Market Research Report : Franchise market in india 2013


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The new report, "Franchising Market inIndia", states thatIndiahas witnessed large scale adoption of franchising as a prospective entry route for expansion. It is hailed as being a key strategy when growth becomes saturated in domestic markets and companies look beyond borders for untapped potential and markets.
The Indian franchise market is particularly poised to grow exponentially with the recent Government mandate barring foreign majors undertaking a direct entry which compels them to establish their venture through franchising. Greater demand for goods has translated into generation of greater demand for franchises which is presently growing at an impressive rate of 30% annually.
A comparative analysis indicates that a symbiotic relationship between franchisors and franchisees exists which culminates into an amalgamated advantage for the end consumers. While franchisors render a set business model, franchisees leverage the understanding of the local and cultural milieu of the country and resultantly consumers derive a wider range of options in products both domestic and international. Based on different strategies adopted by franchisors in high probability, unit franchising emerges as the option with the highest takers. Though this route is a known concept for almost all sectors, food and beverage and education constitute the lion’s share among all the sectors or markets adopting this route.

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Market Research Report : Franchise market in india 2013

  1. 1. Franchise Market - IndiaMay 2013
  2. 2. 2Executive SummaryMarketIndia has emerged as a viable franchising destination for major brands owing to the increasing a1who are keen at shelling out more for luxury brandsa2, a3 and a4constitute the top sectors for earning revenues in the Indian franchising arenaAmongst market entry strategies, a5 is hailed as being the most opted route for entryDrivers &ChallengesCompetitionDrivers–Growth in disposable income andconsumer spending–Development of malls and supermarkets–Access to internet–Introduction of FDI in retail–Improvement in transportationinfrastructure–Increasing availability of credit–Change in consumer outlookChallenges–Shortage of skilled manpower–Real estate issuesMajor PlayersCompany A Company B Company CCompany D Company E Company FE-newsletter as a latest promotional techniqueBusiness model addressing rural-urban divideE-franchiseesTrendsFRANCHISE MARKET IN INDIA 2013.PPT
  3. 3. 3FRANCHISE MARKET IN INDIA 2013.PPT•Macro-Economic Indicators•Introduction•Market Overview•Types of Franchising•Benefits & Key Success Factors•Market Entry Routes•Franchise Model in Key Sectors•Drivers & Challenges•Government Participation•Trends•Competition•Strategic Recommendations•Appendix
  4. 4. 4SAMPLEFranchising has surfaced as a prospective business modelspelling international growth for brandsFranchise Market – Global Overview•A key strategy when growth becomes saturated in domestic markets, franchising helps brands look acrossborders for untapped markets and potential growth•Conducive macro conditions including business climate, legal and regulatory system, judiciary practices, creditfacility are considered to be factors responsible for franchising growth•Leading franchises have recognized the factors leading to growth and now have requisite resources to growand ramify into emerging markets•Top franchises have proven their success in global expansion, mastering linguistic and business challenges asalso adapting to cultural alterations in order to fit in the schema of franchisingThe globalfranchisingmarket isexpectedto reachINR b1 bythe end ofb2Franchise Market – Global Snapshotg7g6g5g4g3g2g1 g14g13g12g11g10g9g8xxxxxxxxxxxxxxh7h6h5h4h3h2h1 h14h13h12h11h10h9h8FRANCHISE MARKET IN INDIA 2013.PPT
