Vice President – Franchising Association of India
India is no different from other countries and market places in terms of evolution of franchising format for inorganic expansion of business.
If we go by numbers, India is the fifth largest country in terms of consumer capacity and retail destination. It is the second fastest growing economy in the world after China. The consumer spending in the country has increased to 75 per cent in the last four years and according to business analysts it will quadruple in the next 20 years. However, franchising in India has not yet attained an industry status even though the industry size is USD 7 billion growing at a rate of 25-30 per cent annually with over 1800 franchise formats operating in the country employing over 1 million people in the sector.
Even though, franchising is creating thousands of opportunities for business owners and jobs seekers, it is still in its early stage of development. Simply to expand a business through franchising is not enough, it also needs knowledge on how to run a franchise business model. In India, the knowledge on franchising is inadequate and there is also no training being imparted to leverage the present status of franchising. We should also remember that India is a multi-ethnic country, therefore, it becomes all the more important to understand the trends and market that governs each region.
The successful execution of any brilliant franchise concept depends largely on one key initiative – training. In order to cater to all the demands of the franchising business and to further run it smoothly it is necessary to learn the working of a franchise model.
Further on the lack of knowledge, it is also necessary to mention that there are no laws specifically assigned for franchising in India. Unlike the US, where there are federal laws to support the franchise industry, here, in India franchising is being governed by simple business procedures based on the law of contracts as embodies in the Indian Contract Act, 1872 and the trade marks act to protect the brand name.. So, the laws which are applicable to any franchise agreement includes – Intellectual Property laws, Competition laws, Consumer Protection laws and Labour laws. It becomes even more important that things are done right.
Looking at learnings from matured benchmark markets like US, according to a survey conducted in 2010, the respondents who were primarily senior franchise executives mentioned operational challenges as the key reason for failure of some franchise businesses. Within that area, the number one concern was finding qualified leads, followed by legal issues and revenue generating problems. This is a shift from 2009 when financing was the number one challenge, which moved down to the number two challenge in 2010.
Justifying the importance of doing such courses, the CEO of a large US franchising corporate, who was recently designated a Cenrtified Franchise Exective (CFE) says “franchise industry is complex and requires very in-depth knowledge on a variety of subjects.” The importance is felt in developing markets and Government is supporing the initiative in various countries like Malaysia, Singapore and Philipines. In Singapore, the highly-esteemed CFE programme is funded by the Singapore Workforce Development Agency (WDA) which provide 50 percent course fee funding for Singaporean nationals. The funding is adminstered by The National Trades Union Congress (NTUC) which is working closely with Singapore Franchising & Licensing Association (FLA).
The CFE programmes of the Institute of Certified Franchise Executives (ICFE) – the academic branch of the International Franchise Association’s (IFA) USA Educational Foundation – is considered to be the international benchmark for professional excellence in the franchising industry. The programme enhances franchising professionals’ understanding of both the industry’s fundamental and complex aspects.
It has therefore become vital in India to impart knowledge and training for the growth of franchise businesses. The CFE program offered by ICFE in collaboration with Franchising Associatiion of India ( the only recognised Association in the country which is a member of the prestiogious World Franchise Council) is designed for CEOs and senior executives, franchise development professionals, in-house counsel and franchise attorneys, paralegals and compliance managers.
The programme helps its members to take proactive steps to reduce risks, manage growth, and build a stronger, healthier franchise system, and covers both the legal and business aspects of operating a franchise business model.
At present over 1,300 franchise executives in the U.S are enrolled or have received certification. More than 300 international association member companies currently have one or more executives enrolled in the program that provides benefits such as specialized knowledge, industry recognition, peer-level networking and professional standing.
As an initiative to support the industry, Franchising Association of India (FAI), an industry association formed by industry professionals about a decade ago has collaborated with ICFE to offer the course in India. The first workshop in this series is being organised in July 2011 in New Delhi. For more information on workshop and the course you are welcome to connect with Amit Agrawal( phone +91 98 1975 1375) or Chitra Manwani ( phone+91 99581 04567) of FAI.