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Bindu D. Menon

New Delhi, May 1

What is common to cricket, Coca-Cola and Kentucky Fried Chicken? All three have grown through franchising. With the Indian Premier League, franchising has been a success formula in cricket as well, said an expert.

Researched reports indicate that franchised outlets of leading brands sell 20 per cent more compared with company-owned ones, Mr Rod Young, Executive Director, DC Strategy, a global specialist in franchising consulting, told Business Line.

Noting that franchising in India has immense potential, he said the $4-billion industry in India has employed 97 lakh employees. “The nearly two lakh-odd franchisees in India will double by 2010 and this will cut across all sectors,” he said.In the US, the listed companies are also looking at the franchising model, he added.

Mr Young said that a good franchising model is all about providing a good customer experience and global brands are adopting it to tide over issues such as attrition and high rentals. “Franchises understand the lifetime value of a customer. Therefore, every customer is a king.”

However, poor customer experience by the franchisee can spoil the brand, he noted. “Franchising and compliance go hand-in-hand and a good brand should immediately terminate a franchising arrangement if compliance in terms of services is not met with,” he added.

Mr Young said both India and China have seen a growth in the franchising model but it is more successful in India as its legal framework is better. “MNCs looking at India can make the most of the franchising model as it is a capital-raising mechanism, besides retaining equity base and control of the company.”

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