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The Future is Bright for Franchising in India

The Future Is Bright for Franchising in India

Though franchise companies represent a small portion of all US business, the franchise industry is big. In the United States, there are over 2,500 franchise systems, with more than 534,000 franchise units, which represent slightly more than three percent of US businesses. Yet that small percentage generates 35 percent of the retail and service revenue in the U.S. economy.

With franchise-related products and services estimated at $800 US billion annually, international demand for franchise brand name products and services is creating huge opportunities for American companies to expand overseas.

India, which has a growing middle-class of over one billion people, is now positioned as a major force in the global economy and fertile ground for investment in retail and business development. The franchising industry in India is expected to grow at an annual rate of 30 percent, and to drive the country’s current $330 retail sector even higher. In 2007, more than 750 national and international franchisors were operating in India, employing millions of people, and generating revenues in excess of $3 US million.

The industries cited as the top prospects for successful franchise opportunities in India include:

* Food and beverage

* Education

* Apparel

* Entertainment

* Courier Services

* Stationery and gift shops

* Health and beauty

* Fitness and nutrition

Many of the world’s largest and well-known franchise companies, such as UPS India, McDonald’s, Yum Brands, Baskin Robbins and Subway already have a visible presence in India. Other US companies, from diverse industry sectors, are now gaining a foothold too.

With India’s retail sector growing at more than eight percent a year, The Dollar Store is actively seeking franchisees. This retail chain, based in Florida, USA, sells low-priced general merchandise products and services. India is just one of the geographical areas targeted for the company’s multi-million dollar overseas business expansion.

And there are some surprising entries to franchising in India too, which at first glance, might not seem like a logical fit with traditional Indian culture and consumers.

Contours Express launched its first Indian center in Bangalore, with a second location in Mumbai. The company has 700 fitness centres for women in the U.S and additional locations across 24 countries, and plans to have at least 1000 Contours clubs operating around the world.

Pizza Corner aims to open 36 stores in India, and is extending efforts to expand in Sri Lanka, Nepal and Singapore.

Golf USA has grown to almost 100 stores in 32 states and 6 foreign countries; and is actively seeking entrepreneurs to operate stores in India.

According to statistics from the Franchising Association of India, franchises currently account for only two percent of retail revenues in India compared to almost 50 percent in the US. However, that two percent is growing at a fast pace, and the implications point to astounding market potential. The success rate for individual franchise business owners in the US is 92 percent, and since franchise businesses are based on proven systems, the success rate for Indian franchises should be comparable.

Franchising has a bright future in India due to the convergence of many factors:

* The average Indian income is steadily rising and individuals have more purchasing power.

* Telecommunications and transportation infrastructure improvements facilitate the exchange of information and goods.

* Increasing levels of consumer spending, with greater recognition of brand value.

* Internet access is opening the world to India, making its population more aware of global trends and brands. And conversely, the Internet is making it easier for international companies to gain an understanding of India’ culture, geography and politics.

To find out more about the franchise industry worldwide, visit Headquartered in Dublin, Ireland, Franchise Direct operates several international franchise information sites, and offers a wide range of research resources on buying a franchise and the industry in general.

Kathleen Fitzpatrick

Franchise Direct (McGarry Internet Ltd)

About the Author

Kathleen Fitzpatrick is an editor a Franchise Direct. Franchise Direct was launched in 1998 by McGarry Consulting who specializes in business development, especially franchising.

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