Being a franchisee of a top brand is a surefire way to succeed—unless, of course, you mess up big time. You get a brand, a product and a marketing strategy on a platter from the franchisor. All that is required of you is to emulate the success.
As a franchisee, you don’t just buy the right to sell a product or service; you also receive a manual of operations that ensures consistency of operation in every location. Therefore, for a franchisee to do well, it becomes important that the franchisor and the segment are doing well.
Here, Entrepreneur turns the spotlight on the most enticing sectors for franchisees in the immediate future.
Travel and Tourisim
Travel and Tourism is one of the world’s largest foreign exchange-earning industries. Providing employment directly to millions worldwide and indirectly , too, through associated service industries, it makes for a good business format.
Work in the Travel and Tourism industry is essentially concerned with providing services to people who are away from home, on business or holiday. Leisure travel includes package tours, pilgrim travel, adventure travel, and the like. Also, many major cruise lines, resorts and specialty travel groups use travel agents to promote travel packages to the millions of people who travel every year.
According to STIC Travel Group Business Development Director Richa Goyal Sikri, aspects such as innovative marketing, brand-building and strategic planning of tour packages encourage free spending of disposable incomes. This, coupled with enhanced amenities, better infrastructure of hotels, local lodging options, accreditation of travel operators and guides, etc., has contributed greatly to the growth of the sector. And let’s not forget the effect of the rising number of MNCs and the diversifications of the Indian open industries.
Sikri says the Travel and Tourism sector has been seeing annual growth rates of about 25-30 percent domestic and international). Of course, some seasons have been more successful than others, but the average has been in this range.
As a franchisee in this space, you don’t have to start the business from scratch. By obtaining another company’s franchise contract, you could see an overnight gain: the parent company’s systems, contracting power, network, brand equity in the market, training and other important expertise.
Speciality Restaurants
The Indian food market is estimated at around Rs. 1,000 crore with an annual growth rate of 25-30 percent and a potential to reach Rs. 7,500 crore by 2010. Rapid transformation in the lifestyle of Indians, particularly of those living in urban India, has resulted in a dramatic increase in demand for fast food outlets.
Consequently, Anurag Sharma, Vice President of Slice of Italy, has seen a steady rise in the demand for processed food and beverages in India. During the past few years, average monthly income has increased by almost 43 percent, and individual disposable income has hit nearly 45 percent.
The growth has been impressive. Slice of Italy has nine successful company-owned outlets in Delhi and NCR. The company opened four new outlets in 2008 and plans to open eight to ten more in 2009.
Most specialty restaurants have a strong management and a team of qualified people to support the franchisee. And the costs are not prohibitive. For example, one can own his own Slice of Italy outlet by investing as little as Rs. 15 lakh.
Learning Solutions
With less than 3.3 percent of the country’s gross national product spent on education, and with 7.2 million Indian children not in schools, education in the country is in disarray. Moreover, UNESCO’s 2007 survey claims that only 58 percent of Indian children in Grade 3 in government schools can subtract or divide.
Sadly, some may argue that imparting education is more like a business in the state. Yet, commercial as it may be, it has armed millions of Indians with skill sets to succeed in life. The mushrooming of learning solution centers—for MBA, engineering, computer science and English language—is filling up the void created by the system, one that’s been unable to offer affordable, high-quality education to all.
G. Raghavan, President-Individual Learning Solutions, NIIT Ltd., says that NIIT’s journey began with the dream of helping people reap the benefits of an IT education. “We launched the franchisee business model in the early 1980s,” he says. “The franchisee network, run by our business partners, not only helped NIIT expand its presence across India and reach the unreachable, it also fueled the fire of entrepreneurship. NIIT helped young Indians set up profitable businesses and participate in the growth of the exciting IT industry.”
Explore opportunities in setting up training centers of reputed brands, preparing curriculum and providing the required infrastructure to set up such networks.
Coffee Shops / Kiosks
There’s a bigger demand now than ever before for quick, hygienic and affordable snacks and beverages while on the move. Gone are the days when consumers didn’t care about the look and feel of the place where they stopped for a bite. Today, Indian consumers are well traveled and educated; they are more conscious of hygiene and brands. And it is their willingness to pay for them that has lead to the growth of this sector.
Coffee Day Xpress President A.G. Puttaraj says the kiosk is an easy-to-manage format. “The USP of our model is that no working capital is required; [it involves] low risk factors, low investment and flexibility, in addition to a well-established bandwidth. This unique concept is easy to set up and operate. It opens a robust business franchising model in the branded retail food and beverage segment.”
Puttaraj says the model works as it has the potential to make profits from day one. “With a low investment requirement of no more than Rs. 2-5 lakh and an area of 16–250 square feet in an A or B city, our model is a very effective way to start a small, profitable venture.”
Diagnostics
Diagnostics contribute 2.5 percent of the overall health delivery market. Yet, about 70 percent of treatment decisions are based on lab results. At present, the country has some 40,000 independent private labs in a market estimated at about Rs. 2,250 crore.
“Whenever someone is unwell, a diagnostic test is required. The first port of call is always the doctor; then, you go to a lab that‘s close by. This means there is an opportunity to have a lab in every dwelling and cluster in India. No one has the reach to cover the entire expanse of the country,” says Sanjeev Chaudhry, CEO, Super Religare Laboratories Ltd. (formerly SRL Ranbaxy Ltd.).
If an entrepreneur from a small town or district wants to differentiate his laboratory from the others, he can quite easily become a market leader by taking up a franchise. “The franchisee then starts off with a quorum of trust and acceptance,” Chaudhry explains.
This sector seems to have bucked the trend when it comes to the slowdown.
SRL/Super Religare has clocked an impressive growth of 50 percent year on year (YoY). “The industry is growing at a compounded annual growth rate (CAGR) of 20 percent—and is expected to maintain the same pace over the next five years,” Chaudhry points out.
Beauty & Wellness
No longer is hair care and beauty considered a luxury service; it’s now looked upon as a basic necessity for many, especially in economies that are undergoing tremendous growth. Global brands are entering India, and Indian brands spreading their wings into the international market.
“[People in] this hugely untapped market are becoming more aware of their looks and the need for basic hair and skin care, as pollution and the environment will ultimately affect them,” says celebrity hair-stylist Jawed Habib. Hair styling and beauty is also gaining importance in the country as a tool for enhancing self-confidence. The beauty and wellness industry is currently worth Rs. 12,000 crore and is growing at over 20 percent annually.
Fitness and Health Clubs
Fitness and health clubs make good business sense. According to Prashant Talwalkar, Director, Talwalkar Gyms, the health club industry has proved hardy even during tough economic times: “Since 1992, when the United States emerged from its most recent remission, the number of health clubs increased by almost 40 percent—from 12,635 to 17,531 facilities. Membership grew by 60 percent—from 20.8 million to 32.8 million.”
Talwalkar says club membership is perceived as more of a necessity than a luxury. Another reason for its sustained growth is the rate of unemployment. While it has increased over the past year, it is still a long way from the 7.8 percent figure of the early ‘90s. “At that point, membership did not decline; rather, it remained stable. People may be nervous about the economy, but their response will be to put off trips to Bermuda and engage in local activities instead. Clubs serve a vital role in peoples’ lives right now,” says Talwalkar.
The return generated is 22-24 percent of the capital invested, though only after a period of four years. Hindrances you might encounter while setting up such a franchise could be in terms of location and electric power supply. You would also require a carpet area of 4,500-6,000 square feet and a capital of Rs. 1.5-2.5 crore, depending upon the geographical location.
