FRANCHISE BUSINESS SUCCESS

AND

ITS SCOPE IN SOUTH INDIA

By

Dr. K. SOUNDARARAJANAssociate Professor

Business Administration Wing

Directorate of Distance

Education

Annamalai University

Annamalainagar – 608 002

E-mail ID:

spknrajan@gmail.com

Contact No.: 0091-9894082552

Office: 0091-4144-238610

Res: 0091-4144-225775

FRANCHISE BUSINESS SUCCESS

AND

ITS SCOPE IN SOUTH INDIA

“In Business for Yourself but not by Yourself”

– Ray-Kroc-McDonald’s

The success of franchising as a businesssystem can be attributed to several factors. Themost obvious is the brand name. In today’sconsumer market, brand names are worth a lot.Every year, billions of dollar are spent onadvertising and marketing the brand name ofcompanies. This is because a good brand namemeans consistency, quality and consumer trust.Also, more importantly it is the proven businesssystem a franchise can offer your.

TOP PROSPECTS FOR SUCCESSFUL FRANCHISE IN SOUTH INDIA

Y FOOD & BEVERAGE

Y HEALTH & BEAUTY, WEELNESS,

FITNESS AND NUTRITION

Y EDUCATION & TRAINING

Y AUTOMOBILE

Y RETAILING

FOOD & BEVERAGE

Eating out is now becoming a growing trend particularly in

urban India with more 40% of Indians eat out two to three times a

week, and approx. 65% eat once a week. More than 43% of Indians

prefer to go for dinner, when it comes to eating out a meal as per

recent research. Seemingly, people don’t just want to eat at their

restaurants; they want to own them too more than ever before. Every

fifth Indian who wishes to invest in a new business would consider

restaurant trade for investment. Whether one comes in as the operator

or angel investor, the restaurant business is undeniably today one of

the top business opportunities to review. Furthermore, approx 70% of

the organized restaurants operate via franchise business model in

India.

A recent report by an Indian Industry Group estimates that

over 30 percent of new food outlets, which are coming up in almost all

the cities across the country, are established through a franchise

system. As many as 17 percent of food and beverage operations in the

organized sector are operated by franchisors. At present there are

1,200 franchisors out of which 150 are exclusively dealing in food and

beverage retail, 75 percent of which are of Indian origin and rest are

international.

Some of the Key Highlights of the CompanyIn just over four decades has become India's largest private sector company in the Dairy IndustryMilk from Select Fine Quality cows is collected from over 3 Lakh+ farmers, chosen with care in 8500 villagesDairies in 10 locations possessing State-of-the-Art facilities, International Know how and Personnel with Sound Experience & Expertise enable creation of products of excellent quality meeting the very highest norms of Hygiene and HealthDairy ingredients exported to 38 countries in the American, Middle East and South East Asian MarketsHolds various Quality Standard Certifications including the prestigious ISO 9001 & ISO 22000Producing and marketing a wide range of Dairy Products – Dairy Whitener, Skimmed Milk Powder, AgmarkCertified Ghee, Butter, Cooking Butter, Milk, Varieties of Curd, Paneer and Buttermilk through the Brand HatsunMilk & Milk ProductsArun Icecreams and Arokya Milk, India's largest private sector milk brand , immensely popular across millions of households are also produced and marketed by CompanyArun Icecreams, the Largest Selling Ice Cream in South India was also the Winner of the Best Ice Cream in the Country award in The Great Indian Ice Cream Contest 2008 & 2009 (National Level)

The Heritage Group, founded in the year 1992 by Sri Nara Chandra Babu Naidu, is

one of the fastest growing Private Sector Enterprises in India, with five-business

divisions viz., Dairy, Retail, Agri, Bakery and Renewable Energy under its flagship

Company Heritage Foods Limited (Formerly known as Heritage Foods (India)

Limited). The annual turnover of Heritage Foods crossed Rs.1726.99 crores in

financial year 2013-14.

Presently Heritage’s milk products have market presence in Andhra

Pradesh,Telangana, Karnataka, Kerala, Tamil Nadu, Maharastra, Odisha and Delhi

and its retail stores across Bangalore, Chennai and Hyderabad. Integrated agri

operations are in Chittoor and Medak Districts and these are backbone to retail

operations and the state of art Bakery division at Uppal, Hyderabad, Telangana.

In the year 1994, HFIL went to Public Issue to raise resources, which was

oversubscribed 54 times and its shares are listed under B1 Category on BSE (Stock

Code: 519552) and NSE (Stock Code: HERITGFOOD).

