Elements to build a franchise network

India is one of the world’s largest and the fastest-growing emerging markets, and franchising has become a successful business model for many firms. No sector has seen more adoption and acceptance than what education sector has witnessed. The market size of Indian education sector is to increase to Rs 602,410 crore ($109.84 billion) by Financial year 2015 due to the expected strong demand for quality education. Indian education sector's market size in FY12 is estimated to be Rs 341,180 crore.

India has the world's largest youth population seeking quality education, with world class training systems. The importance of education by the Indian population and the proven success of education franchising in India has led to a boom in the amount of firms, wanting to expand their education brands using the franchise route. This is clear from over 30 per cent of the 1200+ companies currently franchising, are operating in the education sector.

Some sub-sectors within education industry include companies offering professional and vocational courses, IT training, schools and pre-schools, where pre-schools account for around 35 per cent of education franchising, whereas vocational (other career oriented) courses account for over 30 per cent.

For a franchise network to be successful, there are two points to be noted, namely the franchisee operating the unit and the amount of support provided to the franchisee.

How franchisee performs?

Franchising generally is considered by those who are known to be risk averse. Franchisees like to invest in proven concepts with robust systems already in place, with an established brand name already established, saving them the hassle of having to do so from scratch. Companies should look at prospective franchisees that are willing to comply with franchisor guidelines and have the necessary qualifications to succeed as a franchisee. Franchisees are typically able to bring in an additional 4-5 per cent of cost efficiencies, however franchisors should ensure that franchisees aren't cutting cost and thereby compromising the brand name in any way.

Franchisor support

Majority of franchisees who fail to deliver in the first few months of operations blame it on the parent company. This makes the pre-launch and first few months post opening crucial for a unit's performance. Marketing support is a major factor that can determine a unit's profitability in the first year. Franchisees expect a full blown marketing plan, which should include timing, promotional material and related costing. To this effect a franchisor should have a dedicated resource for its franchisees and look to build capabilities as and when the franchise network grows. The central franchise support team should ensure that, besides marketing, efficient training and staff recruitment is thorough so that franchisees are able to operate the unit effectively from day 1.

The fulfilment of India's growth story relies heavily on a well-educated and skilled workforce. The opportunity is right for business owners who have already developed well-tested and robust systems to penetrate into markets that are demanding high quality education, and team up with capable partners to deliver high quality world class education across the country.

Ashok Raman is a Senior Business Strategy Architect Consulting at Francorp, India