2. 2
franchising defined
A marketing system revolving around
a two-party agreement, whereby the
franchisee
conducts
business
according to the terms specified by the
franchisor .
3. Franchisee
An entrepreneur whose power is limited by a
contractual agreement with a franchisor
Franchisor
The party in the franchise contract that
specifies the methods to be followed and the
terms to be met by the other party
3
4. 4
Reasons for the boom
( demand view )
Increasing consumption and willingness to spend .
Increasing purchasing power of the middle class .
Growing preferences for branded and quality products among
consumers .
Increased global exposure and growing aspirations to adopt western
culture and use international brands.
5. 5
Reasons for the boom
( supply view )
Increasing set of opportunity-driven competent entrepreneurs
Increasing awareness of franchising as a business opportunity and
it’s relative low risk profile
Government initiatives such as the liberalization of FDI in retail
which has allowed foreign brands to enter india
.
9. 7
Franchising
is Big Business Globally
Over a million franchised outlets with sales of 2-3 trillion dollars
The
United States of America is at the forefront of the franchise boom
40 % of retail sale revenues are from franchising
50,000 Malls, 40,000 Supermarkets
Franchising
has a Huge Growth ahead in India
Relatively New Concept for India
Around 1,200 Franchisors in the country (200 are foreign)
More than 100,000 franchisees
Current market size in India: $10 billion
$20 billion by 2014 (30 % Growth Rate)
2% of the total Retail Sales
300 Malls, 1500 Supermarkets
Franchising
infrastructure is in place in India
10. based economy.
2012 and 2017), growing from a
current estimated contribution of 1.4
8
percent of GDP This is also expected
.
to create job opportunities (including
both direct and indirect) for an
additional 11 million people by 2017.
Franchising as a concept has been
prevalent in India since a long time.
However, shifting consumer trends
including growing preference for
Estimated franchising industry
market potential (2012-2017)
Contribution of Franchising to GDP and Emplo yment (2012)
12.0%
60
131 Australia
210
168
8.0%
180
Brazil
103
6.0%
769 USA
Malaysia
8
4.0%
India
78Germany
13.4
2.0%
20 UK
0.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
People employed by franchising sector as a % of total workforce
Source: KPMG in India Analysis
Note: Bubble size represents size of franchising sector
in USD Bn in 2012 except for UK where the numbers are f or 2011
V
alue (U billion)
S$
50
150
40
120
30
50.4
20
90
45
60
7.0%
10
30
13.4
0
0
2012
2017 (projected)
Both demand and supply side factor s are expected to contribute to this growth.
Demand side factors
Supply side factors
• Increasing consumption and willingness to spend
• Increasing purchasing power of the middle class.
• Increasing set of opportunity-driven competent entrepreneurs
• Increasing awareness of Franchising as a business
opportunity and its relative low risk profile
No. of outlets ('000)
F
ranchise S
ales/ G (%)
DP
10.0%