Established in Chennai in the year 1964, Anjappar is the pioneer in bringing the

foods of the famed Chettiars to the people world around.

With more than 50 years of experience and 50 outlets to date.

The people’s demand as led us to take this experience overseas. Anjappar has been

accommodating the changes of time by increasing their standards to cater theever-growing necessities of today’s taste hunters.

Many sources claim Chicken 65 was a dish introduced in 1965 at the famousBuhari Hotel restaurant in Chennai by its founder A.M.Buhari, a pioneer in the SouthIndian food industry. They also offer Chicken 78, Chicken 82 and Chicken 90,introduced in 1978, 1982 and 1990 respectively.

Mr. A. M. Buhari was recognized by the Government of Tamil Nadu and wasmade Sheriff of Madras for the 1973-74, a post given to civilians who excelled in theirfields.

The Thalappakatti Biriyani Hotel’s roots can be

traced all the way back to 1957. Founded by Mr.

Nagasamy Naidu under the name Anandha Vilas

Biriyani Hotel in Dindigul. He always wore a turban

called THALAPA(a traditional head dress), which over

the years became synonymous with his brand and

cooking styles, leading him to earn the nick name

"Thalappakatti Naidu" which would eventually became

the name of our brand and restaurants.

A corporate house established in 1968 with diversified interest in business, thegroup has redefined standards and has placed immense faith in human resources andvalues. The changing trends in the economy and the possibilities available forentrepreneurs had ushered in the confidence to explore various avenues.

With strong focus and commitment towards quality, exceptional service andwarm hospitality, the company employs a team of highly skilled & experienced chefs toproduce ethnic food who come from those regions and supported by a strong managementteam at different levels to ensure the standard. Due emphasis is laid on quality, service &hygiene. We are committed to Food Safety & Standards and strictly implement FSSAI Act2006 across the chain of restaurants and it is periodically audited by Parikshan'sConsultant - an authority in food safety, standards and hygiene managed byDr. V. Pasupathy. Whilst continually sourcing the best produce from well knownsuppliers and always looking for new and innovative ideas, our Chefs create dishes thatare traditional and the contemporary.

Oriental Cuisines Private Limited (OCPL) was originally founded by foodie,professor, restaurateur and entrepreneur M Mahadevan in May 1994 under thename of Chaitanya Gourmet Splendour Private Limited. It was later renamedOriental Cuisines Private Limited in March 1997.

While the name might indicate a leaning towards all things Asian, ourglobal cuisine and flavours brings the finest flavours of the world to our esteemedcustomers.

HEALTH & BEAUTY, WEELNESS,

FITNESS AND NUTRITION

The wellness industry in India is poised to touch

Rupees One Lakh Crore by this year, with compound

annual growth rate of 15 – 17%. Consumer purchase

habits and preference have gradually evolved. This led to

an increase in demand for health and wellness products

and services various wellness products such as medical

and nutritional products, fitness equipments, eye

testing, dental-check-up, beauty slimming, hair & skin

care are all being brought under one roof by big retailers.

Franchise Talk

Success Feels Beautiful With Naturals!

Naturals is India's No.1 Salon chain and with its 410 plus branches spread across India. What makes us so successful

is our formula of delivering the best quality in a pampering environment at affordable prices. Many of our salons are

run by women entrepreneurs and we are glad to fuel their ambitions and help them achieve their dreams.

Running a Natural Franchise is a win-win situation. You get the advantage of being linked to a big brand and save on

the costs of marketing and advertising. Since it has already built a reputation for quality, you enjoy the goodwill

generated. Naturals is specially keen on promoting women entrepreneurs. Once you sign up as a franchisee, you will

get the appropriate training and support, even if this is the first time you are ever venturing into business. You will

also get support in raising capital.

Naturals Salon signed a MoU with Indian Overseas Bank (IOB). The bank has promised to fund up to Rs 25 crore

under the 'Credit Guarantee Fund Trust for Micro and Small Enterprises' scheme to roughly 100 women franchisees

identified by the company.

Each salon would require elements like branding, interior design, infrastructure, equipment and staff. The budget for

each salon would work out between Rs 25 lakh to Rs 50 lakh per salon, depending on the infrastructure and location.

The most attractive part is that the franchisee needs to generate merely 30 per cent of the required investment while

the bank will fund up to 70 per cent without demanding any collateral. So what are you waiting for! Go for it!

