How to Choose the Best Franchise Ideas

Are you interested in starting your own company but are worried about an idea that will sell? If so, consider franchising since you have access to many established and successful franchise ideas to choose from. Without having to worry about something new and original that customers will switch their chosen brands for, you can take advantage of a known brand and business that is already generating profit and open up your own branch of it. It takes a lot of the stress out of marketing a new product and takes advantage of the pre-existing customer base. Unless you want to take a chance with something entirely new, use a franchise directory and start looking for existing franchises for sale and what market you’d like to work in.
You need money to start any new business, and even more so with a franchise since you need to be able to afford to pay for it upfront. The upside is that there is franchise financing which you should take advantage of to free up your saved money to pay for other expenses you will encounter when starting the business. Buying a franchise is also beneficial because you have little legwork to do in terms of marketing yourself or designing extensive advertising campaigns to gain clients. You will have customers right away due to the established brand you will be selling, so if you are weak in the selling department, this is the route for you. However, you will need to support and pay into any marketing strategy or campaign the franchise sets up, and you have little control over how to run your business, sales, design or inventory, since it is all a package deal. A franchise is really the best option only for someone who is looking more to manage their own business than create one, since little creativity is required. Examine your skill set to determine what area of expertise you have to contribute. Don’t choose a franchise in an industry you are interested in but have never worked in unless you are planning to hire a manager to run it for you. Know what you can offer and find a franchise list that supplies available stores in that industry in your area. When you have chosen what you want, create a business plan of your projected costs, profits, plans and changes to bring with you when you apply for franchise finance. This will help you secure your loan and have a plan for the future of your business. When the loan is secure, hire your staff, order your inventory, and put your plan into action.

Source: Franchising Nation, eNewsletter, Team India Managers Ltd

Indian retail market to reach $535 bn by 2013: Report

India’s retail market is expected to reach $535 billion by 2013, says a report on fashion and lifestyle franchises released here on Thursday.

“With anticipated $30 billion fresh investment over the next five years, modern retail will show impressive compound annual growth rate of 40 percent,” said the Fashion and Lifestyle Franchise Report 2009-10.

“With this growth rate, the market is expected to reach $535 billion by 2013,” added the report compiled by Franchise India Holding Ltd, a franchise solutions provider.

“The growth of organised retail will be driven by the franchise model in future,” said company president Gaurav Marya while releasing the report at the two-day Franchise India summit on retail trade that began here Thursday. “In fact, that is the reason that many big companies going into retail mode are adopting it,” Marya said, adding that he expected business deals worth Rs.150 crore would be struck at the summit.

About 250 firms including 30 foreign brands are participating. India’s franchise segment is growing at 38 percent annually with the market size, currently valued at $7.2 billion, expected to reach $20 billion by 2013, the report said.

There are 1,200 active franchise concepts and over 110,000 franchisees in India, it added, and identified apparel retail, education and food leading the pack.

Source: http://retail-guru.com/indian-retail-market-to-reach-535-bn-by-2013-report/

How to Avoid a Franchise Scam

If you are thinking about buying a franchise, there are many opportunities in a variety of industries that you may find suitable. However, there are so many franchise opportunities now that many franchise opportunity scams are surfacing as well. You will have to be wary of these scams while searching for your perfect franchise opportunity, and take precautions so as not to fall prey to them. The most important thing to keep in mind is to avoid things that are too good to be true. If a franchise opportunity presents itself and the franchisor is promising that you will make a lot of money in a short time with little effort, this is very unlikely to be true. The franchisor will go back on their promises and leave you out whatever money you have given to them. If you are going to buy a franchise you have to be prepared to work hard if you want to be successful. You are not going to be able to go into business for yourself and make money if you are expecting to expend little effort. As for the amount of time in which you will see returns, that can vary from franchise to franchise.

Another thing to avoid is franchise opportunities which are advertised in infomercials on TV. A good franchisor will not advertise this way, and an infomercial for any product, franchise or otherwise, should raise doubts for us if we’ve ever bought anything “As Seen on TV.” You should also look out for franchisors who are trying to rush you into making a decision with things like limited time offers. They are trying to trick you into something that you will regret if you do not take your time deciding on their franchise opportunity.

There are certain things you can do to research the company you are thinking aboutbuying a franchise from beforehand to avoid getting caught up in scams that may not be as obvious as those seen in an infomercial. Find out if there have been any lawsuits filed against the company. You can also talk to current franchisees to find out if the franchisor is up to no good or if they do all that they promise to do. You should also check with the better business bureau to find out if they have any unresolved complaints. In general, find out as much as you possibly can about the company. Keep in mind that they could have changed their name if they are a scam business.

