It is that time of year when ‘next year’ is quickly approaching. For franchise systems looking to expand in 2024.
India has seen an increase in the franchise business over the past five years, as global brands such as KFC, McDonald’s, Oyo, Patanjali, and MakeMyTrip invest in franchises to increase their revenues
By 2022, the franchise sector is expected to contribute around 4% to India’s GDP, up from its current contribution of 1.8%. Franchising has grown 30-35% in the last five years, with global revenues approx. 938 crores respectively.
India’s rapidly expanding economy and rapidly expanding youth population make it an attractive market for franchise opportunities. The growth of these industries will create more jobs in various sectors, giving others the opportunity to expand their businesses and contribute to the national economy
Factors Driving Growth in the Indian Franchise Industry:
Population Growth and Expanding Middle Class:
India’s increasing population and growing middle class have created a favorable environment for the franchise industry.
Privatization of Industries:
The privatization of various sectors in India has opened opportunities for businesses to enter the market, leading to an increase in franchise purchases.
Franchise Opportunities from Larger Brands:
Large brands are actively expanding in India through franchising, allowing entrepreneurs to pursue their business goals by partnering with established companies.
Vast Consumer Market:
India’s vast consumer market is a significant driver for franchise growth, with over 3,500 active franchises out of more than 10,000 registered ones.
Government Support and Policies:
The Indian government has implemented supportive programs and policies to encourage franchise businesses, reducing risks associated with market entry.
Rising Unemployment Rate:
The increasing unemployment rate has driven the demand for franchise businesses as a means of employment and entrepreneurship.
Growing Awareness of Franchising:
Franchising is gaining popularity in India as a low-risk business model, further fuelling the demand for franchise opportunities.
Economic Growth Prospects:
The Indian economy is expected to grow to $100 billion by 2024, which is set to reshape the business landscape in the country.
Appeal to Young Entrepreneurs:
The younger generation of business owners is increasingly attracted to franchising due to its reputation as a low-failure business strategy.
First-Time Entrepreneurs:
Around 35% of Indian franchisees are first-time entrepreneurs, contributing to the sector’s expansion.
Naadbramha Idli’s Franchising Success:
Naadbramha Idli, a popular food franchise in Mumbai, offers franchising opportunities in Maharashtra, with over 100 franchises, making it an attractive option for aspiring entrepreneurs.
Overall Growth Drivers:
The growth of franchise businesses in India is propelled by the factors of the growing middle class, privatization, rapid economic growth, and the increasing popularity of franchising as a business model.
Key Trends and Projections in the Indian Franchise Industry:
Impressive Growth Projections:
The Indian franchise industry is expected to reach a value of USD 140-150 billion within the next five years, driven by factors like increased consumer spending and the proliferation of franchise opportunities.
Current Industry Value:
The industry is currently valued at around Rs 800 billion, signifying its substantial contribution to the Indian economy.
Steady Growth Rate:
The Indian franchise industry is anticipated to maintain a robust growth rate, projected at 30 to 35 percent per annum.
Global Ranking:
India holds the second position in the global franchise market, showcasing its prominence in the international franchising landscape.
Abundant Franchisors and Outlets:
The Indian franchise market boasts of approximately 4,600 active franchisors operating nearly 2 lakh (200,000) outlets, underlining the extensive reach and diversity within the industry.
Annual Franchisor Expansion:
Over 300 companies initiate franchising activities every year, attesting to the ongoing growth and expansion in the Indian franchise sector.
Prevalence of Multi-Unit Franchises:
A significant trend is the prevalence of multi-unit franchises, accounting for 53 percent of all franchise units, signifying a preference for larger-scale operations.
Domination by Regional Brands:
Regional brands take the lead in the Indian franchise industry, constituting 50 percent of the market, showcasing the strong presence and appeal of local brands.
National Brand Contribution:
National brands contribute substantially, accounting for 34 percent of the Indian franchise landscape, highlighting the influence of established, countrywide brands.
Local Brand Presence:
Local brands also play a role in the industry, making up 16 percent of the franchise market, representing the diversity and inclusiveness of the sector.
