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FRANCHISING IN INDIA: OUTLOOK FOR 2009

FRANCHISING IN INDIA: OUTLOOK FOR 2009

He exhausted about Rs. 30 Lakhs of his savings last month to launch an English Language Training School franchise that offers education programs for those that wish to master their command over English language and other services for call centres.

Rohit Vaidya, 52, said he took up this particular franchise because of its vast target group and the need for English learning is limitless. It was also less risky than other opportunities and offered useful quality services which are in need.

"I also was concerned I would not be able to find another job in the corporate world due to my age and experience for my previous pay scale," Rohit added.

Welcome to the franchising world in a slowing economy. Rohit joins other former executives from around the world that opted for franchising as an alternative to a job. Every Indian aspires to build a business someday and leave a legacy for their kids. Many of them opt for franchising as they would not get a job immediately and have enough saving to sail through the initial gestation period of taking up a franchise.

Taking up a franchise gets you, a recognized format, brand name and a system to generate sales. Instead of working on strengthening the products or services, you simply focus on increasing sales, as you work on the business and not in the business.

In a weak economy, there are going to be a lot of employees that will be laid off. Several firms in different industries are laying off employees. Some of them are considering taking up some franchise. Many of these people are taking their severance to start up franchises. As a franchisor, you should start targeting this category, since they have previously been employees, they are more likely to follow instructions and adhere to the franchise operations. Also, it means that they would need additional sales training, as well as some entrepreneurial thinking.  Tie-ups with banks is an additional advantage, if a franchise opportunity has an existing relationship with a bank and their line of business is pre-approved, it acts as an additional benefit, which prospects would consider, before taking up a franchise. Financial assistance also adds further credibility to the franchise proposal.

Also, the Indian metros have been hard hit by the slowdown, whereas in smaller towns and cities, there has been a slight increase in the spending power due to the positive effect of inflation, leading to higher prices for agricultural goods. Also, real estate rentals in Sec. B & C towns are a lot lesser as a percentage of sales.

 

Franchise Sales Training always helps; some of the professional franchise education programs conducted by Franchising Association of India would equip franchisors and prospective entrepreneurs to make the right decisions.


But potential franchisees also should be cautious before jumping into business. Since, they will not be able to find a job very quickly as well as a wrong decision would be dangerous as most of the savings would get exhausted. The right due diligence will always help. The Franchising Association of India is a good starting point.

The legal agreement is a document, which needs to be carefully read several times. Clauses pertaining to territorial rights and restrictions, marketing costs – what is covered, what is not, etc.

Another major challenge will be the credit crunch and affordable franchise loans in 2009. Banks are reducing the amount of project finance from the once 90% to 60 – 70% of the project cost.

While recession means reduced manpower and real estate costs, it also means reduced sales. So to conclude, fellow franchisees should carefully consider taking up a franchise and fellow franchisors could alter their franchise sales approach for positive results.

Happy Franchising in 2009. 





FRANCHISING IN INDIA OUTLOOK FOR 2009 - To learn more about this author, visit Dhawal Shah's Website.

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John Power
John Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website

Dianne Crampton

Dianne Crampton is an executive leadership coach, team culture consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here.

Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009.  Her new book TIGERS Among Us: 5 Winning Business Team Cultures And Why, Three Creeks Publishing will release in March 2010.  To receive publishing discounts, subscribe to the free TigerTracks Newsletter here.

- Visit Dianne Crampton's Website


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About The Author


Dhawal Shah
(Visit Dhawal's Website) Dhawal Shah has now launched his franchise brand, www.Way2Franchise.com and www.FranchiseExpo.in, 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, Dhawal Shah can be contacted at Dhawal.Shah@way2franchise.com

Dhawal Shah is a Platinum author on EvanCarmichael.com
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