Franchising Business in India

1. Franchising Business in India Entry India, LLCinfo@entryindia.com Entry India, LLC www.entryindia.com

2. Target Audience • Small & Medium Enterprises (SMEs) • Start ups, and • Non-Resident Indians (NRIs) Who want to • Expand their business into India • Start a new business in India • Profit from opportunities in India Entry India, LLC www.entryindia.com

3. What investors consider -1 • Business, Economic and Social Environment • Markets & Growth Prospects • Legal and Regulatory Framework • Special Incentives Entry India, LLC www.entryindia.com

4. What investors considerSpecifics • Fluidity of capital • Flexibility of the labor pool • Government receptivity to business • Information communication technologies • Private sector development infrastructure • Legal systems to protect intellectual property rights • Available scientific and human capital • Cultural propensity to encourage creativity. Entry India, LLC www.entryindia.com

5. India Rising • Most attractive socio-economic & business fundamentals • Market least affected by the global recession • World’s largest democracy: 1.2 billion population • 100 million middle class in 2009 -> 580 million by 2025 ***** • World’s 4th largest economy • Largest English speaking nation in the world Entry India, LLC www.entryindia.com

6. India Investment Options • Large potential in retail, infra-structure, healthcare, education …… • Invest in Stocks, Bonds, Real Estate …. • Start or expand your existing business to India Entry India, LLC www.entryindia.com

7. India Investment Options-2 • If you have a business and want to expand it to India, consider becoming a Franchisor • If you want to start a new business, consider becoming a Franchisee • NRIs instead of regularly sending money to your family in India, start a franchise for them Entry India, LLC www.entryindia.com

8. Why Franchise in India • Franchising is Big Business Globally • Over a million franchised outlets with sales of 2-3 trillion dollars • The United States of America is at the forefront of the franchise boom • 40 % of retail sale revenues are from franchising • 50,000 Malls, 40,000 Supermarkets • Franchising has a Huge Growth ahead in India • Relatively New Conceptfor India • Around 1,200 Franchisors in the country (200 are foreign) • More than 100,000 franchisees • Current market size in India: $10 billion • $20 billion by 2013(30 % Growth Rate) • 2% of the total Retail Sales • 300 Malls, 1500 Supermarkets • Franchising infrastructure is in place in India Entry India, LLC www.entryindia.com

9. Premier Franchising Resources • International Franchising Association (IFA) http://www.franchise.org/ IFA represents all aspects of the franchise community and works to protect, enhance and promote franchising. • The Franchising Association of India http://www.fai.co.in/ Provides a one-stop shopping experience for franchising business Entry India, LLC www.entryindia.com

10. Franchising Defined Franchising is a method of doing business wherein a franchiser licenses brand, product and proven methods of doing business to a franchisee in exchange for a recurring payment. Various types of support are made available continuously by the franchiser to enable the franchisee to compete and grow. Entry India, LLC www.entryindia.com

11. Franchisee Advantages • Franchising Reduces Business Risks • 90% of start-ups fail in the first year. In a franchised business, over 90% succeed. • Proven business model, recognized brand, customer acceptance • Established methods and quality • Pre-opening (site selection, financing etc) and operational assistance: staff, training, advertising • Wider market penetration • Relatively low capital investment Entry India, LLC www.entryindia.com

12. Franchisee Issuesin India • Some Loss of entrepreneurship • loss of independence in doing and developing business, in pricing, in new product introduction, in hiring etc. • Legal and disclosure framework for franchises is not in place • Real estate markets are somewhat unstructured and unrealistic, making it difficult for start-up ventures to invest. • A franchisor’s problem may become your problem Entry India, LLC www.entryindia.com

13. Franchisor Advantages • The franchisor gets easier access to capital for rapid growth • The franchisor leverages the franchisee’s knowledge of the domestic market & regulations • Franchisees are far more motivated to maximize sales and profits than salaried branch managers. • Franchisees are an important source of new marketing and product concepts Entry India, LLC www.entryindia.com

14. Franchisor Issues • Liability of Parties UncertainNo Franchise specific legislation: the liability of either party is determined by the agreements between them or on the basis of general applicable laws • Possible loss of direct operational control • Possible loss of Intellectual Property Entry India, LLC www.entryindia.com

15. Franchisee Plan • Research • Get Reports • Attend tradeshows • Evaluate strength of the franchisor • Talk with existing Franchisees • Work in an existing operation • Get professional help in navigating through the paper trail and due diligence • Write a business plan Entry India, LLC www.entryindia.com

16. Franchisor Plan • Phase 2 • Roll out plan • Locating the right partner • Govt. clearances and approvals • Valuations and Negotiations Phase 1 • Market Research • Entry Strategy • Legal & Disclosure documents • Growth Strategy • Business Plan • Phase 3 • Support Activities • Audits & controls • Road map for franchise expansion Entry India, LLC www.entryindia.com

17. Growth Sectors in India • Retail, Telecom, Education, Healthcare are fastest growing • Automotive, IT, Beauty, Tourism are fast catching up Entry India, LLC www.entryindia.com

18. Example Education Franchising India • India is one of the largest markets for education in the world in terms of number of students. • Current Situation • 400 active education franchisee owners in India. • Informal and supplementary education has the lion’s share of education franchising. • Professional and vocational skills (Aviation, Hospitality, Hotel Management, Finishing School, Retail Training, Financial Services, and Insurance are the most franchised followed by IT training. • NIIT, Aptech in IT education, Oxford and Cambridge in vocational learning, Hughes network for management etc. • Demand-supply mismatch for quality schooling • 270 million students by 2020 • They will need schools, teachers, training, jobs, housing, entertainment……. Entry India, LLC www.entryindia.com

19. Best Way to find Partnersfor US based companies US Department Of Commerce Golden Key Service buyusa.gov/india • Appointments with pre-screened partners • Profile on each Indian company/partner • Post meeting de-briefing • Available in New Delhi, Mumbai, Chennai, Calcutta, Bangalore, Ahmedabad, and Hyderabad. • Payment SME: $700; Large: $2,300 Entry India, LLC www.entryindia.com

20. Summary • Notwithstanding the current economic slowdown and certain regulatory issues, the franchising market (specially healthcare and education) has enough reasons to remain upbeat about its future in India. • To succeed • Prepare thoroughly • Focus on Establishing Solid Local Partnerships • Get a legal firm and a CPA who have worked with foreign businesses • Track Progress, Enjoy Profit Entry India, LLC www.entryindia.com

21. Thank You Entry India, LLC www.entryindia.com