What is a Franchise Business in India?
A franchise business is generally defined as a type of business in which the license is given to a third party by the original business owner or franchisers. This authorized business license allows the buyer or franchise to use the original business name, logo, and products, etc. to carry out the business under same brand name and business model. The franchise business in India model is receiving high success and is expanding all over the globe.
If we talk about India, the franchise business in India has grown drastically in a decade. Therefore, following the concept, many National and International brands are successfully operating their business in the Indian market. However, many famous Indian franchise business in India are, KidZee, Khadim’s, Prestige Smart Kitchen, Bachpan- A Play School, Jawed Habib Hair & Beauty, Lakme Salon, CottonKing, and many more in different sectors.
Choosing an Appropriate Entry Strategy
For a Franchise Business in India, there are multiple ways to enter into the market.
1. Direct Franchising
In Direct Franchise strategy, the companies create direct network of franchise. This strategy goes well with pre-existing companies. As a result, the companies already present in India can do work easily. However, it could be quite challenging to enter into the market for the new entrants in the Indian business market.
2. Master Franchising
In Master Franchising the authorized company gave its exclusive right to develop the foreign brand as a local entity. Later, it is accompanied with a huge investment made by the franchiser. Therefore, the master becomes the in charge of developing the brand. This could be carried out by sub-franchise network or opening outlets owned by the master’s franchise.
3. Local Incorporation
In Local Incorporation the foreign brand forms a subsidiary company in the country and awards it franchise right. For example: The fast food chain Subway of America has established its subsidiary in India, which handles their franchising network.
4. Regional Franchising
Regional Franchising is same as Master Franchising. However, in this the company operates in only specific areas of the country. Likewise, India’s rich diversity makes many brands to operate franchise business in specific regions only or in specific states.
Franchise Industry in India: Causes and Growth
Franchise business offers easy and established business models to carry out the business instantly. Therefore, the franchise business is growing in India at a pace of leaps and bounds. However, there are many other reasons behind such a great success of franchise business and become the one of the fastest growing sectors in India.
1. Low Failure Rate
As compared to other start-up ventures, franchise business have a lower chances of failing. Since, the business concept has already been worked out and proving to be a great success. In addition to this, the existing loopholes are very well taken care of. Along with this, it is a proven model of what works and what does not.
2. Demand of Franchise Business
With the increase purchasing power and opting for branded products has arisen the need of widen the reach. Therefore, the concept of franchise business has been adopted positively all over the country.
3. India, a huge business market
Being a huge business market and open with a pool of new opportunities, India is a favorite destination place for foreign countries to go for a franchise outlet setup. As, India is one of the fastest growing economies, therefore, it offers a great opportunity to go for franchise business in the emerging business model.
4. Young and New Entrepreneurs
Indian Business Industry is now following the trend of young entrepreneurs. Therfore, the new entrepreneurs are opting the franchise business due to the safe and pre-defined business format. As, it minimizes the risk of losses and going into the market with a completely new idea and attracting the customers. Hence, the franchise business is grabbing the market with a rapid pace.
Future of Indian Franchise Industry
The franchise industry in India is expected to grow at an annual rate of higher than 30 percent, and boosts the country’s current $330 retail sector even higher in few years. Many of the world’s biggest and well-known franchise companies, such as UPS India, Yum Brands, McDonald’s, Subway, and Baskin Robbins are already having a visible presence in India. A part from that, other US companies, under such diverse industry sectors, are gaining a great foothold too.
In addition to this, India’s retail sector is growing at more than 8 percent a year. The Dollar Store is actively seeking franchises in India. Its retail chain is based in Florida, USA, sells low-priced general merchandise products and services all over the country. Along with this, other Indian brands going firmly in franchise business belong to various different sectors and are making business since a long time.
The famous Indian Brands under franchise business are, US Dollar Store since 13 years, Khadim’s 22 years, Prestige 14 years, Lakme Salon 16 years, Little Millennium 11 years, Cafe Desire 15 years. However, there are a lot of Indian brands going strong and spreading their business all over the country as well as International too. Overall, the Indian brands future under franchise business is expected to expand and go great in near time.