  5. 5. 5SAMPLEThough at an initial stage, yet franchising in India hasprogressed and is posting healthy growth over last 4 yearsFranchise Market – Indian OverviewFranchise Market – Growth•A growing urban class aided with rising disposable income has strengthened India’s position as a viablefranchising destination in the global platform•Greater demand for goods have translated into generation of greater demand for franchises which is growingat an impressive growth rate of c1 annually•Further, owing to the less hassles in setting up an entrepreneurial venture an increasing number of people areopting for franchise route to expand and enter Indian market•c2, c3 and c4 constitute the top sectors from the Indian franchising perspectiveFRANCHISE MARKET IN INDIA 2013.PPTINR bn20--epabcdefs20--er20--eq20--eo20--en20--m
  6. 6. 6SAMPLEFranchising – India Snapshot (1/3)Franchise Market – Indian Overviewt1Franchise’s Contribution to overall GDPt6Sales through franchised outletst3t2t5t4t9t10t8t7FRANCHISE MARKET IN INDIA 2013.PPT2012
  7. 7. 7SAMPLEEntry Routes – SegmentationSegmentation ofdifferent entrystrategies basedon the onesadopted in highprobability bythe investors fortheir expansionor market entryThus it can beinferred that d1 isthe most adoptedfranchising route inIndia as companiesgenerally try to testthe water by settingup d2 and based onits performanceventures into d3Franchise Market – Entry Routesu6u5u4u3u2u1FRANCHISE MARKET IN INDIA 2013.PPT
  8. 8. 8SAMPLESnapshotsSectors (1/7)• In a diverse market like that of India, certain factorswork in conjunction to make a brand successful• Factors including e3, e4, e5 and e6 and servicesconstitute the key determinants of success of F&Bconcept• Many brands have tweaked their menu offerings inorder to cater to the local tastes and preferencesalong with dishing out international flavors•India’s food and beverage (F&B) sector isestimated to grow at a rate of e1 year-on-year•India being positioned among the top fourAsian destinations e2, this sector iswitnessing a major influx of internationalplayers through franchising•Restaurant and cafe sector hold prospectivegrowth in this sectorFood & Beverage Sector – Overview Eat Out Market – Growth in IndiaRestaurant Franchisingv1New Outlets venture through franchise modelFRANCHISE MARKET IN INDIA 2013.PPTINR bnnghijp20--eo20--em20--e20--el20--k20--j
  9. 9. 9SAMPLEDrivers & Challenges – SummaryDriversGrowth in disposable income andconsumer spendingDevelopment of malls andsupermarketsAccess to internetIntroduction of FDI in retailImprovement in transportationinfrastructureIncreasing availability of creditChange in consumer outlookChallengesShortage of skilled manpowerReal estate issuesFRANCHISE MARKET IN INDIA 2013.PPT
  10. 10. 10Impact20--e 20--er1520--er16mnghir17r1420--r1320--r1220--r11Total Internet Subscribers – India Number of Broadband Subscribers – IndiaPoint 1mnxyz20--er10r920--er8r720--er6r520--r4r320--r2r1Urban SubscribersRural Subscribers• Internet access has opened avenues towards enlightening Indians about the global trends andbrands• As more and more internet population grows, people are more aware of the latest trends thathappen across the global platform• Growing knowledge in people about products have led to the emergence of ramification of thesame across