Franchising

Introduction
 Derived from French word franchise.
 Franchising prevailing since middle ages.
 Singer swing machine in 1850s started
franchising for the first time.
 A privilege or right granted to a person or
a group by a govt. state or sovereign.
 Authorisation granted by a mfr. for selling.
 Roles
Function Franchisor Franchisee
1. Site selection Oversee Chooses with approval
2. Design Provides prototype Incurs the cost.
design
3. Employees Training Hires, supervises &
pay.
4. Product to be Decides Can change only with
sold approval.
5. Prices Sets / Recommended Can Change only with
6. Advertising/ Determines at national approval.
promotion level May suggest local
requirements.
 Types
 Product Name Franchising.
 Business Format Franchising.
 Predetermined financial returns.
 Complete business package.
 Training by franchisor.
 Single unit / Master / Regional.
 Standard franchising.
 Franchising in India
 Acceptability growing by the day
 Fairly conventional industry spread
 Approximately 1200 franchisors spread across industries like
education, retailing, professional services, healthcare etc
 Over 125,000 franchisees
 Annual turnover from Franchising – anywhere between
Rs.100000-Rs.120,000 crores
 Total investments made by Franchisees – over Rs.90000 crores
 Over 5,000,000 people directly employed by franchised
businesses
 Variety of hybrid formats in practice
 Huge number of International franchises already existing, more
coming in.
 Factors Defining the Growth of
Franchising in India
 Positive Factors
 Huge consuming class
 Fast-growing consumerism
 Shift towards Services from Agriculture & Manufacturing
 Franchising has already proven to be successful in several sectors
 Large entrepreneurial pool

 Negative Factors
 Lack of regulatory framework
 Financing mechanisms not in place
 Skewed real estate markets
 Franchising Trends in India
 The Education sector dominates the Indian franchising
scenario, although Retail is fast catching up.
 Most of the franchisors are relatively new and small.
 Several large Indian corporate also going the
franchising way.
 Newer & innovative concepts being introduced.
 Substantial interest from international franchisors as
well as Indian business houses for master franchises.
 Franchising is now spread across the country, thereby
providing opportunities to entrepreneurs everywhere.
 Top 9 international franchises
 McDonald’s
 Subway
 Dunkin’ Donuts
 Pizza Hut
 KFC Corp
 Domino’s pizza
 Sonic Drive in restaurants
 Inter Continental Hotels Group.
 7-Eleven Inc
 Examples for Discussion
 Mc Donalds (Size and Location dependent)
 Subway (Standard Pricing)
 KFC (Business model Based)