The best time for franchising business has come for India
India is one of the largest and the most stable markets in the world, any day. Geo-politically, no other country can match India’s stability and resilience
Franchising offers several benefits to both investors and entrepreneurs. For investors, it is a relatively low-risk way to enter into a new market. For entrepreneurs, it provides an opportunity to start their own business with the support of an established brand. And he is known for revolutionizing the untouched Indian retail and franchising space with his innovative business ideas. He has the credit to bring the best of the international food, fashion and retail brands to India including KFC, McDonald's, Dominos. He started his first enterprise when he was still a teenage student at an engineering college. Dropping out of college he became a serial entrepreneur, setting up businesses in mobile phones, restaurants, entertainment and advisory services. Speaking to Bizz Buzz exclusively, Gaurav Marya, Chairman, Franchise India, speaks at length on the current status and growth prospects of franchise business in India.
How is franchise business doing in India?
I strongly feel that the best time for franchising business has come for India. India is the second-most populous country with over 1.3 billion people and is projected to be the world's most populous country by 2027. The country's economy is also expected to surpass that of the United States by 2035, making it the world's largest economy.
Just to give you some examples, there are 15,000 direct to consumer brands in India, who are looking at franchising opportunities. There are 1800 tech startups, which have been using brick and mortar supply chain. There are 442 OEMs for EV segment alone. All these numbers are going to grow significantly over the next few years. And for them go to market strategy would be to take the franchise route. Besides, there has been a significant growth in overall entrepreneurial mindset. Otherwise Shark Tank India would not have been as popular as it is today, and 'start your own business' would not have been on top of the Google Search. There are 2.5 lakh first-time startups and nearly 80 per cent of these startups prefer going to market with their own brands. Therefore, there is no doubt whatsoever that the current state of the franchise business in India is very promising. The franchise business has been a shining star of India's economy and it is time for the franchises to explore the opportunities in the smaller cities (tier-II, tier-III cities and beyond) too and spread their wings.
When you say and come up with these facts and figures, are you only looking at Indian brands, Indian products and services?
No, not at all. Most significantly, India has emerged as the most preferred market in the world for global brands. More particularly, mid-level global brands are extremely keen on entering the Indian market. Even Chinese and Russian brands are well set to tap the Indian market. They are extremely bullish about the Indian market. And that's not without a reason. India is one of the largest and the most stable market in the world, any day. Geo-politically, no other country can match India's stability and resilience.
So what is the growth rate, Indian franchise business is looking at in the years to come?
The franchising sector in India is expected to grow at a compounded annual rate of 25-30 per cent over the next 3-5 years. This growth will be driven mostly by a number of factors, including an increasing middle class with disposable income, favourable government policies, and rising awareness of franchising as a business model.
In value terms, the franchising business in India is expected to reach $10 billion over the next 3-5 years, while the overall system sales is expected to reach $65 billion during this time. Interestingly, the global system sales during this time are expected to reach $4.5 trillion.
What about job prospects or employment creations in the sector?
There is no denying the fact that considering the size of the Indian market, not enough jobs (particularly white collared jobs) are being created. Therefore entrepreneurship of different sizes and formats is the only solution to this problem. There has been decentralisation of the job market, post Covid. With over 10,000 registered franchises and 3,500 active ones, the sector provides ample opportunities for entrepreneurs. Franchising can be a great way for entrepreneurs to get their businesses up and running quickly and with minimal risk. When you franchise, you are essentially buying into an already established brand and business model which can help you to hit the ground running. Overall, franchising can be a great option for entrepreneurs who are looking to start their own businesses with minimal risk and maximum support.
It is only by way of democratisation of entrepreneurship, the real value of the Indian economy can be realised. The government must look into these aspects and make financing easy for franchise business. The Indian government has also been supportive of the franchise industry and has taken several measures to promote its growth. These include setting up a National Franchise Development Centre (NFDC) and launching a Franchise India Brand Show (FIBS).
Another somewhat similar business is licensing…..
Yes, you are absolutely right. Along with franchise business, licensing business is also expanding rapidly in India. In this area also there is enormous scope for aspiring entrepreneurs. This is a good strategy. Both in case of franchising business and licensing business, possibilities and opportunities are higher in tier-II, tier-III cities.
Which are the verticals in franchising business that are doing particularly well or where prospects are more?
I would say F&B, retail, tech, EV are the sectors where it is doing exceptionally well. It is in these areas prospects are better as well.
What are you doing to promote and grow this business?
We have been setting up offices across many parts of the world to talk to and bring in more and more global brands. We are already in talks with a large number of global brands. We are also working on to tie up with banks and other financial institutes to find ways to help franchise owners and aspiring franchise owners.
For me ROI is not Return on Investment, but Return on Involvement, Return on Intelligence along with Return on Investment.
My mission is to create 100,000 entrepreneurs in India in near future. And we are on track.