Franchising is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to own and operate their own business under the brand, systems and proven business model of the franchisor. The Idea is simple. Instead of developing company-owned outlets, some businesses expand by granting a franchise to others to sell their product(s) and/or service(s) Under the guidance & support of franchisor.
Who is monitoring the Franchisee?
Each franchise business is owned and operated by the franchisee. However, the franchisor retains control over the way in which products and/or services are marketed and sold and controls the quality and standards of the way in which the business is operated.
Commercials between Franchisee and Franchisor?
The franchisor receives an initial fee from the franchisee – payable at the outset – together with ongoing management service fees. Usually, these fees are based on a percentage of annual turnover or mark-ups on supplies or Royalty. In return, the franchisor has an obligation to support the franchise Partners. Basically, it includes training, product development, marketing and advertising, promotional activities together with a tailor-made range of management services.
History of Franchising in INDIA
The concept of Franchising was introduced to India by a Retail company in the 1940s but it has boosted from the year 1986 by an IT training and education institute which later on attracted the top Franchising brand from the international market to Enter INDIA. Being, one of the biggest franchising markets because of its large middle-class of 300 million who are not reticent about spending and because the population is entrepreneurial in character. Majorly all the sector are now operating in Franchising module since it reduces the cost.
Franchising Today !!!
Franchising is now a flourishing industry boasts nearly 4,000 brands in a multitude of different sectors. From Small business to Bank every business and sector have adopted the method of Franchising for channel expansion.
Franchising has never been in better health than it is now. The authoritative research into the state of the industry – the universally respected FAI approved survey– has shown both short- and long-term growth trends to be very strong in the sector – including prior to and since the economic downturn of 2016 demonetisation and other government amendments.
After a slight downturn in that year, every year following has shown growth in terms of numbers of brands franchising, numbers of franchisees, numbers employed in franchise businesses and the overall turnover of the franchise sector.
Franchising In India Is yet to achieve its mark due to unhealthy practices performed by the Franchisee and Franchisor which makes the Franchising industry most insecure and fluctuating. and thus the growth ratio of Indian Franchising Industry is only 2% to 4%, which is expected to reach 20% by the year 2025 stated in a joint report done by KPMG and FAI in the year 2013.
Role of FAI & It's Members.
FAI is an association of Franchisors, Franchisees and all related interests. Formed in the year 2001 as a not-for-profit, it is the only professionally managed and internationally recognized industry body with the sole purpose of representing the voice of the Franchise Industry in India. We are also planning to tie-up with leading PSU Bank to create Franchise Finance Ecosystem. As an association, we are adding value to the franchise industry in India by some of our major activities like,
Franchising industry Research (Collaborating for Growth By FAI & KPMG), Working with government bank (SIDBI) on Franchise finance/loan program, Promoting education in Franchising through CFE course, Association with World Franchise Council (WFC) and Asia Pacific Franchise Confederation (APFC) as a member to represent Indian franchising globally, Interaction with the government authority for required support to promote Franchise concept in India. Other Operational Management Support through its list of suppliers, which helps FAI members in Legal support, Franchise Tax Consultants, Real Estate assistance, Manpower, LOAN assistance and so on. We also conduct workshops/conference, seminar to spread awareness about the growing Franchise industry and its Impact on expansion.
FAI Members are Brands, Franchisor, Franchisee, Individuals, Volunteers, Entrepreneur who support the association and its cause to bring Value in INDIAN Franchising Industry by following the rules and regulation set by FAI governing council in the form of CODE OF CONDUCT which is signed by them at the time of joining FAI MEMBERSHIP forum.
Mr. Suresh Madhavan - Chairman
Mr. Ajay Agarwal
Mr. Venu Krishnan
Mr. Anil Nambiar
Mr. Ravi Dighe
Mr. Janesh Nair
Mr. Krishna Nambiar