Well start with a simple question. What is your role in franchising
Our role is really about facilitating and helping entrepreneurs. We are an investor-centric, franchise-focussed company. We are the only integrated franchise solutions company in the world. We help franchisers to expand and entrepreneurs to choose the right franchises through our advisory and (franchisee) recruitment services, magazines, web sites and exhibitions. We have 14 offices across India to facilitate these. We conduct about 110 exhibitions a year.
How was the growth of franchising in the past few difficult years
Franchising grows in recession. It's surprising. Franchising grew 30% year-on-year in 2008. In a recession, big businesses restructure and downsize, leading to massive layoffs. The laid-off turn to franchising, since it is the easiest to way for a first-timer to get into business. In fact, franchising is the best way to earn yourself a job.
What is the success rate of such new franchisees
Say, 75% odd first-timers survive the first five years.
It is often felt that product or service quality is not uniform across Indian franchisee units. Why so
This happens because some franchisers do not build the right franchise model. It is an issue with transferring know-how; you know how to do it, but do not know how to transfer it. Again, some may not have a developed a process to audit quality across the channel. These are exceptions. On the whole, franchising has brought some consistency in quality for the consumer.
Is there need for a specific law to govern franchising, as some have suggested
I dont think a separate law is required. Only three or four countries have a specific law on franchising. We have a very watertight British law on contracts. Regulations can sometimes hamper the growth of an industry which is running on its own steam.
May be a law to protect the consumer and the franchisee
I think, both franchiser and franchisee should be protected. In America, laws favour both. It's a win-win for the franchiser and the franchisee. Then only laws work. Again, a large number of segments are not regulated in India, why single out franchising
The government has to facilitate the industry to stabilise first, by creating the eco-sytem. Once you get the ecosystem right, then regulation makes sense. Today the ecosystem is not there. Take financing, for example. In the US, 95% funds for a franchisee come from banks, but not so here. The government role today should be to facilitate franchise finance, help entrepreneurs to be created. Bring controls later to ensure that the interests of banks, franchisees, franchisers and consumers are safeguarded.
What is the future looking like
As consumption grows, franchising will also grow.
But dont you think rapid expansion without quality checks would eventually hurt franchising growth
I agree with you that we need to adopt global best practices and build investor confidence in franchising to ensure its long-term growth. I think, if large corporate houses get into franchising, that will build confidence in investors. India has a tradition of long-standing channel relationship. For example, a distributor of Tata or Hindustan Unilever never goes out of its channel.
Do you have any road map to ensure that the franchise system thrives in India
Education of franchisees is the long-term answer, which can be done. When I came into business, franchising was a sellers market, in the sense that there were very few franchisers, and one needed 'influences' to get a franchise. I have turned around the business. Today, it is a buyers market. Anybody can get a franchise, and choose from a dozen or more. We have exhibitions of franchisers to get franchisees.
Tell me about yourself a little
I come from a humble background as an entrepreneur, I was in the mobile distribution business. 1n 1996, I was among the top distributors. Then I noticed that youngsters had very few opportunities to get into business. I was frustrated about the fact they have the will and energy, but no opportunities. They could turn only to three Fs, friends, family or fools, for advice. There were no professional advisers. This has cultivated a little bit of passion in me, and thus was born Franchise India.
How has been the growth of Franchise India
Franchise India has grown from a four-five people (as staff) to now 600-700 people, 14 offices, and multiple businesses. Weve grown well. But My interest is not in driving top lines, but in making an impact, in making some changes. In the next three-four years, our focus would be on the quality of services, making sure that last mile deliveries are done, and people are benefitting. That is going to be our journey.