Franchising in India still at a nascent stage

By agencies   |   Monday, 25 July 2005, 07:00 Hrs
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NEW DELHI: Franchising has been recognized as a powerful way of retailing goods the world over, but in the absence of a regulatory framework and laws to govern the trade in India, it is yet to become as widespread as the local grocer.

Compared to the U.S. where nearly 45 percent of all sales come from franchising, in India, only 1200 brands offer franchises and experts say though the potential is huge, it is still at a very nascent stage here.

"Lot of issues plague the Indian franchising industry, which are also hampering its growth - the lack of a regulatory body being one of the major hurdles. The government does not recognize franchising as an industry and there are no separate laws to govern the trade," says Gaurav Marya, MD, Franchise India Consulting.

In countries like Malaysia and the U.S., there are special laws to safeguard the interests of both the franchiser and the franchisee. But here the business is still governed by the age-old Contract Law, says Marya.

"Though it started in India in the 90s, with petrol pumps and gas companies first entering into the business, the real starting came with IT as computer training schools were franchised. It has recently started in retail, but is yet to pick up in its true form," says Kapil Mohan Dhingra, First Franchising Pvt Ltd.

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