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Franchising

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INTRODUCTION
Franchising is the practice of the right to use a firm's business model and brand for a prescribed period of time. It is an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities. India’s franchising industry is expected to quadruple in volume in the next five years, accounting for almost 4% of India’s gross domestic product (GDP) in 2017, according to a report by KPMG India Pvt. Ltd released on 31st December,2015.The industry was worth $13.4 billion in 2012, contributing 1.4% of GDP, the report said. That compares with almost 10-25% of GDP in most OECD (Organization for Economic Co-operation and Development) countries .The industry is projected to provide almost 11 million employment opportunities by 2017.Retail, food and beverages, health and wellness, consumer services, and education are predicted to be the key sectors for franchise opportunities. While the organized retail segment in India is estimated to be worth $24 billion, only 2.5% of total retail sales are driven through franchise formats compared with nearly 50% in the US, indicating significant potential, the KPMG report said. “Franchising is critical for retailers to achieve exponential growth. Given the threat of mom-and-pop stores closing, both due to the changing external environment and the rising aspirations of the second generation, there is huge potential for franchise growth in the retail sector,” said associate director of management consulting at KPMG India. “What’s constraining growth right now is the fact that the business model hasn’t been standardized enough—not all business models balance profitability for both partners.” There are presently more than 3,000 brands in India that have adopted the franchise model. Several leading global companies already have an established presence in India. Recent

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