India is becoming a franchise hotspot
The need to broaden sources of revenue and profit has driven major corporations to expand their brands globally. Many do this through franchising which is considered low risk requiring minimal investment. It is also considered a great avenue with potential scaling opportunities.
India has become one of the main targets for these companies and at a quick glance you will notice several of these brands in big cities and small towns. Some notable brands include KFC, Domino’s, the Gap, Levi’s and others. According to the Franchise Association of India (FAI), this industry is worth around $50.4 billion.
What makes India a target for the global franchise?
Youth, including seasoned entrepreneurs, especially those with computer backgrounds, is one of the main reasons for this rapid growth. This is due to their proximity to technological advancements and connectivity. Moreover, the Indian masses have continued to receive the franchise positively resulting in a substantial increase over the years.
India is also steadily progressing to become the third largest consumer after China and the United States, mainly based on its population of 1.3 billion. Also, the number of High Net Worth Individuals (HNI) has mostly increased with spending expected to reach around $6 trillion by 2030.
With such growth potential, India has become a key target market for major global brands. The increase in the number of entrepreneurs and HNIs has created flat ground for the franchise ecosystem to thrive with strong potential for sustainability.
Today in India, most franchises are run by new entrepreneurs who are very receptive to these global businesses and opportunities. Franchises also expose these business newbies to new mentorships, skills, and technologies, hence the high success rate of over 80%.
As India increasingly becomes a franchise hotspot, it presents a chance for many to earn a living as it is a major job generator. Generally, a franchise can create employment for around 5 to 30 people depending on its entry or installation.
Main target sectors for franchising in India
More than 50% of the franchising industry in India is in the restaurant, health and wellness, and retail sectors. For example, catering services have flourished considerably, with Millennials being the main consumers. The majority of Millennials have high disposable income, leading to an increased rate of dining out. In this case, ready meals and drinks represent more than 40% of orders placed by young adults. This is a favorable trend for these franchises.
On the other hand, the rate of increase and improvement in consumption and urbanization trends among Indians has seen the retail sector emerge rapidly through franchising. There is also a dynamic and rapid growth and expansion in the Indian health and wellness sector thanks to an increased awareness of the need to stay in shape and disposable income, mainly from HNI. In particular, the beauty and wellness industry is a key beneficiary of franchising.
Potential Franchise Challenges in India
India has managed to attract big brands such as Pizza Hut, McDonald’s, Burger King, Johnny Rockets, Subway Dunkin and many more. However, despite these opportunities for franchises, there are still some challenges ahead. The government’s failure to recognize franchising as an enabler of small business is a significant challenge. There are still no well-defined regulatory laws on franchising in India.
Another challenge for global brands is understanding the rich local Indian culture and preferences. Additionally, in major Indian cities, commercial space is expensive, which limits the rate of expansion of franchises. Yet with these challenges, global brands have successfully established themselves in the country.
The success of these franchises is largely the result of effective entry strategies, efficient expansion, and rapid adoption of products and services according to the preferences of the local population. Generally, the rapid growth has seen the franchise industry generate almost 2% of India’s GDP, and it is further estimated that by 2025, it will have reached around 5% of the Gross National Income.
Earn passive income by investing in a franchise
India presents many opportunities for brand expansion, with sectors such as food service, retail and wellness contributing almost 60% of the overall franchise. There are several franchise models in India, but the most common are Franchise Owned Company Operated (FOCO) and Franchise Owned Franchise Operated (FOFO).
More and more people are attracted to franchising because it offers high returns and is resistant to both inflation and recession. However, the traditional franchise ownership model presents many challenges that prevent many investors from investing in it. For example, owning a franchise requires a lot of initial investment capital. It also requires a certain degree of experience running a franchise, which can deter qualified investors from participating in a franchise.
These and other challenges have kept many people from investing in franchises. FOCO is the ideal model if you want to win passive income of the franchise. This means you invest in your favorite franchise and the company takes care of the business operations. The business has no owner involvement, making them ideal for investors who want to build wealth without working two or more jobs.
But how is this possible?
This franchise model was rare until the arrival of FranShares. FranShares makes it possible to generate passive income through the fractional approach. Learn more about how FranShares financing works by following the FranShares Reviews. The platform is available to all investors, regardless of your status, and you can invest between $500 and $500,000.
How split investing works
As the name suggests, split investing involves owning a portion of a part of the company. It allows investors to invest in expensive stocks or assets like a private jet, vacation homes, and racehorses. Typically, investing in fractional shares allows individuals to buy less than a full share. This is ideal when stock prices are too high for an investor.
FranShares brings this ownership strategy to franchise investing. The approach allows both accredited and non-accredited investors to have partial ownership in managed franchises with high return potential. FranShares acts as a franchise operator and distributes franchise profits to each investor. The condominium idea is becoming more prevalent in physical assets and inventory ownership. Additionally, with a fractional ownership approach, investors can diversify their franchise holdings. Having a portfolio of franchises in different industries and geographies can help you avoid losses if the franchise or a location closes or temporarily stops its services.