Franchising a New Growth Path for Businesses through Collaborative Efforts FDI Policy Changes, Economic and Socio-Cultural Developments Key to Franchising Industry Success in India Evolution of IT Enabled Products to Ease Lending to Franchising Industry Franchising has been a successful business model in US, which has helped brands to grow at a rapid scale and penetrate in the diverse markets.
Franchising is not something new to India; the historical past of the country consisted of Mansabdars (Land Managers) under the kings who use to manage and share income generated from the holdings assigned to them and in turn would get protection and guidance from the kingdom, said Mr Ninad Karpe, Chairman, CII Maharashtra State Council and CEO & Managing Director, Aptech Ltd in his opening remarks at the first edition of CII - FAI (Franchising Association of India) Conference on Franchising with a theme ‘The Future of Retailing in India’. While speaking further, Mr Karpe mentioned that “Franchising is a popular way to grow through collaborative efforts, reaching territories where opportunities exist. The umbrella of a popular brand aided by power packed processes makes for a sound business proposition. At CII, a key mandate is to aid skilling, adding employment opportunities, creating new jobs and helping ‘New India’-characterized by a burgeoning young population. We realize that Franchising is a new growth area for the private sector today and businesses can be ably aided by the franchising route.” Mr Bhaskar Bhat, Managing Director, Titan Industries Ltd while delivering the keynote address at the conference shared that “At Titan, the experience was a transformation for the company from opening a retail store for brand promise to come alive to adapting franchising as a business model for growth and market penetration. Franchising model helped us is addressing issues like asset light model, challenges of real estate and man power management at the local stores and also benefited the brand with franchisor’s local knowledge and respect”. Mr CY Pal, President, Franchising Association of India in his address at the session mentioned that the “Franchising industry contributes close to 1.4% to the GDP and has the scope to contribute almost 4% of India GDP by 2017 with the sector growing at rate of 25-30% annually. Currently the industry in India is of the size US$ 45.2 billion and is expected to grow to size of US$ 168.7 billion by 2017”. Mr Dinesh Kanabar, Deputy Chief Executive Officer, KPMG India who were the Knowledge Partner for the Conference added that “Franchising industry in India has a potential to grow to US$ 50 billion in the next half decade – around four times the current size while creating job opportunities (including both direct and indirect) for an additional 11 million people by 2017. This above average growth rate across sectors over 2012-17 would be fuelled by rising income and expenditure levels of the young population along with the recent FDI policy changes, economic and socio-cultural developments”. A report on franchising sector in India titled ‘Collaborating for Growth’ by FAI and KPMG was released at the CII conference. Mr Karpe added that it is the first ever authentic report on franchising in India. Mr SKV Srinivasan, Executive Director, IDBI Bank Ltd while speaking on the topic of “Financing the Future - Lending to Franchisor & Franchisee” stated that the “Evolution of IT enabled products will be the corner stone for bridging the gap between the lender and borrower for service sector business like franchising, as it will allow banks to have moderate control of cash flows of the business unit as against the age old methodology of physical mortgage for raising capital.” Mumbai 4th July 2013