Sustained Growth Prospects:
The Indian franchise industry is anticipated to sustain its impressive growth rate of 30 to 35 percent per annum, making it a dynamic and evolving sector in the Indian business landscape.
Advantages of Starting a Franchise their business:
Increased Financial Stability:
Franchising can lead to increased financial stability through multiple revenue streams from franchisees.
Reduced Risk:
Franchise models often entail reduced risk for franchisees due to established business systems and support.
Faster Turnaround Times:
Franchises can grow more rapidly than traditional company-owned locations, leading to faster business expansion.
Highly Motivated Franchise Owners:
Franchisees have a vested interest in the success of their businesses, leading to highly motivated and dedicated ownership.
Initial Investment in Franchise Program Development:
The creation of a franchise program requires an initial investment of time and funds, though typically less than opening an additional company-owned location.
Role of Professional Advisors:
Hiring credible and experienced franchise consultants can aid in the effective development and implementation of a new franchise program while preventing costly mistakes.
Importance of a Successful Prototype:
A successful prototype serves as a model for prospective franchisees, allowing them to envision themselves running the business.
Training and Testing Centre:
The original location can function as a training centre for new franchisees and a testing ground for new products, services, or techniques.
Trademark Protection:
Securing a trademark is essential for establishing and protecting the brand identity in the franchise.
Operations Manual:
A comprehensive Operations Manual with written procedures covering various aspects, including start-up activities, marketing, personnel management, and office procedures, is recommended for consistency and efficiency.
Strategic Marketing Plan:
A well-thought-out marketing plan should include the creation of marketing tools, such as digital marketing assets like websites and e-brochures, to facilitate franchise sales.
Expertise in Sales Tools:
Hiring a franchise development consultant with expertise in designing sales tools can enhance the presentation and promotion of the franchise business to potential investors.
Overall Benefits of Franchising:
starting a franchise offers a range of benefits, from financial stability and risk reduction to quicker growth and the support of dedicated franchise owners, making it an attractive business expansion strategy.
Navigating the Franchise Search Process:
Abundant Franchise Opportunities in India:
India offers a wide range of franchise opportunities, with approximately one thousand franchised systems available per capita.
Benefit for Potential Franchisees:
The availability of numerous franchise options allows potential franchisees the luxury of conducting thorough research and selecting franchises that align with their interests.
Focused Franchise Search:
Initiate your franchise search by identifying a manageable number, typically no more than a dozen, of franchises that match your criteria and submit requests for additional information.
Two-Way Engagement with Franchisors:
Franchisors actively seek engagement with potential franchisees, as the recruitment process is a mutual endeavour. They invest significantly in advertising and marketing efforts to attract prospective investors.
The Importance of Your Inquiry:
Your inquiry can significantly impact a franchisor’s success in promoting their brand, making your engagement vital in the franchisor’s marketing efforts.
Building a Relationship with the Franchisor:
Develop a relationship with the franchisor from the initial inquiry, as both the franchisor and potential franchisee should seek the right fit for a successful partnership.
Diverse Responses from Potential Franchisees:
Franchisors receive inquiries from various individuals. However, a scatter-gun approach is not advisable; demonstrating genuine interest and ambition sets you apart.
Showing a Genuine Desire to Learn:
Franchisors can provide training and guidance, but it is crucial to convey your genuine desire to understand the brand, be trained, and, most importantly, succeed in the franchise.
Investing in Your Future:
By dedicating time to researching franchise options and fostering a relationship with the franchisor, you make a valuable investment in your future success as a franchisee.
Differentiating Yourself in the Process:
In a competitive landscape, taking a proactive and informed approach to your franchise search can help you stand out and make more informed investment decisions.
The Mutual Search for the Right Fit:
Both the franchisor and potential franchisee should be aligned in their pursuit of the right fit for a successful and harmonious partnership.
Conclusion:
To make 2024 your year, make an impression on franchise owners or representatives by demonstrating your skills and ambitions. Get in touch as soon as possible, send background information, and demonstrate your interest. If you fail, seek expert advice from franchise consultants who are paid by the franchisors. Engaging with them will not cost you anything, and you might have nothing to lose and lots to gain. Contact sparkleminds at franchise@sparkleminds.com or +9198 4444 1300 for more information on franchising your business.
informative article.
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