Amidst the increasing threat of AI and expensive education, the craze for franchise business is increasing compared to corporate jobs. Now people are considering practical businesses like teaching Pilates (a special type of exercise) and cooking as safe instead of white-collar jobs with laptops. America’s 8.5 lakh franchise outlets are managed by 2.5 lakh owners. These provide 90 lakh employment. Contributing 3% to American GDP. IFA’s Matt Haller says that until a decade ago, the path to getting rich was a college degree and a white-collar job with a laptop. But now with the advent of expensive education and AI, the attention of the youth has shifted towards traditional and grassroots businesses. Businesses like teaching pilot classes or cooking seem safer now, because they cannot be run without humans. There is a demand for those businesses which cannot run without humans. From Dunkin’ Donuts to UPS stores and most of the Marriott hotels in America run on this model. Now this model is also expanding into new areas like fitness studios, home services and child care. This model has been attracting migrants for a long time. Two-thirds of America’s motels are owned by Indians. Most are descendants of Gujaratis who bought Super 8 and Travelodge franchises in the 1980s. Success – More Millionaires Made from McDonald’s About 95% of McDonald’s approximately 14,000 outlets in the US are run by independent franchise owners. This chain has made more ordinary people millionaires than any other company in history. Cost – In America, it costs Rs 3-8 crore to start a fitness studio. At the same time, an investment of Rs 9.5 crore may have to be made in restaurant franchise. The success rate is better in the first 1-2 years compared to an independent business, but later the risk remains the same. India – Franchise market is growing at the rate of 30% annually. Franchise model has now become the safest and fastest growing business in the Indian retail and consumer market. India is the third largest franchise market in the world after America and China. According to a joint report by Francorp India and Fancast, India’s franchise market is growing by 30% annually. Currently it is worth around Rs 95 thousand crores. It is estimated to reach Rs 14.25 lakh crore in the next 5 years. This will require 72% compounded growth every year. Network – More than 5 thousand active brands in the country There are more than 5,000 active franchisor brands in India. There are more than 2 lakh outlets. If the target is achieved after 5 years, this sector will make a major contribution of 4.2% to the GDP. Currently this contribution is 2-2.2%. Expansion – Franchise outlets are growing in smaller cities. Franchise outlets are growing faster in Tier-2, 3 cities as compared to metros. New entrepreneurs are investing in the franchise model using bank loans and deposits. Food, pre-school coaching, diagnostic labs and beauty-wellness are in demand. Cost – Minimum investment required in India is Rs 5-15 lakh for a small scale kiosk or center in the country. International brands require up to Rs 1 crore. The survival rate of franchise businesses in India is 85% higher than that of independent startups. The risk is significantly reduced due to ready-made systems and established brand values.
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Fear of AI, return of franchise business: Competition to leave laptop job and become one’s own boss; Dominance of Indians in American model
