How Franchising is a Proven Business Model for Retail Expansion?

. In India, the franchising industry is valued at $51 billion (2017). It has grown 4 folds since 2013. In the next three years, it is set to rise 35% annually.

Franchising is an excellent opportunity to grow the brand’s presence by overpowering geographical boundaries. In fact, franchising could be stepping stone towards building a successful business empire. Where implemented, franchising lets an individual come on board of the brand of his/her choice, mainly because he/she senses a lucrative return on his/her investments.

Retail Franchising: An Overview

Overall, franchising is at growing stage in India. As per the Franchise Forcast 2020 report published by Francorp, Franchise industry in India is showing no signs of slowdown. In fact, this industry is growing beyond apparel. Report also highlighted that grocery is an emerging segment. Though, franchising in the grocery market is still in its nascent stage with few regional players leading the space. Hence, there is a lot unexplored space for the organized players.

The RBI had projected India's GDP growth for FY20 at 6.9%– in the range of 5.8-6.6% for the first half (April-September) of 2019-20 and 7.3-7.5% for the second half (October-March). India's GDP growth is expected to grow at a steady rate in the time to come. Therefore, India is seen as a world’s fastest growing economy to invest and factors such as vast population size, cultural diversity create a healthy environment for the growth of franchising industry. In India, the franchising industry is valued at $51 billion (2017). It has grown 4 folds since 2013. In the next three years, it is set to rise 35% annually.

Let’s shed light on few hot retail franchise opportunities in top retail categories..

Fashion and Lifestyle      

Fashion is one of the largest categories as far as retail expansion is concerned. Highlighting the importance of franchising, Raja Basu, COO, Da Milano said,” Brands must analyse their readiness on backend and frontend processes before getting into franchising. Unless the brand is convinced with its readiness to franchising, getting franchisees is a distant dream.”

Speaking on franchising opportunities, Jasvinder Arora, VP-Retail, Siyaram’s informed, “The company plans to take store count to 500 via franchise model from current 200. The brand promises breakeven in 12 months and ROI in 24-30 months.

Pharmacy and Fitness Chains

There many pharmacy and fitness chains which are scouting for retail expansion via franchise model. For example, Nupur Gautam, Senior Manager, VivaFit, said,” We are mulling franchise expansion in Delhi/NCR in the time to come. We are looking at highly motivated women to be part of our franchise network. Gautam was speaking at the sidelines of Franchise India 2019 show, recently concluded at the Pragati Maidan, New Delhi.

Likewise, speaking on franchise opportunity, Rajeev Ray, Operational Manager, Sanjivani, said "Sanjivani offers great margins for their franchise partners going upto 25-26%. Sanjivani also provides continuous support to our franchisees starting from staff, licenses, inventory/stock, infrastructure, layout etc."

Echoing with Ray, Siraj Lalani, Master Franchise Owner, Plus Fitness informed, “ We are targeting tier 1 for expansion. We aim to have 20 gyms by 2020.”

Consumer Durables

Hong Kong based lifestyle brand WKLife has recently opened 7 stores and plans to take this number to 200 outlets by 2021.In an exclusive conversation Gaurav Dabas, Director, WKLife informed that the franchise fee for their outlet is 15-16 lakhs and for full-fledged store the cost to franchisee is 75-80 lakhs. The brand promises ROI within one year.

Lingerie Brands

German based online lingerie brand Triumph plans to go offline via franchise model. The company plans to open 15-20 franchise stores over next two years. The cost for opening a franchise store is Rs.95 lakhs as informed by Shweta Verma, Head of Marketing, Triumph India and Sri Lanka.

Fashion Jewellery

Mumbai based fashion jewellery brand Pooja Jewellers currently has 10 stores and want to take this number to 135 in next five years with the healthy mix of company owned and franchised stores.

PC Jewellers which has the newtwork of 87 stores spread across 69 cities is also mulling franchise expansion. Likewise, imitation jewellery brand Voylla which currently operates 150 stores plans to take store count  till 300, primarily via franchise model. In an offline conversation with Tapan Roy Choudhary, SR-VP, offline retail, Voylla informed, “Voylla has FOCO model and in the investment is around 25-30 lakhs +GST. The average outlet size is around 300 sq.ft. and ROI takes around 3 years.

Specialty Retail

Pet grooming and pet supplies BonBeno is operating 21 stores pan India and plans to take store count to 50 stores by end of FY2020. Vinay Kumar Roy, Co-founder, BonBeno said,” The average set-up cost for a 500 sq.ft outlet is around Rs15-19 lakhs and breakeven period is 12-18 months.






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