Franchising: The ‘mantra’ for successful business

Franchising has grown by leaps 

and 

bounds over the last couple of years in India 

and 

is now seen as one of the best ways to expand businesses

Franchising is one of the three business strategies that a company may use to capture market share. Franchising is a business strategy that is put into practice for attracting and retaining customers. It is a marketing system for creating an image in the minds of the current and future customers about how the company's products and services can help them. It is a method for distributing products and services that satisfy customer needs. Gaurav Marya, chairman, Franchise India Group, says that "Franchising can be seen from two perspectives - the features and benefits associated with them. From a company view point, franchising is a great form of capital generation and a good means to grow your brand. Younger companies, especially in the retail segment, can continue to grow their brand if they properly utilise franchising."

An important aspect which determines the feasibility of any franchising business in a country, relates to the class of consumers it caters to. India is a multiethnic country with the second largest population in the world. Throwing light on this aspect, the franchising industry in India is close to 23-24 billion dollars and according to KPMG India estimates, it is expected to grow four times, between 2012 and 2017. There is scope for the franchising industry to contribute almost 4 per cent of India's GDP in 2017, growing from a current estimated contribution of 1.4 per cent of the GDP. Marya shares that practically, all the sectors, are turning towards implementing the franchising model. "Every single industry, whether it is consumer goods and services, healthcare, retail, education, is looking for franchising and successfully implementing the models into their businesses." The services sector, financial services, courier services, health and wellness and food sectors, is expected to contribute to majority of the growth in franchising in the next half a decade. One of the major positives that has further provided an impetus to franchising in India is allowing Foreign Direct Investment (FDI) in single brand and multi-brand retail.

While the franchise industry is poised to grow over the next couple of years, is there a trend that has been observed wherein, players are largely opting to take on franchising, in order to spread their foot prints? Sanjay Shetty, head of operations, Prince Cuisines, Cream Centre, agrees and says, "Yes, franchising is a great opportunity, if one wishes to expand their business. A single business could take years to establish itself in a city, whereas, if one adopts the franchising model, the business can grow by leaps and bounds, across major metros and tier-II cities and sometimes, even overseas."

Echoing a similar thought, Raghvendra Naidu, owner, Exotic Flavours shares, "There are a lot of positives associated with franchising. To begin with, when starting a franchise, your investment

is taken care of as you know that you are going to implement a tried and tested model, the operational background is in place and is something that has been running for a while. Besides, from an organisational point of view, it is a relief that you are getting associated with a brand and additionally, collaborating with an existing brand saves a lot of time in marketing yourself in the open market, which you would have to do, had you been a single player." 

SWOT ANALYSIS 

Strengths - Capital generation, employment generation

Weakness - Inability to develop and implement successful franchise models

Opportunities - The influx of big brands into Indian soil

Threats - Lack of education and the competition from other countries

FRANCHISING HAS A BRIGHT FUTURE IN INDIA

• ·         The average Indian income is steadily rising and individuals have more purchasing power today.

• ·         Increasing levels of consumer spending, with greater recognition of brand value has given a push to franchising in India.

• ·         Large penetration of the online medium in India is making its population more aware of global trends and brands.

• ·         The internet is also making it easier for international companies to gain an understanding of India's; culture, geography and politics and accordingly rework their models to suit the Indian taste and preferences. 

Source : TOI 

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