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FRANCHISING IN INDIA: A Critical Perspective
Written by: Dhawal ShahArticle 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.
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Free Download - GordonMax, Creators of the World's Finest Diamond Simulants, expand their India Operations in 2011 By Dhawal Shah |
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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About the Author: Dhawal Shah RSS for Dhawal's articles - Visit Dhawal's website Dhawal Shah has now launched his franchise brand, www.FranchiseExpo.in, www.ArabianFranchise.com and www.FranchiseSG.com which is an internet resource for Indian Franchising Industry. He previously worked with the the Franchising Association of India for over five years. He is a qualified franchise professional with Certified Franchise Executive degree from the International Franchise Association, a well known and an international speaker for Indian Franchising, his sites have generated over 25000+ Leads and have helped thousands of entrepreneurs decide the most ideal of all businesses. To know more Dhawal Shah may be reached at Dhawal.Shah@way2franchise.com Click here to visit Dhawal's website GordonMax Creators of the Worlds Finest Diamond Simulants expand their India Operations in 2011 Al Futtaim to open Carrefour Franchise Hypermarket in Iraq Raymond eyes 40 rise in retail biz revenue in 2 years Lifeline Group acquires Medicine Shoppe franchise rights in Middle East Franchising and the Wellness Industry Opportunity |
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