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FRANCHISING IN INDIA: A Critical Perspective

Written by: Dhawal Shah

Article Overview: Franchising in India is not regulated and unlike popular statistics, only 25 to 30% franchisees are successful. Based on my experience in understanding franchising in several large markets, India is atleast 30 + years behind any developed market when it comes to the market size, growth potential and the level of expertise in the franchising business. In my past five years in the Franchising Fraternity, I have come across more failures than successes, both from franchisors and franchisees.

FRANCHISING IN INDIA: A Critical Perspective

There are several reasons for this:

-Anybody can offer a franchise: Be it a large corporation that wishes to tap the entrepreneurial pool or a neighborhood roadside hawker, they all can Franchise without any disclosureor any rules or regulations to comply or follow

-Loosely Structured Franchise Agreements: Franchise Agreements are structured by any lawyer, when there are disputes, there is no legal remedy as neither the franchisor nor the franchisees interests are protected. Several times the Intellectual Property is not registered. I am not too sure if legislation might be the solution, but a basic disclosure mandatory guidelines would be useful for franchisees

-No Real Training: No real training is provided; training can vary from one day to three days with no structured agenda. Although all franchisors are prompt in touting, We-provide-Training-and-Support. There is absolutelyNObranding, advertising and operational support, whatsoever.

-Unrealistic Royalty Rates: Royalty Rates for several brands are unrealistic. Education Brands charge from 10 to 25% of gross sales (Excluding Taxes), Regional even local Food Brands start of with 8% to 15%. When does a franchisee make money at all.

-There are several magazines in India out there, which highlight the glossy side of franchising. Simply for one reason, their advertisement revenues are directly in proportional to how well they promote franchisors, irrespective of how credible or profitable they are.What can you expect when most of their clientele are franchisors. I know of several franchisors that go for paid advertorials to be featured on the front page.

-Inappropriate Franchising Strategy: Several franchisors that I know of, operate company owned locations in profitable regions and leave the lessor profitable ones to franchisees, sending of wrong signals before taking up a franchise.

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Napoleon on Project Management - Why do I include this in a list of books aimed at female entrepreneurs? Well...in the expectation that there are as many female history buffs as male ones, and in the belief that anyone interested in history will find this book fascinating, while those interested in project management will learn a thing or two. I think this was the first "gimmick" book - an author using a historical figure (usually a male, military figure, it must be admitted) to talk about modern day business management. I refuse to read any of the kind that advocates - even obliquely - the techniques of the Sopranos or the Mossad - but these military ones are pretty fun. Anyway: Only in the understanding of history, Napoleon might say, do we gain an understanding of strategy in the present. In the same spirit, Napoleon on Project Management offers the recipe for successfully managing your commitments using the strategies, tactics and priorities that propelled Napoleon himself to victory. [The book doesn't gloss over how Napolean eventually fell in defeat, of course, and there's lessons to be learned there as well. TOC Foreword by Douglas James Allan (Napoleanic Society of America) 1. The Rise to Power -The Skills to Succeed -A Compelling Vision -Diplomacy and Networking -Lessons from the Great Campaigns 2. Napoleon's 6 Winning Principles -Introduction -Exactitude -Speed -Flexibility -Simplicity -Character -Moral Force 3. The Downfall -What Went Wrong -Lessons from the Russian Invasion and Waterloo -The Four Critical Warning Signs -Napoleon's Legacy


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