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How do franchise organizations work in India?

Introduction:

Setting up a franchise requires a lot of work, detail, and precision. It is important to consider all the factors that could affect your work. It requires a lot of time, and especially the motive to work hard. Anyone willing to set up a franchise organization must be well aware of the place, history, customer base, and much more. Thus, it is important to study a lot before setting up a franchise. 

In this article, we shall talk about how franchise organizations work in India.

What is franchising?

A franchise organization is a business where the franchisee looks after the operations, projects, employees, workings, profits, etc., but the company remains under the franchiser's name. In simple words, a franchise is a license given to a franchisee to run a business under an already popular brand/company. In return for representing their name, the franchisee pays an initial fee and annual fee to the franchiser.

According to a report, there are about 200,000 franchising outlets with 170,000 franchisers in India.

 Why do people franchise?

Franchising is a great way for a young entrepreneur to start up. Even though their business is under the franchiser's name, a franchisee looks after the business, employer profit, and many more. Franchise organizations help such young businessmen to enter into the competitive field and make a strong stand. It also plays an advantage to the franchiser as it helps them spread their business brand around different places.

Franchising can also bring huge profits to the franchisee, as the famous brand helps them acquire more customers than it might to a new start-up. The franchiser and franchisee share a mutual agreement on a particular fee that must be paid annually. 

Franchising in India:

In India, franchising is a very common method to start up. India's franchising sector has grown steadily since 2008; according to a report by FranchiseIndia, India has witnessed a growth of 30-35% over the last 5 years, with the sector currently contributing to about 1.8% to the Indian GDP and is estimated to grow about 4% by 2022. Many foreign countries are interested in starting franchise organizations in India due to the abundance of new and young businessmen who are willing to take businesses into their own hands.

There are different methods to start franchise organizations in India. Some of the most commonly used methods are:

Direct Franchising:

In this method, the company creates a network of businesses under their names. This method greatly supports local businesses competing against foreign businesses. 

For example, any company in your region which has many outlets, but not beyond a particular geographical point is a form of direct franchising. This includes bakeries, restaurants that are famous in a particular town with many outlets, like Annapoorna in Tamil Nadu, India. 

Master franchising

Master franchising is when companies, mostly foreign brands, give the exclusive right to the franchisee to grow and develop the company’s brand in the locality.

Examples of companies that use this type of franchising method are fast-food companies like KFC and McDonald’s. 

Regional franchising

Regional franchising is similar to master franchising but works in a small-scale region compared to the latter.

Companies like Manyavar, India are examples of Regional Franchising.

Local incorporation

Local incorporation is when a foreign company gives a license to form multiple franchises and networks in a particular area, depending on the company and other factors.

For example, the American fast-food chain Subway has established a subsidiary in India, which handles franchising networks.

According to entrepreneur.com, there are about 1.7 million franchise companies globally, 50% regional brands, 16% global brands, and 34% national brands.

Conclusion:

In this article, we saw some basic details of franchising in India. Franchising has a large space for new opportunities for everyone. According to www.franchising.com, there are about 1.5 million people employed by franchisers in India. 

Simplified Marketplace is where you will find myriads of franchise opportunities, regardless of, whether you are a franchise buyer or seller. Find your ideal franchise or business idea on Simplified Marketplace and avail of the host of potential franchise businesses waiting for the right taker or if you want to buy; the right seller!

 

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