India is Becoming a Franchising Hotspot

The need to expand revenue and profit sources has seen major companies extend their brands globally. Many are doing it through franchising which is considered low risk requiring minimal investment. It's also considered an excellent avenue with potential scaling opportunities.

India has become one of the main targets for such companies, and with a quick look around, you will notice several such brands in big cities and smaller 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 about $50.4billion.

What Makes India A Target for Global Franchise?

Young, including seasoned entrepreneurs, particularly those with IT backgrounds, is one of the leading reason for this rapid growth. This is because of their proximity to technological advancement and connectivity. Also, the Indian masses have continued to receive franchising positively, leading to a substantial rise over the years.

India is also rising steadily to become the third-largest consumer after China and the US, mainly based on its 1.3 billion population. In addition, the number of high-net-worth individuals(HNIs) has primarily increased, with spending expected to reach about $6 trillion by 2030.

With such potential ground for growth, India has become a key target market for major global brands. The surge in entrepreneurs and HNIs have created a level ground for the franchising ecosystem to thrive with a high potential for sustainability.

Today, in India, most franchises are operated by new entrepreneurs who are highly receptive to these global ventures and opportunities. Franchises also expose these first-timers in business to new mentorship, skills, and technology, hence the high success rate of over 80%.

As India increasingly becomes a hot spot for franchises, it presents a chance for many to make a living since it's a significant employment generator. Generally, a franchise can create employment for about 5 to 30 people depending on its entry or setup.

Major Target Sectors for Franchise in India

Over 50% of the franchising industry in India is in the food services, health and wellness, and retail sectors. For instance, food service has thrived significantly, with Millenials being the key consumers. The majority of the Millenials have high disposable income triggering the increased rate of eating out. Ready-made food and beverages, in this case, account for over 40% of the young adults' orders made. This is a favorable trend for these franchises.

On the other hand, the rate of increase and improvement in the consumption and urbanization trends in Indians has seen the retail sector emerge rapidly through franchising. There is also a dynamic and fast-paced growth and expansion in India's health and wellness sector from increased awareness of the need to keep fit and disposable income, mainly from HNIs. In particular, the beauty and wellness industry is a key beneficiary of franchising.

Potential Franchise Challenges in India

India has successfully attracted top brands such as Pizza Hut, McDonald's, Burger King, Johnny Rockets, Subway Dunkin, and others. However, despite these opportunities for franchises, there are still a few challenges to overcome. One significant challenge is the government's failure to recognize franchising as a small business facilitator. There are still no well-defined regulatory laws on franchising in India.

Another challenge for global brands is understanding the local rich Indian culture and preferences. Additionally, in big Indian cities, retail space is expensive, which restricts the rate of expansion of the franchises. Still, with these challenges, the global brands have successfully established themselves in the country.

The success of these franchises is largely a result of efficient entry strategies, effective expansion, and quick adoption of products and services to the local's preferences. Generally, the rapid growth has seen the franchise industry generate almost 2% of India's GDP, and it's further estimated by 2025, it will have risen to about 5% of the Gross National Income.

Earning Passive Income through Investing in Franchise

India presents many opportunities for brand expansion, with sectors like food service, retail and wellness contributing to almost 60% of the overall franchising. There are several franchising models in India, but the most common are the Franchise Owned Company Operated (FOCO) and Franchise Owned Franchise Operated (FOFO).

More people are getting drawn into franchising because it offers high-yield returns and is resistant to both inflation and recession. However, the traditional franchise ownership model has a lot of challenges that prevent many investors from investing in it. For example, owning a franchise requires a lot of capital in upfront investment. It also requires some degree of experience in managing a franchise which may deter qualified investors from participating in a franchise.

These and other challenges have hindered many from investing in franchises. FOCO is the ideal model if you want to earn passive income from franchising. This means you invest in your preferred franchise, and the company takes care of the business operations. The business has no involvement from the owner, making them ideal for investors who want to build wealth without working in two or more jobs.

But how is this possible?

This model of franchising was rare until FranShares came along. FranShares makes it possible to generate passive income through the fractionalized approach. Learn more about how FranShares funding work by following the FranShares review. The platform is available to all investors regardless of your status, and you can invest anywhere from $500 to $500,000.

How Fractionalized Investing Works

As the name suggests, fractionalized investing is owning a portion of a company's share. It allows investors to invest in expensive shares or assets like a private jet, vacation homes and racehorses. Typically, fractional share investing allows individuals to buy less than a full share. This is ideal when share prices are too high for an investor to afford.

FranShares is bringing this ownership strategy to franchise investing. The approach allows accredited and non-accredited investors to have partial ownership in managed franchise locations with high-yield potential. FranShares act as the franchise operator and distribute the franchise profits to every investor. The fractional ownership idea is becoming more prevalent in physical assets and stocks ownership. Also, with fractionalized ownership approach, investors can diversify their franchise holdings. Having a portfolio of franchises across different sectors and geographies can help you avoid losses if the franchise or one location shuts down or temporarily stops its services.

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