Franchise Market - India 2013

Franchise Market - India
May 2013

2
Executive Summary
Market
India has emerged as a viable franchising destination for major brands owing to the increasing a1
who 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 entry
Drivers &
Challenges
Competition
Drivers
–Growth in disposable income and
consumer spending
–Development of malls and supermarkets
–Access to internet
–Introduction of FDI in retail
–Improvement in transportation
infrastructure
–Increasing availability of credit
–Change in consumer outlook
Challenges
–Shortage of skilled manpower
–Real estate issues
Major Players
Company A Company B Company C
Company D Company E Company F
E-newsletter as a latest promotional technique
Business model addressing rural-urban divide
E-franchisees
Trends
FRANCHISE MARKET IN INDIA 2013.PPT

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
SAMPLE
Franchising has surfaced as a prospective business model
spelling international growth for brands
Franchise Market – Global Overview
•A key strategy when growth becomes saturated in domestic markets, franchising helps brands look across
borders for untapped markets and potential growth
•Conducive macro conditions including business climate, legal and regulatory system, judiciary practices, credit
facility are considered to be factors responsible for franchising growth
•Leading franchises have recognized the factors leading to growth and now have requisite resources to grow
and ramify into emerging markets
•Top franchises have proven their success in global expansion, mastering linguistic and business challenges as
also adapting to cultural alterations in order to fit in the schema of franchising
The global
franchising
market is
expected
to reach
INR b1 by
the end of
b2
Franchise Market – Global Snapshot
g7
g6
g5
g4
g3g2
g1 g14
g13
g12
g11
g10
g9
g8
xxxxxxxxxxxxxx
h7
h6
h5
h4
h3
h2
h1 h14
h13
h12
h11
h10
h9
h8

5
SAMPLE
Though at an initial stage, yet franchising in India has
progressed and is posting healthy growth over last 4 years
Franchise Market – Indian Overview
Franchise Market – Growth
•A growing urban class aided with rising disposable income has strengthened India’s position as a viable
franchising destination in the global platform
•Greater demand for goods have translated into generation of greater demand for franchises which is growing
at an impressive growth rate of c1 annually
•Further, owing to the less hassles in setting up an entrepreneurial venture an increasing number of people are
opting for franchise route to expand and enter Indian market
•c2, c3 and c4 constitute the top sectors from the Indian franchising perspective
INR bn
20--e
p
a
b
c
d
e
f
s
20--e
r
20--e
q
20--e
o
20--e
n
20--
m

6
SAMPLEFranchising – India Snapshot (1/3)
Franchise Market – Indian Overview
t1
Franchise’s Contribution to overall GDP
t6
Sales through franchised outlets
t3
t2
t5
t4
t9
t10
t8t7
2012

7
SAMPLEEntry Routes – Segmentation
Segmentation of
different entry
strategies based
on the ones
adopted in high
probability by
the investors for
their expansion
or market entry
Thus it can be
inferred that d1 is
the most adopted
franchising route in
India as companies
generally try to test
the water by setting
up d2 and based on
its performance
ventures into d3
Franchise Market – Entry Routes
u6
u5
u4
u3
u2
u1

8
SAMPLE
Snapshots
Sectors (1/7)
• In a diverse market like that of India, certain factors
work in conjunction to make a brand successful
• Factors including e3, e4, e5 and e6 and services
constitute the key determinants of success of F&B
concept
• Many brands have tweaked their menu offerings in
order to cater to the local tastes and preferences
along with dishing out international flavors
•India’s food and beverage (F&B) sector is
estimated to grow at a rate of e1 year-on-
year
•India being positioned among the top four
Asian destinations e2, this sector is
witnessing a major influx of international
players through franchising
•Restaurant and cafe sector hold prospective
growth in this sector
Food & Beverage Sector – Overview Eat Out Market – Growth in India
Restaurant Franchising
v1
New Outlets venture through franchise model
INR bn
ng
h
i
j
p
20--e
o
20--e
m
20--e20--e
l
20--
k
20--
j

9
SAMPLEDrivers & Challenges – Summary
Drivers
Growth in disposable income and
consumer spending
Development of malls and
supermarkets
Access to internet
Introduction of FDI in retail
Improvement in transportation
infrastructure
Increasing availability of credit
Change in consumer outlook
Challenges
Shortage of skilled manpower
Real estate issues

