Wellness franchise opens avenues of growth for franchisees

Among all the existing industries in India, the Wellness industry demands high capital investment for growth, thus, players in this segment are increasingly relying on franchising to scale up businesses and extend reach to Tier II and III cities. In fact, the industry veterans believe, franchising will create ample job opportunities in the wellness spa in the years to come.

“There is an increasing focus on preventive healthcare for physical and emotional wellbeing given the rise of lifestyle related diseases. Therefore, even a one per cent increase in consumer expenditure can potentially create an additional opportunity of Rs 600 crore for the industry. The industry is expected to touch Rs 1 trillion in the next three years and is projected to generate 7.39 million jobs in 2017 and 14.27 million by 2022,” said Sandeep Ahuja, Managing Director & Group CEO, VLCC Health Care Limited.

Franchising in wellness sector is expected to contribute around $3.2 billion in revenues by 2017 coming from about 17,000 franchised units alone.

Emerging trends
The beauty and wellness industry is extremely dynamic and has been growing at 18-20 per cent for the last few years. Today, people are not shy of spending money to look good and feel great.

As per the PricewaterhouseCoopers (PwC) prediction, the wellness franchise industry has major trends and good Franchise business opportunities in India for 2015. Brands like VLCC, The Four Fountains Spa, IOSIS spa, Naturals salon, Jawed Habib, Shahnaz Husain and Gold’s Gym, are set to see diverse trends in the sector.

Commenting on the same, Industry Veteran, Jawed Habib said, “As time goes by, personal grooming is more of a basic need than a luxury, as it was thought 5 or so years ago. So, no doubt, wellness franchising will surely bloom in 2015-16. It is a high growth industry which offers tremendous learning and growth opportunities and a good lifestyle. I see a lot of potential for Hair and Beauty brands in franchising.”

Similarly, Sandeep Saxena, Group CEO, Dr Batra’s Healthcare opined, “The highest penetrating category in franchising is Consumer service. The second one is F&B (Food & Beverages) and the third category is Education. Now, these are the three categories which are very well evolved in terms of expanding number of centres and scaling up business through the franchisee route.

Given the fantastic growth opportunity for wellness services, especially in Tier II and III cities, franchising, with an established brand with strong fundamentals, is a good option. Even relatively new players in the category like Anytime Fitness, Mickey Mehta and Sevenseas Spa are reaping the fruits of this model and are aiming for aggressive expansion via franchising in untouched areas.

Challenges and selection criteria
Most of the challenges faced by companies in franchise operations and franchise management are the outcome of a wrong selection of franchise partner. Thus, the franchisors have a certain criteria of selection.

“We surely check his/her background – to analyse whether he/she will be able to manage a salon and earn us profits wherein, we check if the person possesses entrepreneurial skills – plus we appreciate if he/she possesses beauty and wellness background in the past,” informed Bharti Taneja, Founder-Director of Alps Beauty Clinics.

Likewise, Istayak Ansari, Director of Lloyds Luxuries Ltd., offering franchise of London-based Truefitt & Hill Barber shop, noted, “The three major issues faced by Franchisors are Understatement of Revenue, Non Payment of Royalties on time and Non Compliance of SOP. We look at three factors while granting a sub franchise i.e. Financial Capability, Management Bandwidth and Understanding of Luxury Space.”

The selection criteria of franchisee differ as per the business models existing in the wellness industry.

Pushkraj Shenai, CEO, Lakmé Lever India, informed, “After the Franchisee’s initial screening is done, which is more than the ability to invest, we will look at the level of involvement, level of competency, ability to execute processes with discipline. And, post the screening process is done, then the franchisee will go through a very strong induction programme. All the course curriculum methodology, and the IT backbone will be centrally provided to the franchisee, who will get assistance in recruitment and training programme for their entire staff."

Franchisee-Franchisor relation
It is extremely essential for a wellness franchisor to maintain a healthy relationship with the franchisee in a bid to deliver quality service and project a healthy business model in the market.

“The quality is always a mix, the top franchisees are the ones who follow the SOP’s and guidelines set by the franchisor, their involvement in the business is very high. The reason for being the top franchisees is not only the revenue or profits they make, but also the level of customer service they offer to their clients, standards, hygiene and maintenance levels are other reasons for success,” said Nikhil Kakkar, Vice President - Franchising Operations, Gold's Gym India.

Not restricting to only maintaining a healthy relationship with the franchisees, a franchisor also offers adequate support to the franchisees who would help in spreading the brand name across the country. Firms that have created an easily replicable business model, often choose franchising as the most preferred route to expand their operations and scale their business.

Elaborating on the same, Vikas Jain, Managing Director, Anytime Fitness said, “As the brand grows, everyone associated with it also grows, this goes hand in hand. If a franchisee is growing then he would buy another territory or recommend members, friends and family to buy a franchisee and thus the Master franchisee grows.” Jain further added, “Our support starts right from the signing of agreement; training is a never ending process at Anytime Fitness. We help our franchisees in Club Build out, Grand launch, Marketing, Operations, and Sales.”

Sharing a similar view, CK Kumaravel, Co-founder, Naturals salon added, “Once franchisee joins our group, he/she becomes our family member. Thus, they remain with us forever, making us a big family.”

The way forward
According to KPMG India estimates, franchisees in the customer service area are expected to form around 55 per cent of total estimated Franchisees in 2017. Franchising in Health and Wellness sub-segment is expected to grow to almost 6 times the current penetration.

The report also explains that Franchising contributes to the economic growth of a nation in multiple ways such as job creation, access to necessary goods and services and expansion of a country's tax base.

With approximately 3,900 franchise brands in India and roughly 1,050 franchise brands making foray into franchising every year, the world of franchising will definitely offer good Franchise Business opportunities in India and better prospects to numerous brands in 2015.

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