, Spain and the UK. About his take on 'desi going global', Tarang Arora, Designer and Head of International Operations, Amrapali, says: “In addition to cultural and language differences, there are issues of customs and import duties, different countries have their own formalities, rules and regulations, which have to be followed and taken care of; it consumes a lot of time and efforts. But, apart from these issues, the benefits of expanding overseas are the increasing brand value, recognition and also increasing customer base.”
Arora feels the US, the Middle East, Hong Kong and Europe are the best locations to expand internationally via franchising. The franchise fee of Amrapali store is 25 per cent of the stock value with minimum area being 250 sq ft and a city-centric location. “To differentiate ourselves from global competitors, one should follow the trend; improvise your product time and again but stick to your forte, our brand is globally recognised from the ethnic point of view. Indian jewellery has very niche designs and skilful craftsmanship and we always want to keep this up,” adds Arora.
Da Milano Leathers Pvt Ltd, an integrated leather brand, has also captivated the imagination of both men and women with its distinctive Italian sensibility. With its unique traditional yet trendy designs Da Milano has already made its mark in India and is ready to step into the international franchise forum. About their international venture, Sahil Malik, Managing Director, Da Milano, says: “We at Da Milano feel that great product quality coupled with unique designs will be accepted in the global market. Being the Indian hub of leather, we also have a price advantage. This is why we will be launching globally in the coming year. The best locations for international expansion have to be the UAE, Singapore, Malaysia and Indonesia.”
To grab this franchise opportunity one needs an area of 600-1000 sq ft and an investment of $ 0.5 million. The store should be located in a premium mall with a good brand mix. There should be like-minded brands. Malik also says that the brand entering the international arena should have the right product to differentiate itself from its competitors, keeping in mind that it should be flexible enough to adapt to consumer tastes so that the brand is accepted.
Franchising: the way ahead
Many home-grown brands, which have enjoyed tremendous brand recognition, huge customer loyalty via franchising in India are also competing for the lion's share of international market. For the next leap of growth, a host of Indian retailers are turning to international markets. Some of them include watchmaker Titan industries, ethnic wear company Fabindia, beauty brand Shahnaz Husain and many more.
Spreading India's ethnicity worldwide is Manyavar, an ethnic menswear brand. The creativity of the designing cell, the price range, production capacity of over one million units annually and timely supplies have enabled Manyavar to carry forward its legacy to Dubai and Bangladesh. About his business expansion plans Ravi Modi, Managing Director, Manyavar, says: “In order to expand the business there is no better format than franchising. I would recommend this format because we need local partners for retailing; hence, franchising is the best option. Our international expansion plans are also massive. After Dubai and Bangladesh we want to cover all the cities in the UAE, namely Sharjah, Abu Dhabi and many more. We are about to open three stores in Bangladesh and next would be in Sri Lanka, Nepal, the US and the UK.” The franchisee investment of Manyavar depends on the city and location of the store, usually amounting to Rs 20 - 50 lakh in an area of 800-1,200 sq. ft with 24 per cent RoI.
Prominent Indian companies like Raymond Ltd have put the onus for international expansion on franchising. Devoid of the shackles of restrictive business environments these brands have established themselves globally as a strategic imperative. The Raymond Shop, a brand akin to quality, has preponderance in Indian market with 625 franchise units and 40 overseas units. A stalwart brand among others, it showcases its presence in the UAE, Saudi Arabia, Sri Lanka, Bangladesh, Qatar, Bahrain, Malaysia and Kuwait. “Given the renown of brand Raymond, especially as the name for quality among customers, and the keen interest of entrepreneurs to join hands with Raymond, the franchise route has become the most attractive choice. This partnership has not only helped Raymond to spread its footprints across India and in overseas markets, but has also helped to serve them with relevant offerings over a period of time”, says Rakesh Pandey, President, Retail and Business Development, Raymond Limited. The franchise fee of a Raymond store is Rs 60-65 lakh and the area required is 1000-1500 sq ft.
By the end of the year, menswear brand Turtle Limited is also mulling expansion in the Middle East and Italy following the franchise route. “Our stores are generally sized from 800-1,000sq ft carpet area for our exclusive outlets. Our flagship stores can go up to 1,800 sq ft. The investment on the part of the franchisee varies from Rs 25-35 lakh depending upon the store size,” said Shitanshu Jhunjhunwalla, Director, Turtle Limited.
Seeking compatible partners
To continue drawing global attention, the Indian franchisor endeavours to choose franchisees overseas with utmost care and then supports them throughout their franchise journey. For instance, Amrapali Jewels aspires for a franchisee that has a vast local network, an appropriate location and knowledge to sell a creative product. With an eye to understand the one of a kind design, the franchisee should have a team of educated staff. The initial guidance from Amrapali's team allows the franchisee to learn the operations of the business quickly and easily. They also provide written material to educate their sales staff in areas such as details about the stones and the textures used in the jewellery. Besides, all marketing and promotional activities promote the franchise's name and city.
While investors are eager to join the Go! Chaatzz.. franchisee league, the company is looking for strategic investors with good holding powers and scaleable might. The company has also appointed business development agents on the West Coast, East Coast and Mid West of the US. The brand's target is to pepper the US with their food products through various vending modules. YIHSPL has set a target of 100 units by 2020 in the US alone. Elaborating on the brand's expansion plans, Kachru says: “We are evaluating markets and investors' profiles. We need strong partners in defined markets. We want sustainable growth in all circumstances.”
As far as the numero uno brand of leather bags, Da Milano, is concerned, they entail that the retail mindset of the franchise partner should match with them. The partners should have a great understanding of how their market works. The brand should be marketed very well keeping in mind the fact that the brand has just forayed into the international market. Also, it is extremely important for the partner to have a strong human resource base. There has to be a right mix of people.
Manyavar also provides head office (HO) and regional trainings. The HO training consists of the store managers and all their franchisees, while the regional training comprises the entire staff.
Plethora of opportunities
The retail sector has been at the pinnacle of India's franchise story abroad. Being the seventh largest retail market in the world, India's retail sector is expected to grow over 13 per cent in 2012. Besides, India stands tall in terms of authenticity, which is the reason Indian brands are welcomed overseas. Brands like Amrapali, Go! Chaatzz.. and a host of others have shown the way and inspired others. Now, the baton lies in the hands of other brands whether they are willing to play the franchise ballgame globally. As Malik puts it: “One of the many benefits of launching a brand internationally is the increase in market share. After capturing the domestic market, international expansion only increases your customer base, which will in turn increase your revenue and profits.”
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