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Complexities Of Franchising Your Business In India, The Easiest Country To Franchise In The World.

Guest post by: Amit Nahar

Article Overview: I have been repeatedly asked by my foreign counterparts, franchise consultants and brands from across the world and several business owners in India, who want to franchise their businesses as to why on the one hand franchising is exploding in India and why on the other, it is so difficult to franchise in India. Or Atleast, getting that franchise model right being so critical on the back drop of so much complexity,diversity, legality, political, religious and economical considerations. How could you really franchise effectively, while ensuring that all of these are carefully taken care of, and the products or service have reached the consumer in the shortest possible time, lowest possible costs. There really is no one simple answer to this, while we try devising a new formula with the following base matrix for most businesses.

Complexities Of Franchising Your Business In India, The Easiest Country To Franchise In The World.

I am going to begin my article with a paradox. ‘While India is the easiest country to begin franchising in, it is possibly the most complicated country in the world to franchise.' Let me begin with the easy part.

You don't need to be a franchisor with billions of dollars/rupees to franchise in India. Franchising in India can begin with virtually no compulsions on franchise regulations or franchise registration unlike other countries where you have to go through the UFOC (US-States with Registrations) or be compulsorily enrolled / accredited with the government/similar agencies etc.

You just start a simple company, start your business, pilot it, and franchise it. As simple as that. It cannot get easier. You don't even have to be a member of the franchising association of India, to be a franchiser nor do you need to have a specific template adherence to a franchise agreement. A simple bank account along with a PAN number, (Number allocated by the Income Tax Authorities of India.) can get you started.

You don't need to have an operations manual, training manual or any such documentation as a compulsion to franchise in India. There is no restriction on marketing your franchise and there are no time frames, which you need to adhere to, before signing a franchise, post sending your franchise model.

Hence it's all as easy as you like your franchisee, your franchisee likes you, sign off, get started.

Let's look at the complicated part.

There is no single franchising in India framework within which you can operate. Your business could be subject to a wide ranging set of laws, taxes, regulations, and compliances which you might have to adhere to whilst doing the business itself.

You will have to deal with different cultures, different regions, different tastes, different languages, habits, preferences and so on. The diversity is just too much, to fit into one business model. They say we have a country of cultures and differentiation in every state. You need to be very careful of the religious sentiments on the one side, (Beef is not used in Gujarat, by almost every multinational food franchise-Being one classic example) and there is political compulsions on the other. (A large Indian Multinational Tata's had to move their entire automotive manufacturing facility to a different state).

There is Black Money or Parallel economy which is a norm of the day. Any product or service you produce, can reach the customer through this parallel market, without payment of taxes, (You could be paying a multitude of taxes, before your product/service reaches the final consumer) and hence your authorized franchise partner's cost of product could be much higher than the grey market. (Sony TV's are available in lower costs across Grey Markets in India than in their Own Showrooms).

Your franchisee could get away with almost anything as legal rulings take a very long time and at times is very frustrating and costly to even think of going through the process. The legal system is very slow, and can often be further delayed, if you really want to prolong the case.

What's the Solution? Why is franchising in India, growing at such a rapid pace?

Franchising in India is exploding. The reason is simple; companies have understood its importance as a strategy and means of doing business despite the hurdles it faces.

India has been franchising for as long as 2 decades now and there are strong learning's from most sectors which make it very interesting for every business to learn from them and to adapt themselves to success. There is a huge base of skilled and unskilled labor available, the framework is conducive for new companies to experiment and succeed and above all, the industry itself is coming together, as the franchising association of India and others liaise with the government to improve implementation of rules on the one end and consultants like Sparkleminds are guiding companies and businesses to adhere to the right ways of franchising their businesses. I come across several companies every day, who are constantly seeking answers to their franchising problems, and each one of them are in different stages of evolution and have different perception of their challenges.They are not interested in doing the same mistakes, like the others did and would rather learn from us, and get that in place right away. They also want to ensure that the India Franchise Agreement and their Trademark and IP Protection, that they create for their business, protects their business and brand adequately.

Also, there is the emergence of the franchise media. There are so many franchise exhibitions being held with more than half a dozen companies doing these shows. Last week we participated in the Times Franchise Expo in Pune and reached out to over 2000 entrepreneurs seeking new businesses, while we were representing an international franchise brand at that show and were prospecting for suitable franchisees for their cleaning business. Entrepreneurs are exposed to 1000's of new businesses every year through these franchise events, while there are more than a dozen franchise portals educating the masses of the franchise opportunities that are available. A glance at a franchise portal like franchisebazar.com will give you instant inputs on how many companies are franchising in how many industries. The list is exhaustive and baffling.

So as a business owner, it's never been as easy as now to get started with franchising in India or for that matter to learn how to franchise your business quickly and effectively. All you need to do is to hire reputed India Franchise Consultants. As an international franchise brand, you could very intelligently align your India franchise model and get entry into this exciting marketplace, with a long term plan and a very effective franchise execution strategy in place.

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Article Tags: Franchise In India, Franchise Marketing, FranchiseBazar, Franchising In India, India Franchise Agreement, India Franchise Consultants, India Franchise Model, Sparkleminds



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