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About 200 Australian companies from apparel, food & beverage and retail sectors are planning to appoint franchisees in India as a part of their global expansion plans.
According to recent surveys conducted by the Franchise Council of Australia (FCA), about a quarter of the 747 franchise systems in the country are into overseas activities and another 27 per cent are planning to commence foreign operations. India seems to be a natural choice for about 200 such brands that are firming up plans to enter the country in the near future.
"Although both China and India offer tremendous potential because of their vicinity and the population base, India scores over its neighbour owing to the language factor," said Tony White, a franchising consultant from Australia.
White is in India to address an international conference being organised by the Delhi based Franchise India Holdings Limited in the capital later this month.
Studies show that food services, retail chains dealing in lifestyle, healthcare, communications and furniture, other retail formats like hypermarkets and convenience stores, education, entertainment, services and the travel sectors are likely to witness a boom in franchising in India.
"According to US commercial services, India is the second largest market for franchising after North America. Given that foreign direct investment in retail trade is not permitted, franchising is an attractive way through which international brands can enter Indian market," says Marya Gaurav R, president of FIHL.
"There are some issues though, such as the absence of a good regulatory framework, that need to be resolved for the growth of francising in India. However, the fact that about 500 malls are coming up in the country in the near future, is a good sign for this industry which is growing at a 25-30 per cent rate," he adds.
White says that the Chinese and Indian markets look attractive by virtue of the fact that they will see an above six per cent growth in 2004-05.
Similar projections of economic growth for countries like Australia itself, the US, Russia and South Korea are between 3 and 5 per cent.