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Food giants opting for franchise model as it involves fewer risks
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Tuesday, 04 February, 2020, 15 : 00 PM [IST]
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Pankaj Kumar Singh
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The Indian market is well exposed to international cuisine, and this has helped the giant market players to invest in India. This game has helped boost the franchise business model in India. Now the brands have shifted their focus to Tier-III and small cities.
In the food sector, there are various international brands which have come to India with a vision to expand their business and make huge profits. If research is to be believed, this has been possible because of the franchising model.
Despite the GDP (gross domestic product) and economic slowdown, the franchising model continues to witness growth in both urban and rural regions. The franchise industry is the best, and the perfect solution for entrepreneurs who wish to invest in an established brand, while enjoying the freedom of being an entrepreneur by a franchise model.
A franchise model is more popular in non-metro or small cities, where the facilities are less and the demand is high.
Today, eminent food giants like McDonald’s and Domino’s are present even in remote areas. All this has been possible due to the franchise model only. The food giants work on a franchise model, which, in turn, creates employment, benefiting both the entrepreneur and the brand.
The popularity of the franchise model has grown in last one decade, as it involves lesser risks and the brand value of the chain helps you gain popularity without an extra expense in the name of branding or marketing.
Market players feel that the franchise system protects the company from the risk of opening at new locations and helps them operate in accordance with the local cultural values and beliefs.
A research report stated that a good percentage of young Indians are moving towards the concept of franchising, as there is a higher chance of success than in a sole proprietorship.
Also, from the market perspective, the concept requires a shorter time of opening; initial training and ongoing support and assistance in finding an optimal site.
For the research, when youngsters aged between 25-35 were asked about the inclination, they mentioned about the selling power of a known brand makes it a smooth ride for them to find a place in the market.
In terms of expenses, the models involve lower costs through group purchasing; use of an established business model; national and regional advertising campaigns; customer lead generation through websites and centralised call centres.
What really works well in India is the network of peers (fellow franchisees) to provide advice and moral support through a company Intranet, annual conferences, and franchisee associations; and, increasingly, assistance with securing funding.
Franchise industry with the help of technology has set its foot in small cities. As a result potential entrepreneur’s local and small businessmen today are more and more interested and are coming upfront in the form of franchises.
Also, the brand value helps them gain more footfalls as compared to the smaller names, and adding a few offers increases the visibility of the brand in a particular market.
Brands are opening their outlets in the small cities with the help of local vendors and the small entrepreneurs are adding to the employment and changing the face of the city. Experts feel that this act also helps in eradicating unemployment and enhance the living standard of the working class in the city.
All this together makes it a profitable scene for the players and food being the ever-growing business involves the least risk of being a flop show. After all, food is the basic necessity of life and everybody loves delicious food.
(The author is managing director, Franchise Bouquet, a division of Jalsa Ventures Pvt Ltd.)
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