Immense franchise growth in India
India’s franchising industry is expected to experience an above average growth rate over 2012-17 across all sectors.
According to estimates from KPMG, the franchising industry is expected to witness a compound annual growth rate of 30 per cent over the next five years.
The franchising industry in India has the potential to grow to US$50 billion in the next half decade, from US$13.4 billion in 2012, predicts KPMG India deputy CEO Dinesh Kanabar.
The industry is expected to create job opportunities for an additional 11 million people by 2017.
There is scope for franchising industry to contribute almost four per cent of India’s GDP in 2017, from a current estimate of 1.4 per cent.
The services sector, which includes the likes of financial services, courier services, health and wellness and foodservice, is expected to contribute the majority of the growth in franchising in the next half decade. Franchisees in these areas are expected to form around 55 per cent of total estimated franchisees in 2017.
Retail (which includes sectors such as apparel, jewellery, neighborhood stores, food and grocery) and education are expected to be the other major areas where there is huge scope for franchising to succeed.
Allowing foreign direct investment (FDI) in single brand and multi-brand retail is expected to generate interest among large international players to adopt the franchising route to enter and expand in the country, says KPMG.
Growth in the franchising industry will also be driven by rising income and expenditure levels of the young population, it adds.
While certain operating models within franchising – such as area development and regional master franchisee – appear more attractive than others, diversity in Indian consumer preferences and degree of localisation are expected to impact the choice of final model to be adopted.