‘Huge growth potential for franchising business in India’

India offers vast opportunities in franchise management, thanks to surging consumer sentiments within an expanding economy, triggering the entrepreneurial instincts of people, says Chackochen Mathai, founder and CEO, Franchising Rightway, a Chennai-based consulting company.

Given the Indian economy’s growth rate, he hopes franchise management will grow at a whopping 30-35 per cent per year, adding that at present, there is a gap in the execution of the franchising system in India. “The need of the hour is to introduce a franchise law in India in line with other countries, instead of the present Trade Practices Act,” he tells BusinessLIne .

Chacko, as he is popularly known, points out that franchising is a well-suited business model, helping companies to move forward with expansion plans by licensing its rights to third parties. The strategy also allows such firms to use a compact business model and brand for a prescribed period of time.

He has been involved in developing brands such as Aptech, NIIT, CADD Centre, CavinKare salons' Green Trends and Limelite and SSI on a pan-India basis.

Some of Chacko’s consultancy assignments have been for companies such as PhotoExpress, Radiant Wellness Group, Dream Zone, Networkz Systems, Synergy and Blossom Kochhar Beauty Pvt Ltd.

Developed countries such as the US, the UK, Australia, Singapore and China have adopted franchise management for business expansion in a big way. “India, being one of the fastest-growing economies in the world, offers good opportunities in this emerging business model, especially in sectors such as automobile, retail, consumer goods, healthcare, beauty and wellness, food and beverages, QRS, fine dining, sports, sports equipment stores, laundry, etc, all of which require widespread distribution of capital,” he believes.

Today, lack of basic education in franchising, inadequate working capital for starting a venture, dearth of knowledge in running a business in a systematic manner, etc, are preventing many firms from assigning jobs to franchise managements, he said.

“A good franchisee facilitates expansion of companies, while the best franchisor provides meaningful support and guidance to partners in a consistent manner,” said Chacko, who has over 25 years of experience in franchise management.

The franchise management model in India was started in the 1990s with the beginning of the liberalisation era. Initially, it was the IT companies and some educational institutions which adopted this strategy for business expansion to new geographies. Currently, there are more than 3,000 franchise management brands, both in the organised and the un-organised sectors, and its number continues to rise, Chacko says.

“What is lagging in India is a franchisee-friendly approach among franchisors. It is important for the franchisor to find the right franchisee who has the right attitude and financial background. Many franchisors choose wrong franchisees who do not even have the passion for the business,” he said.

Through franchising as a vehicle, Chacko has also chalked out a vision to groom 1,000 entrepreneurs by working with various brands.

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