Started – 2000 Founder K. Venna & C.K. KumaravelBrands: Naturals Unisex Saloon, Naturals Lounge, Naturals W and Page 3

In a Rs.8000 crore salon industry, the organizedsalon segment is currently 25%, yet valued at Rs.3000 croresand rising*. The segment has achieved an annual growthrate of 30% over the past 5 years. A significant part of thisgrowth is being supported by enterprising men & womenwho become franchisees of leading salon brands. There is anetwork of over 5000 franchisees in the organized salonsegment, a majority of who are keen to take on additionalsalons**. They look forward to a highly profitable future.Join us and make the most of this lucrative businessopportunity.

360º SUPPORTFROM TRENDS IN VOGUE• Franchisee induction & training• Guidance on site selection• Architect and layout finalization• Project hand-holding• Staff recruitment guidance• Pre-launch promotions• Ongoing staff training• Staff assessment & appraisal

process• Guidance in Legal & Statutory requirements• Business development support through promotions• Brand building and PR activities• Quality tracking system• Providing point-of-sale software• Business information system• Promotions & brand building• Vendor management• Supply of products and consumables• Providing business guidelines

MEDALL Healthcare Pvt. Ltd (MEDALL) is a chain of medical diagnostic service providers based

in India. Formerly known as Precision Diagnostics, MEDALL has been established by Mr. Raju Venkatraman, a

highly successful serial entrepreneur, with a vision to provide pathology, radiology imaging and other services to

help serve and solve the health-related challenges of its customers; and to provide the highest level of diagnostic

confidence to referral physicians.

MEDALL started its journey by acquiring Precision Diagnostics in Chennai, one of the Chennai’s

leading imaging and diagnostics centers with radiologists of high repute serving customers for 22 years, through

three centers. The founders of Precision Diagnostics, who are now part of MEDALL’s corporate management

team, include eminent radiologists: Dr. Bharathi Y. Dhala, Dr. K. Rajan, Dr. Bobji Kettay and Dr. Satyabhama

Chandrasekaran. They have a combined experience of more than 100 years; and wide reputation and

confidence among referral physicians and customers alike by providing the highest levels of customer

satisfaction with sheer excellence and dedication.

MEDALL has acquired Clumax Diagnostics in Bengaluru. Clumax has been rated as the best

diagnostic center in Bengaluru by the “THE WEEK” magazine in a survey of standalone diagnostic centers.

Clumax scored the highest on customer satisfaction, clinical competence (both radiologist and pathologist),

quality of diagnosis, portfolio of services and so on.

Our brand reputation has been built on high quality, timely delivery and consistency. MEDALL's

highly trained and motivated workforce demonstrates the passion to serve and the desire to make a difference in

the quality of life of its customers.

Breaking new barriers – that’swhat Bharat Scans has been doing for the last 15 years.

The brainchild of Dr R Emmanuel MD (RD), the organization was born as an

unpretentious ultrasound centre at Ashok Nagar, Chennai, way back in 1995. Since then, it

has grown by leaps and bound, and now boasts of as many as five branches in Chennai,

each of them equipped with state-of-the-art medical diagnostic tools.

Dr Emmanuel in his mission of ensuring that the world’s latest and best is available

right here in India that he has entered into an understanding with GE Healthcare, Premier

providers of global medical technology, under which old equipment is replaced by the latest

versions as and when fresh developments take place in diagnostic medicine.

Bringing in the latest and high-end technology as and when it is introduced

internationally adds immensely to the operating cost of the Institution, says Dr Emmanuel. But

nonetheless, Bharat Scans strives to bring the latest at affordable cost to the masses.

A young entrepreneur & clinician by profession, is the smiling face behind

South India’s emerging chain of dental clinics Thirty two Healthcare Pvt Ltd.

Over the last six years, he has been channeling his energy into realizing his

visio – to provide world class dental care at affordable cost, by setting up

neibourhood dental care clinics. As it is said a dream nerver comes true without

a passion. It is because of his dream that chose to collaborate with like-minded

doctors to build a dental care Hospital brand and passion that took the benefits

of HealthCare to the Chennai, Tamilnadu, India.

Under his vision and guidance, Thirty Two Healthcare Pvt. Ltd., is adding

10 more Day care Hospitals in Taminadu by 2014. Dr.Mir with his passion and

determination pioneered the day care model into Dental care segment in South

India Healthcare Industry.

