Franchise in India is perhaps a specified word for specified group of people, yet the term is greatly being employed by companies, of domestic as well international countries, in major proportion, to enter and expand their network in multiple regions of the country, despite obstructing by the strains of rising inflation. If reports are to be believed, ‘Franchise Market in India 2013’ has concluded that companies are now assuming franchising as a prospective tool to prosper business in India. The technique allows companies to tap markets that are not yet being exploited. Not only are the established ones, even the developing home-grown companies are choosing franchising to inject their services and products in the market with a maximum pace, to reap highest possible advantages out of raw markets and customers.
As world is transforming into a hefty house of markets and human resources, demands for more goods and services are taking a steep leap, and hence it is not possible for companies of any level to stay back inside their bordered circle. Reaching out to customers to greet their demands is proving to be a valuable method for companies to magnify the range of their services. In that case, establishing company-owned outlets come as an expensive option, which also does not offer fast growth to a company, especially when extension is targeted into another land and budgets are limited, however franchise-operated chains are nowadays opted as a potent way to develop chain of business by encouraging franchisees’ to invest into the business, making them a credible partner in the journey, in return of a powerful business model that brings lucrative deals.
Other reasons that have triggered success of franchising as an alternative model in business growth are: allowance of FDI in retail by the Indian government, with which foreign companies are barred to invest directly into the country. The move has prompted companies to enter into master franchise agreement with Indian companies to mandate rapid inflow of its products and services into different regions of Indian states. Second, increasing access to internet in India has widely transformed the lifestyles of people. Youth now are not only the sole targets of highly exclusive brands, other categories like kids, women, and elderly people are also approached by number of brands by introducing separate product lines for them in their portfolio.
Furthermore, internet connectivity has made available knowledge about the global trends and with people in India not shying away from experiencing shopping at big brands, demand graph is showing welcoming sign for businesses to jump in the flow.
Third, availability of credit facilities has rendered more purchasing power to consumers. And last but not the least, noticeable development of shopping malls and supermarkets in major cities and states are attracting franchisors by a growth potential in the country.
Franchise model is digging bigger opportunities in India by getting a concrete shape with the entry of companies from different industries. As the model is gaining an impressive velocity i.e. 30% annually, it will successfully carve out a niche in near future. However, there are challenges that are still lying exposed, and in a desperate need to overcome to march ahead towards a potential point in the Indian market.