Franchises Take On India

Why is India becoming so attractive for building a global franchise?
 Franchises Take On India

It was in late April when Pinkberry CEO Ron Graves made the announcement: it was expanding into India, partnering with Mumbai-based casual dining development organization JSM Corporation to help in securing franchisees and building the brand in this new market.One month later, Krispy Kreme followed suit – in mid-May, Krispy Kreme president Jeff Welch announced that the brand was teaming with regional franchisee Bedrock Food Company Pvt., Ltd., to develop 35 locations throughout India by 2018.

Pinkberry is no stranger to growth: India will be the eighteenth country to date to welcome the frozen yogurt franchise since it first launched in 2005. Likewise, Krispy Kreme is already operating in 21 other countries including Saudi Arabia, China, and Australia. But this is the first foray into India for both. So why India, and why now? What is it that has turned India into one of the fastest growing franchise market hot spots in the world?

As far back as several years ago, franchising advice networks have been touting India as a definite market for growth and a place that smart franchisors may want to consider exploring. In 2010, the International Franchise Consultants Network published a report predicting that India’s franchise industry would grow by 35 percent – with special attention paid to the food and drink industry, which the report predicted would itself grow by as much as 45 percent. Those predictions have proved more or less valid: today, franchising site Franchise India notes that franchising as an industry has grown at a rate of around 30 percent over the last five years and is still in its nascent stages.

A lot of it has to do with the sheer size of its population. India tips the scales with over 1.2 billion residents, according to its 2011 census, accounting for 17 percent of the world’s population and making it the second most populous country in the world. With the United States’ 300 million residents coming in a distant third, the only other country that comes close to India’s population is the one that has it beat – China, another nation where franchises are rapidly expanding.

But population alone doesn’t account for rapid franchise growth – there has to be more that is both piquing consumer interest and drawing franchisors in to take a chance on a new market. In the case of India, it could have to do with a growing middle class. “A flourishing class of urban consumers possessing considerable amounts of disposable income together with the continued growth of the economy have strengthened India’s claim to be a viable and beneficial destination for a foreign franchisor,” notes Franchise India. The IFCN also points to education and an increased interest in fashion and lifestyle brands as additional factors.

Interestingly enough, it may not be a coincidence that both Pinkberry and Krispy Kreme are expanding into India so close together – the two may represent a zeitgeist of sweet treats cashing in on Asian taste preferences. “Our experience with the Indian consumer shows Indians are very fond of sweets and believe in the concept of sharing,” said Purwa Sinha, Managing Director of Bedrock Food Company Pvt., Ltd., explaining in Krispy Kreme’s press release why the franchisee expects that the brand’s East Asian successes will carry over into India. “Coffee and doughnuts as a category has huge potential in India and we expect the market to grow quickly over the next few years. We are pleased to enter into a franchise relationship with Krispy Kreme."

That in particular speaks to one point that has also proved important in China – franchises that succeed in Asia tend to be those who aren’t afraid of a little change. “Almost every product or service has a market in India,” notes Franchise India. “But sometimes, innovative strategies like ‘Indianisation’ of its products and marketing techniques must be employed by a foreign franchisor to further access the sizable market of India.” In the case of the food and drink industry, that usually means the inclusion of more regionally familiar flavors, whether that’s a little sweetness or spiciness (in the case of McDonald’s India’s special ‘Spicy Delights’ menu, with items like the McSpicy Paneer that we only wish was available stateside).

Of course, India is not unique in that regard – if you want to win over consumers, it is essential to put the time and effort into researching the tastes of any new market you plan to enter. But with its growing middle class and increasing interest, savvy brands with something unique to offer India will find that the country has a lot to offer in return. 

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