According to an industry expert, cities like Chennai, Hyderabad and Bangalore are the indisputable destinations where franchisors want to have their footprint.
With the franchise format of stores gaining popularity among retailers, owing to low capital requirement, franchise outlets are on a hiring spree.
Under the model, the retailer lends brand name, while the franchise holder makes the capital investments.
The total number of people currently employed in the segment is estimated at 9.5 lakh, according to a FICCI-CIFTI (Confederation of Indian Food Trade and Industry) Franchising India report. The report adds that the Indian franchising sector is growing at 38% with a market size of $7.2 billion and is expected to reach $20 billion by 2013.
There are 1,200 active franchise concepts in India and over 1,00,000 franchisees.
Colonel (retd) Upendra Sachdev, executive director, Indian Franchise Association, said, “While other industries are downsizing, franchisees are having a busy time recruiting. In the next 5 years, 50,000 franchise outlets are expected to come up and generate over five lakh jobs across the India.”
He added that from the retailer’s perspective, the financial return on franchising is much higher than company owned establishment.
The cost of opening a company owned unit which entails much more capital deployment than a franchise store makes it an attractive proposition for the retailer.
Gaurav Marya, president, Franchising India Holding Ltd (FIHL), said, “Franchise is a good option for retailers who are looking to expand quickly. The retail segment forms the largest chunk of franchise stores in India as compared to other categories such as education, services and health, beauty and wellness sector.”
FIHL is Asia’s largest integrated franchise solution company. It is currently working on developing concepts like dental clinics and tutorials on a franchise model.
Edurite Technologies, an online educational material and solutions provider, plans to have 200 Edurite tutorial centres across India in the next two years. “We will step up our presence in Karnataka and Kerala, besides entering Andhra Pradesh and Tamil Nadu, by 2010,” said Edurite Technologies CEO Meena Ganesh.
Going ahead, about 50% of its centres will be franchisees, up from the current 30%. “A speedy expansion will necessitate a franchised approach. The franchisees bring a lot of local knowledge and that is very helpful for scaling the business,” she said.
To tap the Rs 10,000 crore home decor and lifestyle market, Aloke Banerjee CEO of home decor and lifestyle product company, Rosebys Interiors India, said that the company will utilise the franchise model for around 10% of the 240 stores it plans to open in the next one year.
As far as Indian food service entrepreneurs are concerned, the FICCI-CIFTI report states that over 30% of the new food outlets which are coming up, are based on franchise system, while 17% share of food and beverages in the organised sector is operated by franchisors in the country.
At present, there are 1,200 franchisors, out of which 150 exclusively deal in food and beverage retail and 75% of them are of Indian origin.
Speciality Group of restaurants, promoter of Oh! Calcutta and Mainland China, plans to open 13 new outlets between April and September 2009, out of which 5 will be franchisee owned.
“The idea is not only to add outlets in cities but to establish our presence in other small towns,” said Anjan Chatterjee, chairman and managing director of Speciality Group.
According to an industry expert, cities like Chennai, Hyderabad and Bangalore are the indisputable destinations where franchisors want to have their footprint.
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