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Sep, 02 2014

Invest in education business

India is one of the world’s largest and the fastest-growing markets, and franchising has become a successful business model for many firms. No sector has seen more adoption and acceptance than what education sector has seen.

The Indian education industry was approximately Rs 3.4 lakh crore in 2012 and is expected to increase to Rs. 6.0 lakh crore by 2015, due to high demand for quality education.

India has the world's largest youth population wanting quality education, with world class training systems. The importance of education by the Indian population and the proven success of education franchising in India has led to a boom in the amount of firms, wanting to expand their education brands using the franchise route.  This is clear from over 30 per cent of the 1,200+ companies currently franchising, are operating in the education sector.

Some sub-sectors within Education include companies offering professional and vocational courses, IT training, schools and pre-schools, where pre-schools account for around 35 per cent of education franchising, whereas vocational (other career oriented) courses account for over 30 per cent.

In order for a franchise network to be successful there are two points to be noted, namely the quality of the franchisee operating the unit and the amount of support provided to the franchisee.

Quality of franchisee

Franchising generally is considered by those who are known to be risk averse.  Franchisees like to invest in proven concepts with robust systems already in place, with an established brand name, saving them the hassle of having to do so from scratch.  Companies should look at prospective franchisees that are willing to comply with franchisor guidelines and have the necessary qualifications to succeed as a franchisee. Franchisees are typically able to bring in an additional 4-5 per cent of cost efficiencies, however franchisors should ensure that franchisees are not cutting cost and thereby compromising the brand name in any way.

Franchisor support

Majority of franchisees who fail to deliver in the first few months of operations blame it on the parent company.  This makes the pre-launch and first few months post opening crucial for a unit's performance.  Marketing support is a major factor that can determine a unit's profitability in the first year.  Franchisees expect a full blown marketing plan, which should include timing, promotional material and related costing.  To this effect a franchisor should have a dedicated resource for its franchisees and look to build capabilities as and when the franchise network grows. The central franchise support team should ensure that, besides marketing, efficient training and staff recruitment is thorough so that franchisees are able to operate the unit effectively from day one.

Ripe time

The fulfilment of India's growth store relies heavily on a well-educated and skilled workforce. The opportunity is right for business owners who have already developed well-tested and robust systems to penetrate into markets that are demanding high quality education, and team up with capable partners to deliver high quality world class education across the country.

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