Franchising in India has been growing at an incredible speed since 2008. According to a recent report by KPMG and the Franchising Association of India, the industry is likely to have quadrupled in size since 2012, creating 11 million job opportunities. It is also predicted to be the source of almost 4% of India’s GDP by 2017. More than 3,000 companies – native and international brands alike – are now using the franchise model here.
The primary reason for these fine statistics is India’s consumption boom in the last two decades. With GDP expansion close to 8% in the current fiscal year, India now has the fastest growing major economy in the world, outpacing even China. It has become an economic superpower, with its huge market of over one billion potential customers making it seriously appealing to foreign businesses.
And this enormous Indian market is not an average one. The country is witnessing a demographic transformation, with a rapidly growing middle class who are gaining disposable income and happily spending it on more luxurious and comfortable goods. This has resulted in a demand for greater product choice and for higher quality, branded products, which franchises are keen to deliver.
More than 65% of the Indian population is under 35, and India’s economy has structurally shifted from being agriculture-based to service-based. This has led to a surge in young urban consumers who have no problem buying on credit and, thanks to international exposure, are willing to spend money on pricy global brands. Investments from the big foreign franchises are flooding in, with international leaders such as McDonald’s already well-established.
Food and beverages is in fact the largest sector in the franchising industry, with quick service restaurants being the fastest growing format. Other strong trades are retail, health, and thanks to the average age of the population, education.
In India there is an increasing group of competent entrepreneurs who know that the franchise is a relatively low risk business model. They are aware that they will gain an established system and years of knowledge from the franchisor, as well as training and support.
Combine their enthusiasm with the attractive Indian market and the government’s recent slackening on Foreign Direct Investment and it’s not hard to see why numerous business leaders are viewing India as a smart place to economically expand.
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