AILEEN CROWE NANDI, INTERVIEW, PRINCIPAL COMMERCIAL OFFICER (PCO) FOR SOUTH INDIA MS. AILEEN CROWE NANDI

What are the primary hurdles American brands face while entering India?
First, India is a large country offering huge opportunities for the U.S. brands/concepts. Both Indian and American firms are keen to pursue these opportunities and drive growth. With the anticipated growth of this sector, a separate regulatory framework for the franchise industry sector will further foster the growth. Franchisors' will be able to protect Intellectual Property Rights with an independent legislation for franchising as in many other countries. Secondly, the franchise sector will reach record growth if the cap on the royalty is removed. The royalty cap continues to adversely affect the pace of growth since it restricts the master franchisee from paying the royalty charged back to the franchisor. We have been raising this issue with the appropriate government body. If this is liberalized, more American brands will consider entering the Indian market to make this sector flourish.

Importantly, India is a huge country, with a lot of cultural, linguistic and religious diversity. Franchisors that expand here in India are encouraged to modify their product offering. For example, food franchisors in India, such as McDonalds (McDonalds Franchise is currently only expanding through company owned stores), Kentucky Fried Chicken, Dominos have all adapted their meal offerings. It would be difficult for them to just come and sell the same food that they sell in U.S or Europe, and need to customize to the Indian palette. Even as a country, India is diverse, the food in South India would have different spices than the North. Hence understanding diversity and localization is a challenge for American franchisors.

What are the traits of a successful franchisee?
A franchise business is a concept/brand marketing opportunity requiring strong people-skills and, lots of hard work and determination. Having said that, a new franchise venture needs significant marketing and a promotion budget for brand marketing and recall. Success of a franchise venture depends on the ability of the brand recall by the end users. A new franchise venture needs significant investment particularly during the growth phase and during expansion. Therefore, a franchise venture needs adequate capital to remain successful. The franchisee must consider all forms of financing including, loans, other forms of finance, besides his/her own funds.

What are the evaluation steps, one should consider, before taking up a master franchise?
A franchise business is a proven and successful concept working successfully elsewhere in the globe. A potential franchisee must evaluate whether the concept will work in his/her region. If it works, he/she must pursue the opportunity. If he/she believes that it will work with customization, the concept must be adjusted accordingly. For example, customization holds the key for the success of franchise opportunities in the areas of Spa, healthcare, and gyms. After all, the needs of an American client may be different from the expectations of an Indian counterpart. If he/she believes that the concept will not work even with customization for various reasons, then there is no point in pursuing the opportunity.

Which entrepreneurs are not suitable for taking up a franchisee or a master franchisee?
As I mentioned earlier, a franchise is a successful business concept. A new franchise venture must follow the guidelines of the concept completely and systematically because it worked successfully in several countries. If customization is required to meet the local conditions, foreign franchisors must be consulted and all customization must be done with franchisor's consent. Franchise ventures are serious business opportunities and just not an investment option. A franchisee, with determination, hard work, and the ability to learn will succeed in the venture.

How does a successful franchisor take his business global?
Franchising is a very well documented concept. A successful franchisor must share the documentation relating to the franchise venture to franchisee. Documentation includes: brochures, guidelines, how-to-books, step-by-step instructions, and manuals. It could also be a successful formula, ‘tried and tested' activities, and 'did not work' category. These documents will provide a road-map for the new franchisee to understand the concept thoroughly and work for its success. A successful U.S. franchisor also must understand the local customization requirements and accord high priority for changing the concept to meet the local needs. A foreign franchisor, with his/her knowledge of having launched the concept elsewhere in the world, must work closely with the new franchisee at the growth phase to guide the new venture to success.

Some Success Stories
One-Roof: This is a rural India focused cyber-cafe franchise operation successfully working in second-tier cities in Tamil Nadu. Headquartered in San Francisco, One-Roof has in-house expertise and software to manage a basket of services including e-mail, browsing, chat, desktop publishing, financial services, casualty and health insurance, education/e-learning, job skills and training.

Little Caeser's Pizza, Sign-A-Rama, Apple Bees have appointed master franchisee in India and very soon Apple Bees will launch their operations. Several other U.S. franchisors are looking for partnerships in India.

Does India need franchise legislation?
As I mentioned earlier, with the anticipated growth of franchise business in India, a separate regulatory frame-work for the franchise industry sector will further foster the growth. This will also offer international franchisors additional safety net and comfort to launch their concepts/brands in India.