Dentistree is one of the leading, professionally

managed, leading hospital of its kind in Chennai providing a

range of dental services in all specialties.

Launched during Nov ‘1999 with just two Dental

Surgeons, Dentistree today has evolved as a complete

dental care center, providing a host of services in various

fields of dentistry, to the residents of Chennai.

WITHIN A SHORT SPAN OF TIME, FITNESSONE HAS GROWN TO BE A NAME WITH INSTANT RECALL ON THE SOUTH INDIAN MIND.THE BEGINNINGIn September 2004, FitnessOne India was instituted with a single gym and many visions. By September 2005, the single gym in Chennai's posh Alwarpet area began making its presence felt in six more locations, taking the count to seven. Soon word spread, as did the FitnessOne brand recall. Interesting advertising brought crowds into its clubs, but bright, chirpy interiors, top class scientifically formulated exercise training and world leading equipment kept clients happy. They became brand ambassadors and the FitnessOne word spread.Not happy to rest laurels, other related divisions were launched.

AHLL is establishing a

large network of Apollo

Clinics across the country

with over 90 clinics

operational all over India.

As a part of the Apollo

Groups objective to

expand its operations a

number of similar clinics

will be setup overseas as

well.

CLASSIC YOGA IN A CLASSY AMBIENCEIntroducing 136.1, India’s first chain of integrated yoga studios, that arms

you with timeless yoga techniques in a swanky, state-of-the-art studio ambience. At136.1, it will be our mission to make everyone feel lighter, fresher and stronger byoffering of group and personalized yoga, every week.YOGA FOR ALL

136.1 is perhaps, the only place in India, where you have the flexibility oflearning yoga from a variety of schools including Hatha, Iyengar, Sivananda,SatyanadaYoga and Power Yoga. Our International and Indian teachers also have the capability ofcustomizing classes according to your health needs.

EDUCATION & TRAINING

There are more than 60,000 schools and 33,000colleges in India with more than 20 million students thatpass out every year from these Educational Institutions. AsIndia lags behind in imparting skill training compared to itsInternational Counterparts, only 10% of the total workforcein the country receives some kind of skill training.

In the last few years, the education industry hasgrown become one of the largest in the service market. Theeducation sector has opened its doorway to franchising andseveral other private players.Vocational Training Industry

IT, Finance, BPO, Animation, CAD, Fashion Design,Jewellery, Interior Designing, Retail & Hospitality.

Franchisee Support & Process

1. FRANCHISE SUPPORT

Training Support:

NIIT organizes induction programs for new Business Partners and their staff.

NIIT undertakes Faculty and Counselor training and certification.

NIIT hosts sales and marketing training periodically.

NIIT conducts ongoing training for new products.

FRANCHISE PROCESS

Eligibility

1. Educational Qualifications:

The candidate should be a graduate in any discipline.

2. Financial Qualifications:

The individual should possess the ability to mobilize resources through internal

and external means. He/she should have the capability to personally invest around

50-60 percent of the total project cost.

CADPOINT Engineering Solutions PVT. LTD. is a well established and affordableITeS/CAD/ CAM/CAE company in INDIA, providing services to Architects, Interiordesigner Civil engineer, & HVAC consultants for over 18 good years now. Weincorporated and built on the foundation of ' Value delivery at all levels and duringall interactions '. CADPOINT has been delivering value to its customers in all itsbusiness units, which incorporates experts in the fields of CAD, Animation,Graphic Design, Multimedia, creating cartoons and advertising animation.Experienced specialists with a solid professional background are working in theCadpoint. This enables the animation company to accomplish assignments using alarge variety of styles and work techniques and to effectively solve virtually everytask set.

MISSION

It is our Mission tocreate a fully integrated Pre-School program designed tofoster the child’s Physical,Social, Emotional, Language,Cognitive, and creativeDevelopment.

PHILOSOPHY

We at Gurukulam believethat each child is apotentially divine humanbeing sent out on a purposeand all we do at Gurukulamis just facilitate them todiscover themselves.

Partner with A Committed & Progressive Pre-school

Established in 2003, Paripurna Kidz Care is a progressive Pre-school with Day Care

facility for children aged 2–5 years, based in Karnataka's capital city Bengaluru. Heading with a

vision to facilitate children achieve their fullest potential by fostering individual liberty, joy of

learning and humanitarian spirit, Paripurna Kidz Care offers various programs: Pre Nursery,

Nursery, Lower/Upper Kindergarten and Day Care facility. Formulated to fulfil a child's growth

needs, Paripurna's teaching methodology is an innovative mix of Play way and Montessori

Method. The school at all times endeavours to make learning fun through various child-centric

programs and initiatives. Moving ahead with ambitious plans, Paripurna Kidz Care aims to open

15-20 pre-schools in 20-25 cities in next 5 years through franchising.

