Rise In Franchising In Small-Format Retail

Daily News & Analysis:

Even as retailers shelved their expansion plans last year and struggled to keep company-owned stores running, they figured out a way to multiply their stores and sustain business — through franchising.

Franchise India Holding Ltd, a counseling and partnering firm for the franchise industry, estimates a rise in the adoption of franchise model by small-format retail players in the country since the slowdown last year.

As per its estimates, 85% of all small-format retail business in India now operates on the franchise model.

“Earlier, only 50% of small-box retail companies in India operated through franchise model, while the rest is operated only through company owned stores. This is a very significant growth from what it used to be a year or two ago,” Gaurav Marya, president, Franchise India Holding said.

During the recession, most retailers were starved of capital for expansion. Franchising offered a model to sustain their business.

“That was when we saw the growth in retail and companies that were earlier not franchising started looking at the model,” Marya said.