Franchising

Introduction

Derived from French word franchise. Franchising prevailing since middle ages. Singer swing machine in 1850s started franchising for the first time. A privilege or right granted to a person or a group by a govt. state or sovereign. Authorisation granted by a mfr. for selling.

Roles
Function
1. 2.

Franchisor
Oversee Provides prototype design Training

Franchisee
Chooses with approval Incurs the cost.

Site selection Design Employees Product to be sold Prices Advertising/ promotion

3.

4.

5. 6.

Hires, supervises & pay. Decides Can change only with approval. Sets / Recommended Can Change only with Determines at national approval. May suggest local level requirements.

Types

Product Name Franchising. Business Format Franchising.

Predetermined financial returns. Complete business package. Training by franchisor. Single unit / Master / Regional. Standard franchising.

Franchising in India

Acceptability growing by the day Fairly conventional industry spread Approximately 800 franchisors spread across industries like education, retailing, professional services, healthcare etc Over 75,000 franchisees Annual turnover from Franchising anywhere between Rs.15000-Rs.20,000 crores Total investments made by Franchisees over Rs.9000 crores Over 300,000 people directly employed by franchised businesses Variety of hybrid formats in practice Number of International franchises already existing, more coming in.

Factors Defining the Growth of Franchising in India

Positive Factors

Huge consuming class Fast-growing consumerism Shift towards Services from Agriculture & Manufacturing Franchising has already proven to be successful in several sectors Large entrepreneurial pool

Negative Factors

Lack of regulatory framework Financing mechanisms not in place Skewed real estate markets

Franchising Trends in India

The Education sector dominates the Indian franchising scenario, although Retail is fast catching up. Most of the franchisors are relatively new and small. Several large Indian corporate also going the franchising way. Newer & innovative concepts being introduced. Substantial interest from international franchisors as well as Indian business houses for master franchises. Franchising is now spread across the country, thereby providing opportunities to entrepreneurs everywhere.

Top 9 international franchises

McDonalds Subway Dunkin Donuts Pizza Hut KFC Corp Dominos pizza Sonic Drive in restaurants Inter Continental Hotels Group. 7-Eleven Inc