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India Franchising to Grow by 35% in the Next Fiscal

13 Mar 2010 - At a time when the retail industry in India has started looking up again, franchising business in the country is expected to grow by 35% in the next fiscal.

At a time when the retail industry in India has started looking up again, franchising business in the country is expected to grow by 35% in the next fiscal. In a recent report published by the Franchising World, the franchise industry in the country is growing at 35% while the retail industry in the country is growing at around 20% in terms of turnover.

Last year almost 80 new brands including Pollo-Campero, Lolita, Santa Barbara Polo and Zara entered India through the franchise model.

A recent study by PricewaterhouseCoopers and Retailers Association of India has also found that the $ 350 billion retail industry in India is growing at a rate of 15-20%. In fact conversion of footfalls into sales for Pantaloon went back to the 2007 level [around 43%] during the first half of 2009.

While there are almost 12 million kirana shops or mom-and-pop stores in India , organised retail has a penetration level of 5-8%.

According to Gaurav Marya, president of Franchise India, almost 80% of the companies at present are following the franchise model. “Even in 2008 half of the companies in India , including new entrants and the existing ones, followed franchise model,” he said.

“The main reason for such a shift is franchise model gives more money in the hands of the retailer,” he said.

“We expect at least 35% growth too in the entry of new brands in 2010-11,” Marya said.

The PwC report shows that textiles has the highest penetration in the country-almost 38.1%, while food & grocery has 11.5% penetration and footwear and consumer durables has 9.9% and 9.1% penetration respectively.

The Franchising World report finds that the food and beverage industry is likely to grow at 45% next fiscal in terms of new market penetration through franchising route. Fashion and lifestyle franchising is expected to grow at 27%, new education concepts at 30-35% and healthcare & wellness at 25% growth in 2010-11.

Source: The Financial Express - http://www.financialexpress.com/

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