The information below is an extract from the interview given by Alan Branch while attending in Mumbai India as a speaker on international franchising at the invitation of the Franchise Association of India. Reproduced below is the published article appearing in Business India – The Magazine of the Corporate World – 2013
Alan Branch, president, global development, Global Franchise partners, Australia, was in the country recently to talk about the growing potential for franchising in the Indian market. He has almost 30 years’ experience in the franchise industry and often speaks on various franchise laws and other related issues. He shares his views on how franchising is shaping up in India.
Do you believe franchising has evolved to a greater extent in the Indian market now? What potential do you see?
I last came to India in 2007. At that time, one could see just a few sectors experimenting with this model and just a handful of franchises. Some of the early pioneers were hotel chains, probably regarded as the most professional franchisors
in the world. However, there were a number of government restrictions on royalties that could be taken out of the country; hence, brands were a little wary about taking this route. I think today, people are realising more and more that India is the place to come to for growing franchises. Now, you’re seeing franchising happening in sectors like real estate, healthcare and more. What I think people don’t realise is how much of it already is here. It’s no longer just about a Subway and McDonald’s.
What does remain is some government’s confirmation on franchise-specific laws. It would be good if the government were able to establish a sound definition of what franchising really stands for.
Another positive is that landlords are more open to this concept. Earlier, they would be confused about what a franchise represented, but they now see it as something that will make them profits as well.
A number of brands are looking to fuel their expansion through the franchise route in India owing to the vast entrepreneurial talent available. Your take on this…
The key is to look at how a franchise can remain profitable. Because no one wants a brand that they think is wonderful but doesn’t make money. In that context, many brands have started off slow in India. A brand coming into India should start off slowly and not jump to 1,000 stores in just a couple of years or three. It’s important to understand the culture and customer because a customer in India is very different from those in other countries. If you sell the product and don’t understand the
customer, you don’t end up making any money. Often, the Indian psyche of rapid expansion can lead to failure in understanding what the customer really wants.
What about the new areas for franchising in India?
The growing number of shopping centres will provide a wonderful mecca to concentrate consumers and there are some really great opportunities here; for instance, home services. It can translate into more employment and cost efficiency. For example, in the US, they have recently started a service where you can get your house painted in one day. What would normally take three weeks, you now have 10 painters doing in one day. Other services like gardening, cleaning or washing windows, laundry services etc can be franchised as well.
Ageing populations is also a big franchise area. This could be anything from designing activities or holidays for the elderly – not just putting them in a nursing home. Physical education for older people and dental care is another new area for franchising. Health and beauty services will be huge as well, considering there’s no end to the willingness of people to look good.
What changes would you like to see in the Indian market to reduce the challenges that brands often face in scaling up?
I would say announcing franchise systems that show that India is welcoming to this concept. If foreign brands know that the Indian public likes the idea of franchising then they will come anyway. What’s important to remember is that it’s very pleasing to sign many franchisees, but very expensive to lose them. So, there needs to be some regulations that are encouraging for the whole franchise ecosystem. The laws need not be as complicated as those in say America, but some kind of legislation to lift the standards in the market is perhaps needed.