10
Impact
20--e 20--e
r15
20--e
r16
mn
g
h
i
r17
r14
20--
r13
20--
r12
20--
r11
Total Internet Subscribers – India Number of Broadband Subscribers – India
Point 1
mn
x
y
z
20--e
r10
r9
20--e
r8
r7
20--e
r6
r5
20--
r4
r3
20--
r2
r1
Urban SubscribersRural Subscribers
• Internet access has opened avenues towards enlightening Indians about the global trends and
brands
• As more and more internet population grows, people are more aware of the latest trends that
happen across the global platform
• Growing knowledge in people about products have led to the emergence of ramification of the
same 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 which
inadvertently leads to consumers devoting more money for luxury means even if it implies
shelling out for international brands
• Further, internet is also making it easier for international companies to gain an understanding of
the cultural milieu of India and its local preferences
Internet acts as a window that enables consumers to have a
view of the wide array of products
Access to internet

11
Government Regulation – Summary
Participation
Franchising laws in India
Indian Franchise
Association
Franchising Association
of India

12
SAMPLEThough 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 behind
not categorizing it under any law
• Moreover, franchising as an industry has not been recognized as a sector by the Indian Government which also
states the reason behind why no legal framework has not yet been constituted
Laws regulating franchising in India includes f1, f2, f3, f4, f5, f6, f7, f8, f9
•However, there are certain regulations that are also factored when
franchising is considered
•These are laws that are generally applicable to all parties that come into
an agreement
•The applicability of laws depends precisely upon the modes of
franchising which may be domestic or even trans-border

13
SAMPLETrends – Summary
Key Trends
E-newsletter as a latest
promotional technique
E-franchisees
Business model
addressing rural-urban
divide

14
SAMPLE
Unique business model in franchising ecosystem expected
to 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 their
presence into non-urban and tier III cities
• This business model aims to bring together retailers, brands and consumers on a single technology-enabled
platform and thereby create ample opportunities for franchisors and franchisees
•xxxxxxx
•xxxxxxxxx
•xxxxxxx
•xxxxxxxxxx

15
SAMPLEPublic: Domestic Company – Company A (1/5)
Key People
Products and Services
Company Information Offices and Centres – India
Corporate Address Company Address
Tel No. +91-xx-fefhdgfjkb
Website www.companyA.com
Year of Incorporation 19--
Ticker Symbol ----
Stock Exchange Exchange Name
Category Products/Services
c1 P1, p2, p3
c2 P4, p5, p6
c3 P7, p8, p9
Name Designation
Person 1 Designation
Head Office

16
SAMPLEFinancial Snapshot Key Ratios
Financial Summary
• The company incurred a net profit of INR - mn in FY 20--, as
compared 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--, a
decrease of - percentage points over FY 20--
• The company reported debt to equity ratio of - in FY 20--, a decrease
of x3% over FY 20--
Key Financial Performance Indicators
Indicators Value (dd/mm/yyyy)
Market Capitalization (INR mn) z1
Total Enterprise Value (INR mn) z2
EPS (INR) z3
PE Ratio (Absolute) z4
Particulars
y-o-y change
(2012-11)
2012 2011 2010 2009
Profitability Ratios
Operating 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 Ratios
Operating costs (% of Sales) 0.79 91.03% 90.24% 90.01% 92.86%
Administration costs (% of
Sales)
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 Ratios
Current Ratio 33.00% 2.66 2.00 2.43 2.55
Cash Ratio 38.99% 0.06 0.04 0.12 0.13
Leverage Ratios
Debt to Equity Ratio -55.37% 0.03 0.07 0.06 0.09
Debt to Capital Ratio -53.67% 0.03 0.07 0.06 0.08
Interest Coverage Ratio -34.42% 6.39 9.75 11.77 6.11
Efficiency Ratios
Fixed Asset Turnover -1.78% 3.03 3.09 2.86 2.86
Asset Turnover 10.47% 1.37 1.24 1.19 1.07
Current Asset Turnover 24.15% 2.98 2.40 2.03 1.71
Working Capital Turnover -0.53% 4.77 4.80 3.45 2.82
Capital Employed Turnover 1.92% 1.00 0.98 0.93 0.89
Improved Decline
Public: Domestic Company – Company A (2/5)
Net Profit/Loss
Total Income
INR mn
q
p
r
s
INR mn
e
f
g
0
20--
k
o
20--
j
n
20--
i
m
20--
h
l

