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India: Your Next Franchise Location

India: Your Next Franchise Location

report by
Kieran McLoone

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in 5 minutes

The numbers might add up, but franchising in this dense sub-continent isn’t a walk in the park. Rich cultural variation, intrinsic religious beliefs, and the risk of copycats make India a market quite unlike any other

A bustling hive of culture located in the center of Asia, India is a diverse gem. But when it comes to international franchising – both into and out of the country – the story becomes complex.

Theoretical success
On paper, franchising within India is a match made in heaven. For franchisees, low fees mean easy access into a potentially lucrative business strategy; according to Gaurav Marya, chairman of Franchise India Group, 53 per cent of brands in the country offer an investment cost of less than $60,000. For franchisors, a population of 1.4bn and a young average age of 29 allows plenty of choice for master franchisees. The Indian food and beverage industry alone is placed at around $400bn, and the contribution of franchising to the Indian GDP is set to rise to five per cent by 2025.

So why is it proving difficult for franchises to penetrate the country – and why is it seemingly impossible for Indian franchises to flourish abroad?

Culture shock
It’s often said that every 100 miles in India, culture and cuisine are reinvented. There are very few national truths that unify the entire sub-continent, besides perhaps dietary preferences – over 50 per cent of the population is vegetarian. India also has the largest Muslim population in the world, who don’t eat pork. There’s also a considerable Hindu following, who don’t eat beef. Already, it becomes clear that even the titans of franchising – names like McDonald’s, Pizza Hut, and Domino’s Pizza – would struggle to transpose their successes in America, Europe, and Australia.

“Indianization”
As we know, though, the giants of the F&B industry have managed to break into the elusive Indian franchising market. Their method? They altered their menus and services through what some refer to as “Indianization”.

“It’s often said that every 100 miles in India, culture and cuisine are reinvented”

You won’t find a regular Big Mac on any Indian McDonald’s menu, nor spicy ground beef at Pizza Hut. The prices of chicken nuggets will also be considerably cheaper in several restaurants when compared to the offerings in the West. The western franchises that have thrived in India are those that can successfully adapt their set-up to the specialized and often cheaper preferences of Indian culture. Meat is still consumed across the country, but it would be ill-advised for a popular U.S. steakhouse to try and market their franchise nationally.

Adaptations can be broad (no pork on the menu, for example), or notably restrictive: Gujarat, a state in west India, is primarily – not quite wholly – vegetarian. A universally-appealing franchise such as Dr. Bubbles, a bubble tea bar, would outperform a general western fast-food chain, whose food menu is entrenched with meat options.

Areas in East India, such as Kolkata, have low discretionary income. This means that expensive brands may not be viable whatsoever, and more affordable franchises will have to revise their fees to reflect the local market.

article extract from report:

article extract from report

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