AUTOMOBILE

The recent trends indicate that beyond the warranty

period, customers look for a reliable alternative to the OE

Service Centres. They expect value for money and the

general perceptions is that the OE service is expensive. The

Multi-brand Car Service Market is estimated at about

13,500 crores with 6.5 million cars.

In India it is estimated that used cars sales outstrip

the sales of new car by a factor of 1.2:1. The used car

market is projected to growth at a 16% Compound Annual

Growth Rate (CAGR) to a level of close to 8 million units by

Financial Year 2019.

1. Started its Franchise Operations in 2008

2. Within short span of just five years, MFCWL has 400

franchises.

3. The company plans to expand this number to 500 outlets over

the years.

THE BEGINNING

The Enfield Cycle Company made motorcycles, bicycles,lawnmowers and stationary engines under the name Royal Enfield out ofits works based at Redditch, Worcestershire. The legacy of weaponsmanufacture is reflected in the logo comprising the cannon, and the motto"Made like a gun". Use of the brand name Royal Enfield was licensed bythe Crown in 1890.

RETAILING

India’s retail market is expected to cross 1.3 trillion USD by

2020 from the current market size of 500 billion USD. Modern retail

with a penetration of only 5% is expected to grow about six times

from the current 27 billion USD to 220 billon USD, across all

categories and segments

Country Share of Organized

Retail to Total

Retail

US 85%

UK 80%

Malaysia 55%

Thailand 40%

China 20%

South Korea 15%

Indonesia 25%

India 5%

Growth of Online Retailing:Internet PenetrationConvenience, speed and 24 hour accessibilities in purchasing products.Consumers are willing to experiment with new forms of retail purchase and feel confidence to search for and buy goods online.Tamil Nadu is one of the largest retail market in India.

Source: Media Reports

Founded as a single company

cutting and polishing

diamonds for the jewellery

trade at Surat, Gujarat, in

1966, the Gitanjali

Group became, many times

over, a pioneer among major

diamond and jewellery

houses.

First major diamond and jewellery house to be launched and run by modern

entrepreneurs rather than dynastic jewellers. An authorised DTC Sightholder and loyal

customer – and a modern multinational business run on innovative insights. At the

forefront of the global breakthrough in diamond jewellery design and production

brought about by India’s ability to cut diamonds considered unworkable for jewellery

till then. Has the distinction of producing the world’s smallest heart shaped diamond

(0.03 carat), and developing some 25 patented facet patterns. Besides changing the

face of manufacture, broke the mould of traditional jewellery marketing: it abandoned

jewellery trade convention by launching multiple brands for multiple markets and price

segments. Opened up distribution via superstores, department stores and other retail

outlets at MRP,supported by international certifications of scientifically tested purity

and authenticity, across India and in the world’s jewellery capitals. Even markets

branded jewellery directly by mail order catalogue.

FUTURE TRENDS IN FRANCHISING

The future is bright for franchising. Increasing population

world over and a move towards free markets is a definite plus for

the franchise business. Moreover, the very nature of franchising is

enticing to any businessman because it has a very high

profitability of being a profitable venture for both the franchise

and the franchisor. Recent years have witnessed an international

boom franchising and it is fast catching up.

It is estimated that in a few years about franchising would

comprise over 50 per cent of the retail. Experts also predict that

franchising would create jobs of millions.

The current technology boom also has a large role to play

on the future of the franchising world. The wide reaches of the

interest and the increasing dependency of most on the net is

already shaping the future of the franchising world. E-commerce is

the fast catching up trend and already three are many that have

cashed in on this scenario.

The uniq1ue feature of franchising is that it evolves with

changing times. The very fact that franchising is evo9lving both in

numbers and concepts is proof that franchising is the mode fro the

future.

SCOPE IN INDIA

X India is witnessing an unprecedented

consumption boom.

X Changing life style of the young urban elite.

X Penetration of Satellite TV

X An increasing appetite for western goods

X International Exposure

This leads to greater demand for goods in

India is in turn generating a greater demand for

franchisees.

The franchise Market in India is estimated

to be US $ 3.3 billion. Franchising in India is

growing at an impressive rate of approximately

30%.