Indian Franchise Industry Outlook for 2018

The growth of the franchise industry in India shows no signs of slowing down. The sector proved to be highly profitable in 2017 and 2018 is on track to produce similar results.

Economic Growth and Social Development
Recently renamed the world’s fastest growing economy, India’s gross domestic product (GDP) grew by 7.2% in the final quarter of 2017. It is expected that this growth will continue over the next number of years, reaching an estimated 7.4% by the end of this year and 7.8% in 2019. Prime Minister Narendra Modi has pledged to double the size of the Indian economy by 2025, creating a wide range of opportunities for Indian citizens.

Recent developments within India such as globalisation, liberalisation and increased brand awareness have greatly impacted the country’s economy. India is now seen as one of the world’s largest and fastest emerging markets, and its vast population size and cultural diversity have made it a prime environment in which franchising can thrive. The franchise industry is growing at a rate of 30-35% per annum and the sales turnover of the sector was recently valued at over US$7 billion.

The recent demographic transformation in India has led to a consumption boom, meaning that there is now an identifiable section of the population with high disposable incomes, evolving lifestyles and an appetite for Western goods, which has been stimulated by a greater choice and availability of products. Over the last number of years there has been a huge growth in an interest in entrepreneurship in India. This has incited growth within the franchising sector, as franchises provide the perfect solution for budding entrepreneurs who wish to invest in the security of an established brand, whilst enjoying the freedom offered by franchise models.

The Franchise Business Model
As a model, franchising has proven itself to be highly resilient, even in times of economic downturn. Franchising can be a more attractive prospect for many people than opening their own business, as the stability of an existing model and mode of operations can mitigate a lot of the risk of opening a brand new business. Indians can rely on the fact that they are buying into an established brand with a target market that has already been identified.

Franchise Options and International Interest
Food and beverage franchises consistently dominate the franchise sector within India. One-third of new food outlets in India are established through franchise systems. Quick service restaurants and fast food outlets are the most popular, pointing to a shift in the pace of consumer lifestyles. By 2022 it is estimated that the food and beverage industry will have doubled its workforce, providing plentiful employment within India. The market value of the food and beverage industry was US$26 billion in 2017; this figure is projected to increase to US$46 billion within two years.

Retail, beauty and healthcare and education are also attractive markets for franchising. India has become an increasingly popular tourist destination and this influx of travellers has strengthened the growth of hospitality franchises. American brands have also identified India as a market that is ripe for expansion. There is a strong demand for American products and service among Indian consumers in areas such as food and beverage, hospitality, retail, education, clothing and fitness.

The key to the success of international brands within India is an accommodation of the market. India’s culture is richly diverse and this is reflected in the population. The needs and tastes of India’s consumers are unique, and international brands who have adapted their franchise model specifically to suit the particularities of the Indian market have experienced notable success.

Franchise Events
There are a number of events coming up in 2018 that should be of interest to those who are interested in franchising. The TTF Travel and Tourism Fair will take place from July 6th to 8th in Kolkata, with a second exhibition to be held in Hyderabad from July 13th to 15th. India’s International Tea and Coffee Expo will take place on November 22nd, 23rd and 24th in Kolkata. World Food India’s annual exhibition has been a great success in the past, and will return in November 2018. These events can be a fantastic opportunity for potential franchisees to expand their knowledge of the franchising sector and help narrow down which type of franchise or industry could be the right fit for them.

The economy of India has experienced positive growth throughout the last number of years, yet there is still considerable untapped marketing potential within the franchising sector. It will be interesting to see what 2018 has in store for franchising in India. Franchise Asia are pleased to report that we have seen a huge 30% increase in visitors to our site for the first quarter of 2018, compared with the same period in 2017. This reflects the appetite for franchising in India and the high level of interest people have in securing the right franchise opportunity for them.

India’s franchise sector is expected to experience considerable success this year. Be a part of that success; invest in your future and find the perfect franchise for you today.

Some information and statistics courtesy of the U.S. Department of Commerce, KPMG, Statista, the International Franchise Association and The Financial Times.

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