boundaries Consumers are getting more brand conscious and are lured to procure those products• Rising awareness stems from heightened penetration of internet among masses whichinadvertently leads to consumers devoting more money for luxury means even if it impliesshelling out for international brands• Further, internet is also making it easier for international companies to gain an understanding ofthe cultural milieu of India and its local preferencesInternet acts as a window that enables consumers to have aview of the wide array of productsAccess to internetFRANCHISE MARKET IN INDIA 2013.PPT
  11. 11. 11Government Regulation – SummaryParticipationFranchising laws in IndiaIndian FranchiseAssociationFranchising Associationof IndiaFRANCHISE MARKET IN INDIA 2013.PPT
  12. 12. 12SAMPLEThough there is no particular law franchising law …Franchising laws in India• There is no specific regulation that pertains to franchising sector in India or even regulates franchise agreement• Complexity and vast areas of law which such relationships involve have been explained as the reasons behindnot categorizing it under any law• Moreover, franchising as an industry has not been recognized as a sector by the Indian Government which alsostates the reason behind why no legal framework has not yet been constitutedLaws regulating franchising in India includes f1, f2, f3, f4, f5, f6, f7, f8, f9•However, there are certain regulations that are also factored whenfranchising is considered•These are laws that are generally applicable to all parties that come intoan agreement•The applicability of laws depends precisely upon the modes offranchising which may be domestic or even trans-borderFRANCHISE MARKET IN INDIA 2013.PPT
  13. 13. 13SAMPLETrends – SummaryKey TrendsE-newsletter as a latestpromotional techniqueE-franchiseesBusiness modeladdressing rural-urbandivideFRANCHISE MARKET IN INDIA 2013.PPT
  14. 14. 14SAMPLEUnique business model in franchising ecosystem expectedto reap benefits …Business model addressing rural-urban divide (1/2)• E-commerce is gradually penetrating into rural sections as retailers start using this model to expand theirpresence into non-urban and tier III cities• This business model aims to bring together retailers, brands and consumers on a single technology-enabledplatform and thereby create ample opportunities for franchisors and franchisees•xxxxxxx•xxxxxxxxx•xxxxxxx•xxxxxxxxxxFRANCHISE MARKET IN INDIA 2013.PPT
  15. 15. 15SAMPLEPublic: Domestic Company – Company A (1/5)Key PeopleProducts and ServicesCompany Information Offices and Centres – IndiaCorporate Address Company AddressTel No. +91-xx-fefhdgfjkbWebsite www.companyA.comYear of Incorporation 19--Ticker Symbol ----Stock Exchange Exchange NameCategory Products/Servicesc1 P1, p2, p3c2 P4, p5, p6c3 P7, p8, p9Name DesignationPerson 1 DesignationPerson 2 DesignationPerson 3 DesignationPerson 4 DesignationHead OfficeFRANCHISE MARKET IN INDIA 2013.PPT
  16. 16. 16SAMPLEFinancial Snapshot Key RatiosFinancial Summary• The company incurred a net profit of INR - mn in FY 20--, ascompared to net profit of INR - mn in FY 20--• The company reported total income of INR - mn in FY 20--,registering an increase of x1% over FY 20--• The company earned an operating margin of x2% in FY 20--, adecrease of - percentage points over FY 20--• The company reported debt to equity ratio of - in FY 20--, a decreaseof x3% over FY 20--Key Financial Performance IndicatorsIndicators Value (dd/mm/yyyy)Market Capitalization (INR mn) z1Total Enterprise Value (INR mn) z2EPS (INR) z3PE Ratio (Absolute) z4Particularsy-o-y change(2012-11)2012 