Sectoral Capsule-Franchise Business Opportunity in India (2009-2018)
The success of global franchising in the last decade has influenced the Indian economy to adopt afranchising market form in various sectors. An increase in disposable incomes, added to theexpanding population in India, has accelerated the demand and preference for branded products.These are the primary factors that are providing franchisors with business opportunities in India. In2009, the Indian franchising business accrued revenues worth USD 4.60 billion and contributedaround 1.4 percent to the GDP. It is expected to grow at a CAGR of 30 percent through 2014-2018.
Certain factors such as a fragmented market, expanding middle income groups, increasing luxurymarket size and rising number of malls in India are expected to boost the country’s franchisingmarket. Increasing unemployment rate can also be cited as a factor contributing to the risingfranchising market, as a number of unemployed people are turning to entrepreneurship via thefranchising mode. Finally, the absence of proper legal regulations to regulate the sector allowsfranchisors to operate their businesses freely in India, thereby contributing to its growth.However, operating a franchising business in India is riddled with challenges in the absence ofspecific direct laws and regulations to control the sector. Government initiatives to bring in somedirect regulations to facilitate franchise business is the need of the hour. The establishment of aninnovative franchise model involves high cost, which the government can support by setting up acentral fund for this purpose. Such assistance to franchisors will definitely help in expanding thesector in the country.
The industry associations in franchising in India, such as the Franchising Association, could act as acommon platform between the franchisors and the franchisees. This would lead to strong long-termrelationships. Further, it could set up franchise incubation centres in order to encourage franchisorsto promote their business. The associations may even persuade the government to adopt global bestpolicies in franchising.
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