The Hindu Business Line : `Franchising can spur retail growth'

New Delhi March 10 Franchising is the order of the day. It is a key element of any growing economy. The retail revolution has brought many brands to India and the franchising industry provides it the required resources to expand in a vast country such as this. That was the point emphasised by the speakers at the Indian Franchising Summit here organised by the business opportunity magazine Franchise Plus, in tie-up with the Franchising Association of India.

Though the franchising industry is not new to India, it accounts for only two per cent of the total organised retail market against 50 per cent in the US.

"However, in the last couple of years the franchising industry has been growing at around 35 per cent a year. And at present, there are about 800 such systems operating here across products and services categories," pointed out Mr C.Y. Pal, National President, Franchising Association of India. Emphasising the need for creating awareness about the model, he said, "There is a need to educate people here on the format to have an orderly growth in the industry and to bring in best practices."

Great employer

Franchising, apart from being the best model to grow one's business, can also prove to be a great employer. "At present, there are four lakh people employed in the franchising industry in India. This could be three million by 2010 and would account for 15 per cent of the organised retail market," Mr Pal said.

According to Mr Vikram Bakshi, Managing Director, McDonalds India, franchising is the globally proven format for expansion. It lets the brand owner stay focused on the core development of business.

Citing Bata, Raymond's, NIIT, Archies and several restaurant chains as successful examples, Mr Bakshi said in India today there are over 1,500 franchisees spread across categories selling close to 60,000 products and services.

Discouraging factors

Though franchising is an easy route to expand and succeed, there are certain discouraging factors such as lack of transparency in the business, lack of control and sharing from thin margins, he said.

"To succeed in this business model, there must be clear understanding between partners, a well-established network, transparency in deals and innovative products and services," he said.

Mr Anurag Batra, Managing Director, Exchange4media group, and organiser of the summit, said the growth in the franchising industry is more likely to come from services segments such as healthcare, education, financial services, food and grocery.

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