View of India from Nandi Hills - Franchise Explosion in India

Recently, we spotlighted the fast-growing pharma franchise sector in India, but that’s just one segment of the rapidly expanding franchise industry within the nation. Franchising in India is experiencing strong growth, and its expansion is poised to continue into the foreseeable future. As of April 2015, this was a $24 billion industry; however, that number is expected to top $50 billion in just a few short years. Today, there are more than 4,000 franchise brands in the country, representing just about any business sector you can think of. That number has also been forecasted to grow, at least through 2020.

A Rapidly Expanding Consumer Market

According to Franchise Mart, India is the seventh largest and second most populous nation in the world, so it’s no surprise that it “has emerged as the world’s second largest, yet fastest growing consumer market.” This phenomenon is due to five main factors: a growing population, economic reforms, increased global exposure and a desire for known brands, plus an increasingly cash-rich upper class with a willingness to spend (spurring a “consumption boom”). Various franchise brands continually target India for expansion and growth. Franchise Zing comments, “all the leading global brands [are] eyeing India as their target market.”

Five Factors Affecting India's Consumer Market Growth

  • A growing population
  • Economic reforms (resulting in a stronger focus on entrepreneurship, services, and manufacturing)
  • Increased global exposure
  • A desire for known brands (especially international brands)
  • A cash-rich upper class with a willingness to spend

After initially being seen as risky, franchising as a business model has stabilized, and by the end of next year, it will contribute about 4 percent to India’s overall GDP. As mentioned, just about every business sector is represented here by one or more franchise businesses. Popular sectors include retail, health and wellness, education, food and beverages, financial services, courier services, consumer services, and fashion. It is estimated that, on the whole, 1,000 new brands are targeting India for growth each year. In addition to the growth of pharma franchising that we’ve already called attention to, some of the biggest changes are being seen in the food services, health and wellness, and retail segments of the franchise industry.

Big Changes Across Three Sectors

Yoga class - Franchise Explosion in IndiaFor food services, changes are coming in the form of new concepts, specialty cafes, and regional cuisine. As for the health and wellness sector, franchise businesses are responding to a growing importance placed on overall wellness and lifestyle within the country by embracing different exercise programs such as Zumba, kickboxing/Mixed Martial Arts (MMA), yoga, and Pilates. There’s no doubt that Prime Minister Modi’s personal interest in health and wellness is responsible, in part, for this movement. In fact, this segment of the franchise industry is expected to grow almost six times larger than its current size by the end of 2017. The retail segment is also growing, thanks to an increased disposable income among consumers, with consumer durables, mobile devices, and other electronics leading the way.

Continued Expansion Expected

By the end of 2017, franchising is expected to bring an additional 11 million jobs to India, contributing to the overall health of the country’s economy, and it’s likely that we will continue to see India’s franchise market expand for many years to come, as the nation steadily climbs to the top rung of the international franchise scene. Big brands will continue to eye India for global expansion, and different market segments will follow the lead of those already enjoying consumer success throughout the country.

Franchising is an ideal business concept for a market like India’s — one that embraces new opportunities and entrepreneurship. Just how much the industry will actually to be able to grow remains to be seen, but if the past few years are any indication, we may just watch our predictions give way to even higher figures.

To stay up to date on the latest franchise news, to learn more about franchising or a particular franchising opportunity, and to gain access to our complimentary collection of Franchise Disclosure Documents, sign up for your free membership to Birkhoff Research Group»
 

image 1: Natesh Ramasamy (Creative Commons BY); image 2: Fabrice Florin (Creative Commons BY-SA)
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