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rapidly since then. Our
membership of the World
Franchising Council gives us
access to Franchising Associations
of all the major countries. This
helps to tap many global business
Franchising is a business model of retailing, wherein the franchiser provides
opportunities in this area, which in
the brand name, business format and related training; while the franchisee
turn enables us to provide superior
puts in his capital for the retail outlet. Franchising, thus involves a contractual
quality service to a growing
relationship between the franchiser and franchisee, in which the latter pays a
number of members that currently
one-time license fee and typically an ongoing franchise fee, as an agreed
include prominent companies like
percentage of revenue generated by his outlet.
Kodak, Lakme, Lever etc.
The Association's aim is to
ranchising is a certain entrepreneurs. In the U.S almost
spread knowledge on Franchising
way of expanding 50% of retail trade takes place
in India and the related best
business because the through franchising as against a
practices around the world.
franchiser provides a meagre 2% in India.
Towards this end, FAI has been
tried and tested business
conducting many workshops and
What has your role been
format along with the brand
seminars in different parts of the
in setting-up FAI? What
inputs. The franchisee has a strong
country. For more information on
are the primary activities
motivation to make the investment
careers in franchising, you can visit
of the association?
work because of his share in the
the association’s website at
revenue. C Y Pal, President of The I have been associated with the
Franchising Association of India Franchising Association of India
and Chairman of Cadbury’s, since its birth in 2000 and have had
What is needed to pursue
shares his views on prospects in the privilege to see it
a successful career in
franchising and how an MBA can grow
help you to make a successful and
Typically, a large
lucrative career in the field of
How does franchise
an MBA help in
What is the potential of Franchising?
Franchising in India?
Franchising, by definition, is an entrepreneurial activity wherein
Franchising as a business model
a franchisee with the help of a brand, the business format provided
has tremendous potential for
to him and the related training in systems sets up a franchise outlet.
growth in India because of the
This necessarily requires expertise in all business related activity
obvious boom in the retail and
even if on a smaller scale i.e. Finance, Operations, People
services sector, inspired by the
Management, Logistics and other standard business activities.
changing lifestyles and the
An MBA provides all necessary training for holistic operation of a
resultant rapid increase in
business and is therefore in my view a very good qualification for an
demanding customers - both for
individual setting up an enterprise as a franchisee.
products and services. The
Besides becoming independent entrepreneurs and franchisees,
Franchising model also fits in well
MBAs also have tremendous potential to grow in the position of franchise
with the inherent skilled
manager in a company.
enterpreneurial resources that
The success of a franchisee depends largely on the manner in which
have always existed in India.
he or she is able to run his outlet. The growth and success of the business
Franchising also has the potential
also depends significantly on the overall competence and commitment of
to create a huge number of jobs as
the franchisee. While the commitment and investment angle has to be
well as many successful
ensured by the franchisee as an individual, an MBA qualification certainly
contributes to the competence aspect of managing a franchise business.
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manage a franchise
company, which is conducting its
retail business through more than
one business model, will have a While the franchisee needs to
franchise manager to look after have the abilities of an overall
that aspect of the business. He business manager, specialisation in Yes, many MBAs have
should preferably have a marketing and/or finance will started looking at franchising, as
marketing background, a good certainly help to succeed. As far as they perceive the tremendous
knowledge of the market and clear operations are concerned, the growth potential the field offers.
conceptual understanding of the franchisee would get sufficient
What are the typical
way franchising works. An MBA assistance from the franchiser to
challenges that one would
with a specialisation in marketing, learn the operational details of
face in this field?
and 8 – 10 years’ experience in business. However, when it comes
marketing and sales is an ideal fit. to managing the franchise outlet, Well, there are several
As far as the franchisee is it will be a big plus if one has a challenges. The first would relate
concerned, the major knowledge, at least in principle, of to the drafting of a fair and proper
requirements, in addition to a retailing, marketing and finance franchise agreement with a
sound and good education management. franchiser, and choice of proper
background, are business acumen business of a franchise venture.
What are the current
and strong entrepreneurship skills. You also have to absorb details of
trends in Franchising?
The person in this role should be the business model thoroughly and
able to relate effectively with the Franchising as a business model assimilate the training inputs from
franchiser on an ongoing basis in has become exceedingly franchisers effectively besides
order to absorb all the inputs successful, particularly in service setting up the franchise outlet as
related to the brand, best practices provision, with consumers per franchisers’ norms and
and training needs. The becoming increasingly demanding standards. But the greatest
relationship between the in the quality of service they challenge is perhaps that of
franchiser and franchisee on an receive. Franchising as a concept generating higher sales by creating
ongoing basis plays a very originated with manufacturing, as the right ambience.
important role in ensuring success in the case of cola companies
What has your personal
of the business. setting up franchise units for
experience been like?
bottling. Of late, however, the
Are there any typical growth in franchising is being The major challenges I have
specialisations which primarily driven by the services faced in franchising related to
would help an MBA to sector like IT education, childcare, manufacturing were in the area of
successfully run grooming, beauty services, achieving the projected sales
or hospitality, food and beverages, volume and managing its
etc. relationship with production
volumes committed to franchise
Do a lot of MBAs units. A major area that requires
look at continued focus of the franchiser
is the profitability of the franchisee,
because at the end of the day the
franchiser – franchisee relationship
becomes sustainable only if both
are in a WIN-WIN situation.
The author is a BMS student and
is fascinated by Economics.