E-com to give a new face to franchising

Anjali Prayag Bangalore | Updated on January 11, 2012 Published on January 11, 2012

The Indian franchising industry, estimated at about Rs 90,000 crore and growing at 25-30 per cent, will take on a new avtaar with the growth of the e-commerce industry. “Franchisees will become consumer delivery points for products and services with the growth of e-retailing,” said Mr Gaurav Marya, President, Franchise India, an organisation that helps facilitation between franchisors and franchisees.

Thanks to e-commerce, companies can now maintain a larger virtual inventory, but will exist in the brick and mortar form (as franchisees) to give the product the touch-and-feel like in the case of jewellery brands, he explained.

The franchising industry, driven by the small format retail growth, will also not be impacted by the impending 100 per cent FDI in single brand retail. “Globally, retail has grown through franchising and FDI would only be for big box formats or in the back end,” said Mr Marya, pointing out that smaller retail outlets are always franchised across the world.

Franchising is the most economical form of retailing because of the reach the small format can give brands. Hence, all big brands, would continue to partner with master franchisees to take them to the strategic last mile connect, which is the consumer, he added. A franchised store is about seven per cent more efficient than a company-owned store, has almost zero shrinkage levels, and saves the entrepreneur almost 2 per cent overhead costs in HR, thus impacting sales by eight per cent, according to Mr Marya.

New trends

On new trends, he said Franchise India is currently advising several players in the speciality retail and services sector to use the franchising route to reach out to consumers. Cartridge refilling, housekeeping services and gardening products are new business areas looking for franchising opportunities, he said.

At present, education and training is the most franchised sector, followed by food and beverages and apparel. The industry in India has 1,800 home-grown franchisors and over 200,000 franchisees.

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Published on January 11, 2012
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