2011 2010 2009Profitability RatiosOperating Margin -0.77 8.95% 9.73% 9.98% 7.14%Net Margin -1.02 4.72% 5.74% 5.64% -0.78%Profit Before Tax Margin -1.57 6.91% 8.48% 8.57% 1.34%Return on Equity -1.17 4.87% 6.04% 5.57% -0.76%Return on Capital Employed -1.48 14.92% 16.40% 15.61% 10.15%Return on Working Capital -4.01 42.79% 46.79% 34.46% 20.15%Return on Assets 0.19 12.33% 12.15% 11.86% 7.66%Return on Fixed Assets -2.93 27.20% 30.13% 28.56% 20.45%Cost RatiosOperating costs (% of Sales) 0.79 91.03% 90.24% 90.01% 92.86%Administration costs (% ofSales)1.52 43.60% 42.08% 40.86% 41.81%Interest costs (% of Sales) 0.40 1.40% 1.00% 0.85% 1.17%Liquidity RatiosCurrent Ratio 33.00% 2.66 2.00 2.43 2.55Cash Ratio 38.99% 0.06 0.04 0.12 0.13Leverage RatiosDebt to Equity Ratio -55.37% 0.03 0.07 0.06 0.09Debt to Capital Ratio -53.67% 0.03 0.07 0.06 0.08Interest Coverage Ratio -34.42% 6.39 9.75 11.77 6.11Efficiency RatiosFixed Asset Turnover -1.78% 3.03 3.09 2.86 2.86Asset Turnover 10.47% 1.37 1.24 1.19 1.07Current Asset Turnover 24.15% 2.98 2.40 2.03 1.71Working Capital Turnover -0.53% 4.77 4.80 3.45 2.82Capital Employed Turnover 1.92% 1.00 0.98 0.93 0.89Improved DeclineFRANCHISE MARKET IN INDIA 2013.PPTPublic: Domestic Company – Company A (2/5)Net Profit/LossTotal IncomeINR mnqprsINR mnefg020--ko20--jn20--im20--hl
  17. 17. 17SAMPLEKey Business Segments Key Geographic SegmentsKey Recent DevelopmentsDescription NewsOverview• p1 is India’s market leader in the social expression industry with the maximum market share in theorganized sector• It exports its products to p2, p3, p4Collaborations• p5 has entered into a license agreement in Jan 2011 with p6, Inc the global market leader in p7, to openup exclusive p8 across India• It also has exclusive tie-ups with many other global majors such as p9, p10, p11Expansion Plans • Has plans to double its revenue to INR - by the end of 20-- as also to open - stores every yearFRANCHISE MARKET IN INDIA 2013.PPTPublic: Domestic Company – Company A (3/5)20--j1 i1h1g1h2g2abc20--j4 i4h4g420--j3 i3h3g320--j2 i2Product 4Product 3Product 2Product 1ef20--l4k4 j8i8h8g820--l3k3 j7dh7g720--l2k2 j6i6h6g620--l1k1 j5i5h5g5i7Region 6Region 5Region 4Region 3Region 2Region 1
  18. 18. 18SAMPLEInvestment Details• xxx• xxx• xxx• xxxDate of OperationFranchiseRequirementsRightsSupports OfferedFRANCHISE MARKET IN INDIA 2013.PPTPublic: Domestic Company – Company A (4/5)
  19. 19. 19SAMPLES WTO• Strength 1• Strength 2• Weakness 1• Weakness 2• Threat 1• Threat 2• Opportunity 1• Opportunity 2FRANCHISE MARKET IN INDIA 2013.PPTPublic: Domestic Company – Company A (5/5)
  20. 20. 20SAMPLEKey PeopleProducts and ServicesCompany Information Offices and Centres – IndiaRegistered Address Company AddressTel No. +91-xx-hgfruhighjijWebsite www.companyB.comYear of Incorporation 19--Name DesignationPerson 1 DesignationPerson 2 DesignationPerson 3 DesignationRegisteredAddressCategory Products/Servicesc1 s1Private: Domestic Company – Company B (1/6)FRANCHISE MARKET IN INDIA 2013.PPT
  21. 21. 21SAMPLEShareholders of the Company Ownership StructureName No. of Shares heldY1 Y8Y2 Y9Y3 Y10Y4 Y11Y5 Y12Y6 Y13Y7 Y14Total Y15z1z2FRANCHISE MARKET IN INDIA 2013.PPTPrivate: Domestic Company – Company B (2/6)
