India Focus: The Future of Franchising

A recent evaluation of the business sector in India puts number of small enterprises operated by sole traders or family groups at over 25 Million. Over half of these, 14 Million, are retail merchants operating mainly in the informal sector.

With a young and ambitious consumer market thirsty for the lifestyle portrayed on social media, the potential for growth is huge. The majority of the Indian population is under 25 years of age and hungry for openings in the retail market. The scope for franchise networks is massive.

Big global brands are entering into the Indian market which is seen as one the largest in the world. However, they have faced considerable cultural challenges over the past decade. One of the best known, Yum Brands with the KFC stores, was one of the initial casualties. Underlying social forces and logistical difficulties combined to make many early entrants into the subcontinent readjust their views or face failure.

Since the model of franchise management was introduced in the 1990’s Indian businesses have enthusiastically welcomed the franchising concept. This can be seen in the array of different service and retail franchises. The successes of these are determined by a number of reasons. Firstly, the sheer numbers of population ensures that Fast Food, Restaurants and Retail are among the most lucrative franchises to operate. Subway, Amul’s Ice Cream and Domino’s Pizza are a few of the best known.

Secondly, the privatization of the health care and education sectors saw a number of franchising opportunities opening up. Some successful examples are Dr Lal Path Labs which is one of India's largest chain providing pathology services. In the education sphere franchises such as TechnoKids and EuroKids fill the growing demand for quality technology education.

The ability of new and advanced business methods and business models to adapt to a changing environment can contribute to the resurgence of the franchise industry in India. The various innovative tactics utilized during the Covid crisis should also not be abandoned since they may be useful in crisis management and have introduced a culture of alternative thinking.

The capacity of entrepreneurs and stakeholders to tolerate changes in the economy and survive the abrupt shocks of global upheavals will determine the future of franchise business. The fact that, despite the challenges of interruptions in the supply chain, low operability and delays in product shipment, franchise businesses have continuously grown augurs well for the future of franchise business in India.

Source: Times of India – Guarav Marya, Worldometer, World Fact Book, Wikipedia, India Brand and Equity Foundation, Regional to Global.com