17
SAMPLEKey Business Segments Key Geographic Segments
Key Recent Developments
Description News
Overview
• p1 is India’s market leader in the social expression industry with the maximum market share in the
organized sector
• It exports its products to p2, p3, p4
Collaborations
• p5 has entered into a license agreement in Jan 2011 with p6, Inc the global market leader in p7, to open
up exclusive p8 across India
• It also has exclusive tie-ups with many other global majors such as p9, p10, p11
Expansion Plans • Has plans to double its revenue to INR - by the end of 20-- as also to open - stores every year
20--
j1 i1
h1
g1
h2
g2
a
b
c
20--
j4 i4
h4
g4
20--
j3 i3
h3
g3
20--
j2 i2
Product 4
Product 3
Product 2
Product 1
e
f
20--
l4
k4 j8
i8
h8
g8
20--
l3k3 j7
d
h7
g7
20--
l2
k2 j6
i6
h6
g6
20--
l1
k1 j5
i5
h5
g5
i7
Region 6
Region 5
Region 4
Region 3
Region 2
Region 1

18
SAMPLE
Investment Details
• xxx
• xxx
• xxx
• xxx
Date of Operation
Franchise
Requirements
Rights
Supports Offered

19
SAMPLE
S W
TO
• Strength 1
• Strength 2
• Weakness 1
• Weakness 2
• Threat 1
• Threat 2
• Opportunity 1
• Opportunity 2

20
SAMPLE
Key People
Products and Services
Company Information Offices and Centres – India
Registered Address Company Address
Tel No. +91-xx-hgfruhighjij
Website www.companyB.com
Year of Incorporation 19--
Name Designation
Registered
Address
Category Products/Services
c1 s1
Private: Domestic Company – Company B (1/6)

21
SAMPLEShareholders of the Company Ownership Structure
Name No. of Shares held
Y1 Y8
Y2 Y9
Y3 Y10
Y4 Y11
Y5 Y12
Y6 Y13
Y7 Y14
Total Y15
z1
z2

22
SAMPLEFinancial Snapshot Key Ratios
Financial Summary
• Company incurred a net loss of INR - mn in FY 20--, as
compared 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 increase
of z3 percentage points over FY 20--
• The company reported a debt to equity ratio of z4 in FY
2010, a decrease of z5% over FY 20--
Particulars
y-o-y change
(2010-09)
2010 2009 2008 2007
Profitability Ratios
Operating 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 Ratios
Operating costs (% of Sales) -43.47 100.77% 144.24% 77.76% N.A.
Administration costs (% of
Sales)
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 Ratios
Current Ratio -13.95% 7.15 8.30 7.07 1.85
Cash Ratio 185.11% 0.32 0.11 0.07 0.10
Leverage Ratios
Debt to Equity Ratio -5.98% 0.047 0.049 0.00 0.01
Debt to Capital Ratio -5.71% 0.04 0.05 0.00 0.01
Interest Coverage Ratio -69.74% -33.76 -111.55 158.54 N.A.
Efficiency Ratios
Fixed Asset Turnover 26.76% 39.16 30.89 37.51 17.97
Asset Turnover -10.27% 0.24 0.27 0.34 0.76
Current Asset Turnover -9.07% 0.28 0.30 0.33 1.10
Working Capital Turnover -7.00% 0.32 0.35 0.38 2.39
Capital Employed Turnover -10.53% 0.26 0.29 0.34 0.77
Improved Decline
Net Profit/Loss
Total Income
q
INR mn
s
INR mn
t
v
x
0
20--
k
o
20--
j
n
20--
i
m
20--
h
l
y
w
u
r
p

23
SAMPLEKey Recent Developments
Description News
Overview
• 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 z9
Services
•It addresses z10
•It offers complete range of services in the likes of consultation with specialists, latest
medical 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 and
thereby prevent them

24
SAMPLE
Investment Details
• xxxx
• xxxx
• xxxx
• xxxx
Date of Operation
Franchise
Requirements
Rights
Supports Offered

25
SAMPLE
S W
TO
• Strength 1
• Strength 2
• Weakness 1
• Weakness 2
• Threat 1
• Threat 2
• Opportunity 1
• Opportunity 2

26
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Franchise Market - India 2013

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