Top 23 Hot Franchising Trends and Disruptive Models to Invest in
Opportunity India Desk
Nov 27, 2019 -
8 min read
The franchise industry is witnessing growth of newer concepts and models, which are further creating excitement in the market and among the investors.
With the food delivery business turning into a booming $15 billion market, cloud kitchens have become the new norm in food service. This implies that about four or more restaurants could be co-located with each other, individually occupying about 300 sq feet.
The success of co-working is linked to your ownership or ability to be able to get your hands on good real estate, ideally in business districts or high streets. This business is generating approximately 40-50% margins. Complete investment is recovered in 1.5 years by the stable co-working business. For instance, BHIVE Workspace started to expand its co-working brand across the country through franchise-owned company-operated (FOCO) route. In this co-working franchise model property owners or landlords can start and own a co-working space business by offering their property as warm shell or with furnishing for BHIVE branded co-working space. The franchisee landlords can earn higher rental income / returns on their investments through minimum guarantee and revenue sharing model compared to conventional lease/rental model.
Estimated to be a market worth around $8-10 billion in India, co-living spaces are a clear winner for the millennial generation in metros, combining the power of lifestyle and security with collective living.
Low-cost and variety retailers like Miniso, 2358 and Mumuso are betting big on reasonably priced lifestyle merchandise for the Indian consumer. The range of the products is typically between Rs 10 and Rs 1,000 and these small-format stores are customer-friendly as well as profitable. Founded in 2011, Miniso launched its first Indian store in August 2017. It sells a variety of quirky products in categories of health and beauty, stationery, gift items, homeware, digital accessories, and lifestyle and fashion. The company operates 120 stores in India (70% are franchise-owned) and plans to double the count by December 2020.
Bubble tea is not just a tea proposition but represents a new lifestyle of eating out as an uptake on milkshakes. Several Indian and global players promise breakeven in 15-20 months with investment between Rs 30-35 lakhs.
With an upward spiral in the technology-related sector, there is high affinity towards the IT profession as most schools still do not teach computer coding in India. Addressing the age group of 6-13 years, this promises to be a great educational franchise.
Almost 80 million homes in India own a pet. This implies that there is an opportunity for pet products’ retail stores providing pet care products and accessories on one hand while a bigger format could also include a day care or a pet cafe for pet grooming. The area required to open a franchise is 300-500 sq. feet with an investment of Rs 3 lakhs. MAD and Bon Beno are a couple of leaders in this segment.
Given that urban Indian households are moving towards a café culture, migration towards ‘chai’ cafes and tea bars from home-brewed teas is the reason for over 250 tea bars present all over the country. The franchise investment is as low as Rs 5-10 lakhs.
The gaming and entertainment centres that marry sports, virtual reality, music and dining are in vogue today. The investment required is typically Rs 2-5 crore with a floor area of 5,000-8,000 sq. feet.
Cleaning services, organic groceries and more are setting up trucks or vans for door-to-door services. It’s the mobility that gives them the ability to keep overheads low while giving a service that meets customers at the front door.
The pre-owned market for vehicles is around 3.8 million units and will grow up to 7.5 million units by 2023. Today omni-channel franchised models exist in the automotive trade that are low on investment but high on commission-based returns. CredR, for instance, started as an online marketplace for used two-wheelers (certified refurbished), is gradually adopting an omni-channel approach through FOCO model in order to be easily accessible to its audience in offline markets. It has build 7 experience centres across Delhi NCR, Pune and Bengaluru. The first franchise showroom was set up in 2017 and by Feb 2019, CredR had more than 25 showrooms set up on franchise model across 4 cities.
With the rising costs of real estate and food service models that promise great food but become unviable with huge fixed costs, entrepreneurs have today come up with the food truck model that operates with low investment and can service many customers outside its four walls.
The Indian gourmet popcorn market is expected to grow at a CAGR of 36%. Representing contemporary snacking and gifting, on an average there is about 60-65% margin for non-multiplex popcorn counters serving many varieties of gourmet popcorn.
Portable farming has given way to a new opportunity in franchising to build organic farming in buildings. This can be done with the help of an open-climate portable farming system (PFS) that comes along with a unique organic farming kit. It requires an investment of Rs 6-8 lakhs to build a store of 1,200-1,500 sq. feet.
Circuit-style fitness studios are injecting fun back into fitness regimes by cutting machines out of the gym and replacing them with result-oriented timed fitness programs. Global brands like Orange Theory and Indian brands like Cross Fit have started a new culture for fitness.
With a Rs 100-crore market held by the organised and Rs 200 crore by the unorganised, the car washing and polishing industry is a star opportunity. The investment required is Rs 15-20 lakhs and breakeven is expected within 6-8 months.
Laundrettes and the dry cleaning business are growing 13-14% per year. With investment ranging between Rs 10-12 lakhs and margins between 25-30%, the average bill size is usually Rs 300 with expected 15-18 month breakeven time. For instance, UClean has built India’s first and fastest growing organized chain of laundromats, focused on fostering the DIY (Do It Yourself) culture, through FOFO model. UClean has set up brick and mortar stores, equipped with the laundromat machines and ironing setup, which cater to the laundry needs of customers in the store’s neighbourhood. In just over three years, the firm has expanded to 180+ franchisees closing an annual GMV of 30 crore.
With an average area requirement of 80-100 sq. feet in a small suburb or rural areas, the expected breakeven is achieved within 100 transactions on a daily basis. The services typically include BFSI, governance, B2C, etc.
The vegan movement both in food and wellness is gaining momentum with Indian consumers between 25-55 years old who believe in cruelty-free environment and products. Vegan restaurants and vegan food and wellness retail are the next big trend.
Stem cells therapy is the future for prevention of age-related degeneration and such centres present a good franchise option. The investment size is Rs 20-30 lakhs and the likely payback period is one year.
A designer cake shop or an open bakery is a great business model requiring low investment. The options range from online services to over-the-counter to specialty services for events and parties. The typical investment requirement is Rs 10-20 lakhs for an area of 250-500 sq feet.
The red-hot athleisure trend has brought into its fold many retailers and brands and is now estimated to be worth $6-7 billion in India. New brands like Wildcraft, Zeven and others have a great franchise model built around their products.
As travel for work and travel for fun is rising year-on-year, it has led to new segment of branded hotels in the two to four star category. Budget hotels with the right branding and services get better consumer traction than standalone hotels.
