Why is franchising a successful retailing format?
As per several surveys in India, the franchise business has proven the quickly earning source and fastest expansion of the firm. The franchise trend is the most powerful plan for the company’s start-up to new entrepreneurs. Our country is full of people who come up with brilliant business ideas. A franchise is an appealing business opportunity that can assist you in starting a profitable business from the ground up. A franchise, in a nutshell, is a marketing tactic utilized by companies to extend their operations. Depending on how it is implemented, a franchiser licenses its know-how, procedures, intellectual property, utilization of its business model, brand, and rights to sell its branded products and services to a franchisee. In exchange, the franchisee pays a set of fees and agrees to abide by the terms of the franchise agreement.
Retail and non-retail franchising are the two types of franchises in India. In terms of the priority devoted to real estate, retail franchising differs from non-retail franchising. The ‘Pure franchise’ and ‘Management contract’ formats dominate non-retail franchising, but retail franchising has a variety of hybrid formats. The word of the day is franchising, and there are numerous options available in a range of types. To reduce risks and expand nationally and internationally, the majority of retailers are searching for a franchise model. Apart from a number of promising franchise sectors growing in franchising, such as education, healthcare, and the service industry, retail is catching up and expanding through franchising. One of the first businesses in India to start franchising was retail (apparel/footwear). Raymond, a clothes company, and Bata, a footwear company, were among the first in India to franchise.
India is now one of the world’s largest and fastest-growing emerging economies, and its vast population and cultural diversity make it an excellent environment for franchising to flourish. With a recent sales turnover of more than US$ 7 billion, the franchise industry is growing at a rate of 30-35 percent each year. In recent years, there has been significant growth in interest in entrepreneurship in India. This has fueled the franchising industry’s expansion since franchises are the ideal solution for new entrepreneurs who want to invest in the security of a well-known brand while also having the freedom that franchise models provide. Franchising is becoming more prevalent in India. According to a Franchise Asia report, India’s franchise business is showing no signs of slowing off. Before the pandemic, the Franchise industry had shown a tremendous profit and now as we see the gradual shift in the process now. 2021 has shown good and we hope for the better in 2022. India’s gross domestic product (GDP) climbed by 7.2% in the fourth quarter of 2017. This upward trend is predicted to continue in the next years, with growth expected to reach 7.4% by the end of this year and 7.8% in 2019.
Working on a combination of company-owned and franchisee distribution methods can actually profit in the long run if franchisee partners are appropriately selected. Extreme caution should be used while choosing a Franchise partner. While there may be numerous brand-specific requirements, a brand should spend time and effort pre-screening potential Franchisees. Franchising is one of the most successful and popular business expansion options in the retail industry. It will become increasingly important in the rising services sector of the Indian economy in the coming years. The shifting landscape of the franchising industry necessitates a mindset adjustment as well. A coordinated effort involving franchisees, franchisors, financial institutions, and industry organizations is urgently needed.
Especially in times of economic crisis, franchising has proven to be a very resilient business model. It is a more tempting concept for many people than creating their own business. A franchise, in some ways, gives the stability of an existing model while reducing the risk of beginning a new business. Many Indian businesses believe this because they believe they are investing in a well-known brand with a well-defined target market/audience. The current anticipated market size of the Indian franchise sector is US$ 50.4 billion, up from US$ 13.4 billion in 2012, according to a poll done by KPMG and the Franchise Association of India (FAI). Education, food, retail, health, beauty, and wellness services are among the most potential franchise opportunities in the United States. Apparel, travel and tourism, and business and financial services are among the other promising industries.
However franchise business is your best and fastest way for business expansion. Also, India is emerging more fresh entrepreneurs through it. Because the established firm already has the full marketing strategy and strong sales as they have all their target customers. A franchise can be successfully run by any entrepreneur with training and support. At last, every business has a common goal to become a tremendous brand.