With the advent of global players in the arena the whole perception of the business has changed. Franchising business has become a trendy business formula these days and is gaining strong grip in India. We can claim that it would be the wave of future business in the country.
Franchising is the practice of doing business involves the use by a person (franchisee) pursuant to a license of another persons (franchisor) business model, name, image and business identity along with his confidential know-how to make use of intangible assets in a particular territory for a specified period with or without assured financial return to the franchiser. For the franchisor, the franchise is an alternative to building ‘chain stores’ to distribute goods and avoid investment and liability over a chain.
This model of business works best in businesses with a good track record of profitability and businesses which can be easily duplicated.
Though franchising business in India has witnessed impressive growth of around 30-35 percent over the last 4-5 years with an estimated annual turnover of $ 4 billion, this is a mere fraction of the potential that India can offer. According to the estimates of the Indian Franchise Association, there would be at least 50,000 franchises in the Indian market in next five years.
India is one of the biggest franchising markets because of its large middle-class of 300 million who are not reticent on spending and because the population is entrepreneurial in character.
A huge consumer base of over a billion people including a flourishing class of urban consumers having substantial disposable income with quality and brand awareness is instrumental in attracting foreign enterprises to the country. A good number of international players are planning to enter the fast growing franchising market in India.