  22. 22. 22SAMPLEFinancial Snapshot Key RatiosFinancial Summary• Company incurred a net loss of INR - mn in FY 20--, ascompared to net loss of INR - mn in FY 20--• It reported total income of INR - mn in FY 20--,registering a decrease of z1% over FY 20--• Earned an operating margin of z2% in FY 20--, an increaseof z3 percentage points over FY 20--• The company reported a debt to equity ratio of z4 in FY2010, a decrease of z5% over FY 20--Particularsy-o-y change(2010-09)2010 2009 2008 2007Profitability RatiosOperating Margin 42.61 -0.75% -43.36% 21.26% 100.00%Net Margin 31.55 -1.78% -33.34% 22.52% 8.64%Profit Before Tax Margin 43.03 1.27% -41.77% 25.54% 100.00%Return on Equity 9.24 -0.47% -9.71% 7.92% 6.63%Return on Capital Employed 11.84 -0.19% -12.03% 7.47% 76.28%Return on Working Capital 15.05 -0.25% -15.30% 8.45% 239.10%Return on Assets 11.84 -0.19% -12.03% 7.46% 76.28%Return on Fixed Assets 1336.40 -30.15% -1366.54% 834.39% 1796.69%Cost RatiosOperating costs (% of Sales) -43.47 100.77% 144.24% 77.76% N.A.Administration costs (% ofSales)N.A. N.A. 49.53% 35.81% N.A.Interest costs (% of Sales) -0.37 0.02% 0.40% 0.14% N.A.Liquidity RatiosCurrent Ratio -13.95% 7.15 8.30 7.07 1.85Cash Ratio 185.11% 0.32 0.11 0.07 0.10Leverage RatiosDebt to Equity Ratio -5.98% 0.047 0.049 0.00 0.01Debt to Capital Ratio -5.71% 0.04 0.05 0.00 0.01Interest Coverage Ratio -69.74% -33.76 -111.55 158.54 N.A.Efficiency RatiosFixed Asset Turnover 26.76% 39.16 30.89 37.51 17.97Asset Turnover -10.27% 0.24 0.27 0.34 0.76Current Asset Turnover -9.07% 0.28 0.30 0.33 1.10Working Capital Turnover -7.00% 0.32 0.35 0.38 2.39Capital Employed Turnover -10.53% 0.26 0.29 0.34 0.77Improved DeclineFRANCHISE MARKET IN INDIA 2013.PPTPrivate: Domestic Company – Company B (3/6)Net Profit/LossTotal IncomeqINR mnsINR mntvx020--ko20--jn20--im20--hlywurp
  23. 23. 23SAMPLEKey Recent DevelopmentsDescription NewsOverview• Is a wholly owned subsidiary of the z6 with an aim “xxxxxx”• It is working at establishing a standardized network of z7 across the country with over --clinics operating in India• Is considered to be positioned to be the largest corporate player in the z8 in z9Services•It addresses z10•It offers complete range of services in the likes of consultation with specialists, latestmedical equipment, well stocked 24-hour pharmacy Consultations are provided in diverse fields such as z11, z12, z13, z14 Boasts of having laboratory that are equipped to handle investigations related to z15, z16 Moreover, it also processes health check-ups in order to detect onset of diseases in early stages andthereby prevent themFRANCHISE MARKET IN INDIA 2013.PPTPrivate: Domestic Company – Company B (4/6)
  24. 24. 24SAMPLEInvestment Details• xxxx• xxxx• xxxx• xxxxDate of OperationFranchiseRequirementsRightsSupports OfferedFRANCHISE MARKET IN INDIA 2013.PPTPrivate: Domestic Company – Company B (5/6)
  25. 25. 25SAMPLES WTO• Strength 1• Strength 2• Weakness 1• Weakness 2• Threat 1• Threat 2• Opportunity 1• Opportunity 2FRANCHISE MARKET IN INDIA 2013.PPTPrivate: Domestic Company – Company B (6/6)
  26. 26. 26Thank you for the attentionAbout Netscribes, Inc.Netscribes, Inc. is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas ofinvestment & business research, business & corporate intelligence, content-management services, and knowledge-software services. At itscore lies a true value proposition that draws upon a vast knowledge base. Netscribes Inc. is a one-stop shop designed to fulfil clients’profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used in the preparation, “Netscribes” isnot responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes and priorpermission is required for guidelines on reproduction.Phone: +91 33 4064 6214E-Mail: sales@netscribes.comFollow us on:The Franchise Market – India 2013 report is a part of Netscribes, Inc.’s Business ServicesIndustry Series.For more detailed information or customized research requirements please contact:FRANCHISE MARKET IN INDIA 2013.PPT