I was finally meeting the man himself, the one they hail as the ‘father of Indian franchising’ – Gaurav Marya, chairman of Franchise India and Francorp India. We met in a busy café at the Hilton London Paddington, where we spent the morning discussing the Pandora’s box that is the Indian business market, and how franchises can successfully navigate its complex systems. And who better to discuss franchising in India than Gaurav, who first came across the concept on a business trip to the U.S. in 1998. Having finally found his passion, a year later the entrepreneur founded his franchise venture in India. Over the last two decades, his company has diversified to become a one-stop solution to cracking all things franchising, whether it is an Indian brand going international or a global business trying to establish a presence in India. Today, he is widely credited for sparking the Indian franchise revolution and is the visionary behind India’s largest integrated franchise and retail solution company, Franchise India Holdings Ltd.
Can you elaborate on the Francast Franchise Forecast 2020 Report for India you recently published?
GM: This is a report we do every year to forecast trends and where the business is changing. We profile both the franchisor and the franchisee. There are significant changes happening globally in franchising and India is no different.
In my 23 years of being in franchising, I have seen massive changes; the most significant has been in the last two years. This is because franchises are essentially consumer businesses. As the consumer is fast evolving, so is the franchise business in order to keep apace. For example, the food industry, which is 35 per cent of the global franchise contribution, has significantly changed to accommodate delivery concepts. This has resulted in the rise of the cloud kitchen (with the food delivery business turning into a $15bn market, cloud kitchens have become the new norm in food service. The report states that four or more restaurants could be co-located with each other, individually occupying 300 square feet). Major players are emerging, and older, conventional brands are changing their models to become delivery-centric. KFC has launched its first cloud kitchen with no shop front, just delivery outlets. It’s still in its early stages but going forward this is going to be the model.
India is also seeing these changes along with the modernization and branding of services – this means franchises are taking over the market, like UClean’s laundry business. The world is moving away from the local mom-and-pop business to branded ones.
Technology-based franchises are seeing major growth. For instance, we worked with Zomato, a large delivery platform, to franchise its dark kitchens (delivery-only kitchens which service areas where it is hard to open restaurants).
India stands at about 6,000 regional active franchise systems, of which 400 are nationally active (upward of 50 to 500 franchises), while another 1,000 have a national presence but are not as active.
How are these Indian franchise systems attempting to expand globally?
GM: Globally, India has not done much. We haven’t created concepts or formats that are ‘global-ready’. When it comes to a developing nation going to a developed world, it’s not that easy; however, I see a change.
India is now looking internationally from two perspectives. Firstly, from a developing nation to another, or an underdeveloped country, which means Indian concepts are going to the likes of Bangladesh, Sri Lanka, Nepal and Myanmar. There is acceptability of an Indian brand, especially in the sectors of healthcare, education and food service. For instance, Delhi Public School Society (DPS) is an example of a global education franchise that is expanding not only in the Middle East but all over Asia. However, we can do better and look for markets in Africa and East Europe, too. These smaller countries do not have good education or healthcare capabilities and that’s where Indian brands can thrive.
Secondly, mature and iconic brands in food like Copper Chimney or Farzi Cafe – the latter is now opening franchises in the U.K., U.S., and Middle East – have the potential to become global.
Another major Indian franchise system that is emerging is OYO Hotels & Homes. It is going to be the largest hotel franchise in the world and Franchise India helped to build its franchise model. A lot of Indian tech-based companies are keen on their global expansion and that is where the future lies.
The biggest impediment to franchising in India is lending and the lack of finance, even if there is a reliable brand behind the business”
What are some of the international franchises making their way to India?
GM: Historically, we suffer from an American or British hangover with foreign brands expanding in India. Now we can see a change and people are accepting of non-American and non-British businesses, like with the specialty retailer Miniso from China. The Chinese are investing a lot in building their franchise brands globally, and India is one of the key markets – Miniso will have a big rollout with 600 stores in three years.
India is a key market for Thai, Japanese, Chinese and Malaysian brands, however, we do not see the same flow of Indian brands going abroad. Indian brands have been successful in the Middle East as it has been the most immediate market, but this has slowed down. Thus, we need them to look beyond their comfort zones.
When Indians look at exporting their product or service abroad, they look at other Indians being the buyers, which is not the best way to go about it. If you want to make a global company, you need to make a global product that can work in different markets.
How do brands that have a core Indian offering (like biryani) make it globally acceptable?
GM: I advise against expansion by convenience, which is going to a country because someone has approached you. International expansion is a very well thought out strategy and we need to develop products for overseas markets. The essence of the brand can be Indian, but it must have wider acceptability. Farzi Cafe is a good example, but we are not yet ready for an Indian quick-service restaurant going global.
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