Why might the franchise business be India's economy's bright spot?
04 Jan 2023
Why might the franchise business be India's economy's bright spot?
With approximately 1.3 billion citizens, India is the second-most populated nation in the world and is expected to surpass China as the most populous nation by 2027. By 2035, the nation's economy is anticipated to overtake that of the United States and become the largest in the world.
The franchise market has been a bright spot in India's economy, and now is the perfect time for franchises to expand and explore the possibilities in smaller cities. Many people are looking for attractive franchises to invest in, and the smaller cities offer a lot of potential.
The franchise business in India is currently in a very positive situation; it is expanding quickly and is anticipated to reach Rs 7,000 crore by 2025. Nearly 4% of India's GDP comes from franchising, which also provides jobs for over 1.5 million people.
The potential for expansion in the franchise industry is enormous given the size of the population and the strength of the economy. Some of the largest franchisors in the world operate in India, where franchises are already well-established. However, since just a small percentage of Indian businesses are franchises, there is still possibility for growth. Through 2025, it is anticipated that India's franchising market would expand at a 30% compound annual rate.
A growing middle class with disposable income, supportive governmental laws, and more knowledge of franchising as a business model will all contribute to this rise.
With 3,500 active and over 10,000 registered franchises, the market offers plenty of chances for business owners. Although still relatively new in India, franchising offers enormous development potential.
Both investors and business owners can benefit from franchising in a number of ways. It is a relatively risk-free option for investors to enter a new market. It offers company owners the chance to launch their own venture with the backing of an established brand.
The franchise sector has also received backing from the Indian government, which has implemented a number of initiatives to foster its expansion. These include establishing the Franchise India Brand Show and a National Franchise Development Center (NFDC) (FIBS). The franchise industry is well-positioned for further success in India thanks to a robust development trajectory and government regulations that are supportive of it.
Franchise development in India is fraught with difficulties. First off, there are many small enterprises fighting for customers in the highly fragmented Indian market. Due to this, franchisors struggle to locate compatible partners and are unable to grow quickly.
Second, there is no protection for either side in the event of a legal dispute because India's franchising laws are still in its infancy. For both franchisors and franchisees, this can make franchising a dangerous business. Finally, it can be challenging persuading potential partners to sign a franchise agreement because many Indians are still unfamiliar with the idea of franchising.
Despite these difficulties, many businesses wishing to increase their presence in India continue to find the franchise business model to be a compelling alternative. India presents a sizable prospective market for franchises thanks to its enormous population and developing economy. It's critical to be aware of these difficulties if you're considering franchising as a means of growing your company and to take action to address them.
Franchising can be a fantastic solution for business owners to launch their enterprises rapidly and with low risk. When you buy a franchise, you are effectively investing in a brand and business strategy that have already been proven successful, which can help you get started quickly. In general, franchising can be a fantastic choice for business owners who want to launch their own enterprises with the least amount of risk and most assistance.