Finally, make sure that the contract is everything it is supposed to be. If they promise that you will make a certain amount of money, you need to get it in writing in the contract, otherwise, you have no guarantee that they will follow through on that promise. Also, it is strongly recommended that you get a lawyer to read through the contract before you sign anything, no matter how confident you are in your ability to understand it and the reputability of the company.

Source: http://www.the-franchise-shop.com/articles/How-to-Avoid-a-Franchise-Scam_307.html

Grabbing a bite, Indians are lovin’ it!

BANGALORE: Amit Burman, vice-chairman of Dabur India, never thought that a casual stroll down one of south Delhi’s upcoming localities would
provide an idea for a unique business opportunity.

In 2006, the US-returned Burman and his friend Rohit Aggarwal were in Saket, standing outside one of the outlets of the international chain, Subway. The place was crowded, with people, especially in the 18-35 age group, buzzing in and out constantly. Burman and Aggarwal paused their conversation and wondered if there was a business opportunity here.

“Franchising Subway began as a hobby,” Burman says laughing. In the initial months, the team had to work on creating the sandwich category and tailoring it to local tastes. The classic cold-cut turkey and tuna subs had to share space with chicken tikka and chicken seekh kabab fare. “People were very doubtful about the venture and would ask if I planned to make sandwiches all my life,” jokes Burman.

He needn’t have worried. In three years, Burman’s Lite Bite Foods has become Subway’s largest franchisee in India. The company operates 40 quick- service restaurant (QSR) outlets and has added other international brands apart from Subway to its menu. Street Foods of India serves roti-kababs and rajma-chawal though kiosks, bakery cafe Bakers Street at airports, Pino’s Pasta Pizza and Rapps. It will also franchise US-based fried chicken brand Pollo Campero in the next few months. “We intend to become a restaurant chain with 200 outlets, including 30 QSRs, in three years,” he added.

Consumers’ growing penchant for eating out and taking quick meals in between long working hours has spawned a boom in the Indian QSR industry. Across the country, businessmen are either venturing into QSR market on their own or through franchisee tie-ups with foreign chains such as Domino’s and Papa John. Unlike fine dining restaurants, QSRs largely operate through smaller self-service outlets that provide value-for-money food that can also be consumed while on the go. It is estimated to be worth about Rs 2,500 crore and is growing at 30-40% annually.

Bangalore, which is a favoured choice for many people to open restaurants, has also seen an explosion in the number of QSRs in the recent past. This includes Spencer’s Retail’s Au Bon Pain, Global Franchisee Architects’s Cream and Fudge Factory and Donut Baker as well as Italian coffee brand Caffe Pascucci. US chain Melting Pot is ready to invest $5-$7.5 million in the Indian market by 2010.

“Many international franchise food brands are successfully operating in the country and these success stories have sent positive signals to other US franchisors to actively look at India for expansion,” said US Consulate’s principal commercial officer, Aileen Crowe Nandi. The consulate recently held a programme to introduce Indian entrepreneurs to American fast-food outlets such as CKE Restaurants, Round Table Pizza, Tropical Sno, Melting Pot and Church’s Chicken.

QSR segment operates on a high volume-low margin business model. Not only does it focus on delivering products with speed within high footfall areas but its ability to push sales even in recent months by tapping into captive audiences at malls, educational institutions and airports through evolving formats such as kiosks, drive-ins or even take-away joints has been critical.

“India offers tremendous opportunity due to its sheer size which will see the Papa John’s outlets quadruple to 100 in four years,” said Tapan
Vaidya, general manager, restaurant division, of the Jawad Business Group—the franchisee for pizza take-away chain Papa John’s in India and Middle East.

International brands are not the only ones to cash in on this trend. Local entrepreneurs have jumped into the fray with different concepts and ideas. Sunil Cherian, who runs the Chennai-based Burgerman is one such. Burgerman’s core business proposition is to offer 25 burger variants within a 25 sq ft kiosk. With 50 outlets in Chennai and 30 in Bangalore by the month-end, the chain has tied up with retail chains to grab captive consumers at Big Bazaar, Foodworld, Nilgiris or even HPCL and BPCL.

BuddyChef, which comes from the stables of Pune’s organic farming firm Orgreen, aims to sell pre-cooked Indian and Chinese meals under $1 across every pin code. With seven outlets across Pune, it is selling 5,000 meals a day across the counter to working couples, students and small offices.

Franchising has been a catalyst in fuelling the QSR concept in India. Sanjesh Thakur, Ernst & Young’s associate director, retail & consumer products practice, says that around 17% of the F&B outlets within the organised sector are operated through franchisees and over 30% of the upcoming outlets are projected to be based on this model.

