New Delhi, Delhi India (PressExposure) December 28, 2011 -- As per Francorp India, the consulting arm of Franchise India, the franchising business will grow by an estimated 25-30% in 2012. There is a sign of high optimism in both, franchisors and investors alike. These insights came out from a recent survey conducted by Francorp India, to gauge the confidence of the industry stakeholders, brands and investors, for the coming year.
"The year 2012 will see the horizontal expansion of the service sector, with many new and unique services being offered for the first time, on that scale and level. Services being a majority segment of the franchising business in India, it will be a major driver for the industry as a whole. We expect the sector to grow by 30% and the consumer products sector by over 25% in 2012, thus driving the overall industry by around 25-30% in 2012. Among the services, education segment, the largest amongst the service offerings, is poised to grow by 18-25% next year" said Mr. Gaurav Marya, Managing Director, FRANCORP.
"The way I see 2012 is "Big will not beat small anymore, it will be the fast beating the slow". The year 2012 bestows a BIG business opportunity. It will see a shift towards enhanced capacities and structured approach, accommodating the varied interests of the stakeholders. The focus would be more on efficiency and effectiveness adds Ms Brototi Sengupta, Vice President - Business Development & Client Relations, FRANCORP."
Mr. Mohit Ganglani, Business Head of Indian Franchise Association (IFA) further comments "Indian economic growth expected to rebound to 7.5 per cent in FY-13 from 7 per cent in FY12.The government has taken up initiatives on increasing foreign participation- FDI's in retails and corporate debt market and these are likely to have a positive impact on Indian economy. This will certainly revive sentiment and boost investments in starting or owning a Franchise Business in 2012."
Most of the franchisors, over 89%, were Indian brands, with 11% being of foreign origin. This is a glaring proof of the fact that even the foreign brands have a faith in the growth of the Indian economy.
Many overseas brands wish to enter India and are testing waters by participating in shows held in India. All of these are optimistic about the Indian growth story and wish to become a part and facilitate value enhancement for the Indian consumers.
Of the brand franchisors surveyed, over 62% were from the service segment and 48% from the products segment. In services, 68% were related to education sector alone. Beauty and wellness grabbed the second position with over 11% of the franchisors hailing from the sector, business services segment following at the third place with 8% and health-care at 4%.
Amongst the products segment, food and beverage was the single largest segment with over 16% of the franchisors from the segment.
Among the franchisor brands that were interviewed, almost all of them were confident about the growth in their respective sectors with over 96% betting an above average growth in their respective sectors.
Almost all, around 98%, of the brand franchisors had expansion plans with over 21% wanting to expand beyond India shores into the SAARC and Middle East countries, to start with.
The brands are mainly looking at North India, for expansion purpose, with over 55% respondents focusing there.
Amongst the zones, Francorp estimates the major growth to come from metros along-with a mix of tier II & III cities. However, this will vary according to the sector.
The survey also got some insights on the sunrise sectors. Most of these were services. Amongst these, the major were gaming, media and personalized services such as home cleaning. Francorp estimates a slow growth rate for these with a potential market waiting to be explored.
India's young population is showing interest in becoming franchisees. The growth fuelled by rising income and expenditure levels and pushed by the urge to increase wealth has led the youth to explore the opportunity.
Almost 63% of the 170 respondents were in the age group of 21-40 yrs.
Over 86% of the investors were self employed. Employed people are not seeing the industry as an option now. However, Francorp estimates that the percentage of the employed people will rise in the coming years. The main drivers for this will be the rising inflation and aspirations. Women investors were still very low at around 1% of the total number of respondents.
Most of the respondents (over 62%) want to go with the established sectors which have a low risk profile like apparel, food & beverage, education and retail. Not many like to take a plunge into new sectors.
North and West India are the favorite zones for investors to invest their money. North India was the top investing preference with over 78% investors willing to invest there. West India followed with only 9%, at the second position. Investors wish to take the Indian franchising industry to the tier II & III cities along with the metros.
Investors are also confident about the growth in 2012 in their sector of interest with over 68% respondents showing optimism. Amongst the sunrise sectors, as perceived by the investors, real estate, telecom, media, entertainment along with some niche sectors like wine and pest control, were top of the mind.
Overall, the franchising industry in India set for an above average growth rate in 2012, with the stakeholders confident about the immense potential of the model. However with the recent policy, economic and socio-cultural developments in India there are limitless opportunities, both for the franchisors as well as the investors which we will have to wait and watch out for.