Want to start your own business but not from scratch? Become a franchisee. But don’t forget to do some homework before zeroing in on a business
Two big franchising stories unraveled over the past year albeit in opposite directions. On one side, the franchising bug hit Indian cricket with the Board of Control for Cricket in India (BCCI) unveiling the
Indian Premier League (IPL) in September last year. On the other, Reliance Industries decided to pull curtains on all of its 1,432 petrol pumps across the country this month, leaving its franchisees high and dry. While at IPL it has been raining money for the BCCI, franchisees and cricketers, Reliance dealers have seen a dead end to their dreams.
But all failures leave us with some learning. Here is one: “The franchisees should have read the fine print of the agreement with Reliance. Difficult exit clauses have left Reliance petrol pump dealers in a lurch. They can’t even sell out and exit now,” says Dwarika Prasad Uniyal, assistant professor of retail management at the Mudra Institute of Communications (MICA), Ahmedabad. 
Given the subsidy regime in oil retailing that is skewed in favor of the public sector companies, it was indicative right from the start that RIL might not be able to sustain the selling price differential between private and public sector retail outlets. But the Reliance fiasco is only an exception to one of the most successful business models around the world—franchising.
Ask Cyril Roy and he will vouch for the success of his franchisee business. Roy runs a Ludhiana-based franchise of Top Careers & You (TCY), which provides college-level test preparation and school-level supplemental education services. The company provides classroom and online teaching from K-12 and to students preparing for competitive exams. Roy, 
who was earlier the business development manager for TCY decided to switch sides in August last year, having found the business model lucrative. With an initial investment of Rs 3.5 lacs, he opened a TCY center in rented premises. “I got tremendous response from day one. I hope to break even in another two months’ time,” says Roy. His franchisor helped him with advertisements, study material and training of staff. Roy is among the thousands reaping the benefits of the booming Indian franchising industry, pegged at $3.3 billion.
“The Indian franchise market has recorded a steady growth of 30-35% per annum in the last five years. The industry turnover touched $3.3 billion and is projected to soar higher in the coming years,” says Zahir Abbas, Associate Director, Technopak Advisors, a leading retail consultancy firm.
What is franchising?
Just having the ambition to start your own business is not enough. You have to begin from scratch; going to the drawing board making a business plan, finding co-founders, if needed, scouting for funds and then building the blocks of your dream plan. The other option could be to take the franchising route. Someone out there has a tried-and-tested business model and is looking to expand. “The franchising model comes into play when the business either has a great product, service or a process and wants to expand. So either it opens its own outlets or finds out willing partners who would become its franchisees and thus help it grow,” says Uniyal. That ‘willing partner’ could be you.
So a franchisee gets the license from the franchisor to operate the same business at a different location using the franchisor’s brand name. The infrastructure is set up by the franchisee, while the brand holder helps the licensee at each step.
What’s driving it?
The simple answer is India’s entrepreneurial zeal. With the number of people wanting to start their own business on the rise, franchisee networks are bound to grow. “India is a very diverse country so you need people who understand the local market and expand the brand. So franchising offers a very good opportunity,” says Gaurav Marya, President, Franchise India Holdings, an integrated franchise solution company.
India’s retail sector is growing like never before. According to estimates, the $383 billion retail industry has a miniscule 3% organized sector that is growing at 25-30%. This is backed by the rise in purchasing power of the populace and is fuelling consumerism. Abbas of Technopak believes that fast-growing consumerism, a shift towards services from agriculture and manufacturing, and urbanization are contributing to the growth of franchising. He says the franchising industry employs about 3,00,000 people with concentration in telecom, retail, food and education, as these are the fastest growing sectors in Indian franchising. The Indian telecom sector recently celebrated a record of 100 million users and this number is expected to touch 500 million by the end of the year 2010.
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written by Authentic NFL Jerseys, November 18, 2010
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