The QSR trend was kicked off by the likes of McDonald’s and Yum! Restaurant’s KFC, which began operations in the 1990s. “Since the market opened up in the ‘90s, consumer habits including eating-out behaviour has gradually undergone a change,” said KFC India’s marketing director Unnat Varma. KFC added 27 outlets last year taking its total count to 72.

All this growth needs money and investors have started opening their purses to the industry.

Bangalore-based East West Ethnic Foods, the holding company of wraps chain Kaati Zone which is adding 100 outlets by next fiscal across Maharashtra, is in talks with two-three private equity players to raise between Rs 12-15 crore.

It received its first round of funding from Accel Partners India, Draper Investment company and the founder of Helion Ventures, Ashish Gupta.

Source: http://economictimes.indiatimes.com/News/News-By-Industry/Services/Hotels-/-Restaurants/Grabbing-a-bite-Indians-are-lovin-it/articleshow/5393087.cms?curpg=1

Indian retail sector to be $410-bn by fiscal-end: Assocham

NEW DELHI: The Indian retail market is expected to reach $410 billion by the end of the current fiscal, according to the Associated Chambers of Commerce and Industry of India (Assocham).

Another report on India’s retail market released here late last month had made similar projections, saying the sector was expected to reach $535 billion by 2013.

“With anticipated $30 billion fresh investment over the next five years, modern retail will show impressive compound annual growth rate of 40 percent,” said the Fashion and Lifestyle Franchise Report 2009-10.

“With this growth rate, the market is expected to reach $535 billion by 2013,” added the report compiled by Franchise India Holding Ltd, a franchise solutions provider.

As per the Assocham study released on Monday, the retail sector is estimated to grow 5.5 per cent to become $410 billion market by April 2010, registering growths of more than 22 per cent and 30 per cent in the third and fourth quarters this fiscal.

The study noted that the share of retail trade in the country’s gross domestic product (GDP) was between 8-10 per cent in 2007.

With strides of development in the organized retail segment, its share has now risen to 12 per cent, Assocham said.

Also, organised retail, which currently accounts for nearly five per cent of the retail market, is pegged at around $9.23 billion and was expected to grow at 2.3 per cent to touch $13 billion by the end of this financial year.

“Retail sector is witnessing exponential growth with development taking place not only in major cities and metros but even in tier-II and tier-III cities in India,” said Assocham president Swati Piramal in a statement.

Source: http://retail-guru.com/indian-retail-sector-to-be-410-bn-by-fiscal-end-assocham/

Franchises' easy path to ownership has costs

by Jeff Cornwall

Franchising is a path to business ownership that many of today's accidental entrepreneurs find appealing.

"For those in career transition who are considering business ownership, franchising may be a viable option, primarily because most have spent their entire career in corporate America and are used to structure and following processes," says Dan Aronoff, Nashville franchise consultant with FranNet.

"Franchising provides that structure through well-established and proven systems. For the right person and right fit, following the franchise's 'recipe' can lead to success. Why reinvent the wheel if you don't have to."

One of the downsides of buying a franchise, though, is that many require that the entrepreneur put up a significant amount of funding to start the business. However, many franchises may be eligible for Small Business Administration loan programs, too. Here is a Web site that offers more details: franchiseregistry.com/registry.

Just like any new venture, developing a business plan is a must. It's essential to determine the feasibility within the local market where you plan to open the franchise. Make sure that you temper any financial projections with current economic conditions. Be realistic.

Also, look for franchise opportunities that create value for the customer, as this will be the best business model for some time to come.

There are some sticky contracting issues with buying any franchise. Make sure to work with an attorney who has experience in that arena.

Monthly fees add up
One of the biggest sources of frustration among franchisees is that, over time, they begin to perceive that the value added provided from the franchisor or the parent company becomes less valuable.

A franchise will charge a significant monthly percentage fee (this typically ranges from 4 percent to
7 percent of sales).

This fee covers business systems, marketing support, purchasing power for inventory, and so forth. As they gain experience in the business, many franchisees believe that they can be at least as effective on their own without the support of the franchisor.

Another concern expressed by franchisees is that with all sorts of rules and standardized procedures, they tend to feel more like an employee than a business owner. Those who try to break away from the predetermined model can face the wrath of the franchisor. Larger franchisors have entire staffs dedicated to franchisee compliance.

Source: http://www.tennessean.com/article/20091011/BUSINESS01/910110340/2047/BUSINESS/Franchises++easy+path+to+ownership+has+costs