Specialist advice

Eastern promise

India being an English speaking nation, with a high consumer base, supportive infrastructural growth, booming economy and a rising middle class makes it a lucrative franchise destination

There are some 1150 business format franchisors, both from domestic and international markets in the country today. Out of total numbers, around 85 per cent of franchisors are for country-made products. Following the acceptance of franchising business in the country in the last decade, growth in total systems started booming.

There is no regulatory framework for franchising in India. The lack of formal franchise laws sometimes acts as a mind block for a business investor or prospective franchisee looking to invest in a new franchise system.

Secondly, the real estate prices have reached an unrealistic lease rentals, although corrections are soon coming in many markets. The escalation of real estate price has become an impediment to the rapid growth of franchising and franchisors are concerned about this particular hitch.

The economic reforms that happened in the early nineties have unleashed a new entrepreneurial spirit creating a vibrant economy supported by rising per capita income. The booming economy, infrastructural developments and faster communications have created a suitable environment for business to prosper. The growth spurt in disposable income has generated demand of consumer durables, mobile phones, better utilities and everything that is needed for a better standard of living. The middle-class, which is the force behind the rise of Indian consumerism, is expected to grow from 90 million today to 351 million individuals by 2010, and consequently the retail market would grow from $360 billion today to $637 billion by 2015.

Growth of franchising
It was in 1999 that Indian Franchising got a head start when an official IT boom was declared. IT education gave a great impetus to franchise sector and perhaps did what fast food did to US franchising. But an increased interest in following this model across various business sectors has emerged more in the past five years.

With the burgeoning retail sectors in India, franchising is now becoming more and more popular with entrepreneurs who want to start their own business because of its ‘almost' risk-free business nature. Though the Indian franchise system is at its early stage in the country, almost all sectors continue to expand and experience impressive growth. Franchising now occurs in a range of industry sectors and there is evidence of franchisors adopting innovative approaches to stimulate exponential growth.

Between 2004 and 2008, the franchised business systems grew in the country by almost 110 per cent, and this proved a positive sign for both small business development in India and the catalytic role played by franchising to spur the growth of the system. The increase in franchise systems in the past couple of years indicates that entrepreneurs and even corporates are aggressively using franchising as a means of increasing their market penetration. There are close to 110,000 franchisees in India in 2009.

For more info
FranFind, a specialists in international franchising and trade, based in the UK and Germany, has set up an exclusive link with Franchise India, a franchise provider and broker in India. The UK and international franchisors can take advantage of getting established in the Indian market place.