Cashing in on consumerism

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: Imagine biting into a Chinese dosa in Lucknow, receiving orchids in Patna, slipping into a perfect fitted branded jeans in Meerut or visiting a branded spa in Palakkad.

Actually all of this is happening and happening at a break neck speed thanks to brand consciousness in smaller cities and towns. It’s no longer about knowing the latest trends, it’s also about sporting the latest brands, eating at the hippest restaurants, using the latest beauty products and studying at best institutes. It’s little surprise then that the franchise business has taken off in India like never before.

Experts say the franchise bubble is big and easily not the one to go bust for a while. So, what is it that is leading to the franchise boom? Gaurav Marya, president, Franchise India, an umbrella organisation of various franchise businesses in India, is himself surprised at the growth of this market.

Franchise India began in 1999. But the last two/ three years have seen the franchisee business embark on a new growth path altogether. Agrees Marya, “Between 2004 and 2007, the franchised business systems grew in the country by almost 100%, and this proved a positive sign for small business development in India and the catalytic role played by franchising to spur the growth of the system here.”

Today, the acceptability for franchising is growing by the day and it has a fairly wide industry spread. Franchise India estimates show that that there are approximately 1,150 established franchisers, 75,000 franchisees with an annual turnover around Rs 12,000 crore. The business employs around 3.50 lakh persons.

Though the system did exist in India for years, it was at informal, local levels. For example, a popular pickle maker supplying his pickle to other shops to sell exclusively was a form of franchise business. But business format franchising truly began in India in 1990s primarily with homegrown companies like courier services and education services that wanted to expand their network. Companies like NIIT and Aptech, for example, says Marya, can truly be regarded as the torchbearers for franchising in India.

Today franchising business is not just better organised, but is also well received, thanks to the growing awareness in consumers. Another important aspect leading to the growth, says Anjali Grewal who heads Franchise Guru, a body that helps people get into franchisee business, is the growing aspirations of people to turn into entrepreneurs. “With the growth of retail business in India, the awareness in general has grown up. Also, people who always wanted to get into businesses of their own but didn’t have the means or awareness are taking the franchise business route.”

What is also spurring the growth, she says, is growing aspirations of people. Take, for example, the Live-in brand of jeans that she takes care of, “There are upcoming malls in every place. Jeans is aspirational clothing. It makes perfect sense for Live-in to be present in place like Meerut.”

What has also changed, says Gautam Sahni, director, franchise, US Dollar Store, is the fact that people’s aspirations have hit a new high. It’s for the same reason, he says, entrepreneurs are coming up to take franchises of a store like theirs. “I’d say we are present in metros but our real business is in Tier II and Tier III towns, where aspirations are sky high and people want to buy imported things for their homes.”

It’s a little surprise that they began in 2005 and today have 45 stores in 18 states. “From Kohima to Shillong to Dharampur to Solan, you name it and we are there,” says Sahni.

And it’s not one category that is growing when it comes to franchise business. There is horizontal growth across all categories. A pre-school like EuroKids International Pvt Ltd, for example, that began franchising in 2003 today has 450 centres across India and they are doing pretty well in smaller places like Rajpura, Jodpur and Patna. These little places today know a hip new way of education, thanks to the growing disposable incomes.

And if pre-school education gets the kind of importance that it does, it’s little surprise that a brand like Ferns ‘N’ Petals is making it big in say Kanpur, Dehradoon or Patna. Pawan Gadia, vice-president, Ferns ‘N’ Petals Group, explains that the franchisee businesses are growing in India is because they are providing budding entrepreneurs with a ready business. “See, we are cutting their learning curve. They can begin operations from day one and with a brand on their side. They have everything to gain.”

Shahnaz Husain, one of the pioneers of franchisee businesses in India, is pretty impressed with the growth of the franchise market herself. She opened her franchise store in Kolkata way back in 1979. Today her chain of Salons has extended worldwide. Also Shahnaz franchise system is the basis for other ventures like beauty training institutes, lifestyle shops and signature parlours where they provide both spa and salon treatments. Today Shahnaz Husain has 300 franchise salons in India, many of them are in towns like Raipur, Bhatinda, Mathura, Jammu, Silchar, Shillong and Palakkad.

Says Husain, “Today, people are much more aware of global trends, beauty and fashion, thanks to the exposure to media. The world has become a smaller place. There is a high awareness of brand names in small towns, too. Due to the increasing awareness, people in small towns are going in for treatments that they believe will improve the appearances. Also, purchasing power has increased in smaller towns.”

In fact F&B is a sector that is getting very popular as well. Be it Baskins and Robbins, Pizza Hut or food courts like Club City, you name the city and they are there. Sonia Chowdhary, who looks after Club City’s franchise business, explains the logic when she says, “Today if a businessman in Patiala is going out, he wants his family to go to a nice place and to get the right ambience. Also there is more disposable income, so he wouldn’t mind taking them out to a food court.”