Australian franchisors urged to not overlook India, with sector set to grow 35%

Australian franchisors looking to expand internationally should not discount India as a viable market, an expert says, because the country’s franchising sector is growing at 35% per annum.

According to Tony Maddock, managing director of Solutions Franchising Group, the retail sector in India – which has the third largest economy in the world – is “booming”.

“Franchising is growing at 35% per annum. The growing middle class is a big opportunity. It’s also the largest English-speaking continent in the world,” he says.

Maddock will travel to India next month to attend Franchise India 2011, an international franchise exhibition held over two days, to research opportunities for Australian companies.

He will then return home to educate local franchisors on the viability of expanding into India, including market entry strategies to ensure success.

“The plan is to have some forums next year in Australia and talk to interested parties,” he says.

According to Maddock, food franchises are among the easiest business models to introduce to India, claiming The Coffee Club and Burger Edge are already expressing interest.

However, Maddock says there are a number of factors franchisors need to take into account, namely religion and food preferences.

“Where we’re going, which is Delhi, they’re predominantly Hindu, so that means they will predominantly be vegetarians… Stuff like that’s going to be taken into consideration,” he says.

“Also, the way people work, royalty collections and management systems are different throughout Asian countries,” Maddock says.

“India is almost an extreme, so joint ventures are almost the safest scenario.”

According to Austrade chief economist Tim Harcourt, the business opportunities in India go beyond franchising, with many Australian companies already doing business there.

“Just strolling through the Chennai city centre – one of India’s new modern shopping malls, fuelled by the retail boom and a burgeoning young middle-class – gives you a flavour of the Australian presence,” Harcourt says.

“[There are] plenty of familiar brand names, such as… Florsheim shoes.”

“In addition, legendary Australian basketballer Andrew Gaze has set up a franchise, Juz Sports, to sell basketball clothing and accessories in India.”

Harcourt says South Australian and Victorian companies are particularly prevalent in the south of India.

“Many Adelaide automotive-component manufacturers are joining the automotive global supply chain,” he says.

“Further manufacturing opportunities are expected to come in food processing, a relatively undeveloped opportunity in India for Australian companies, and in engineering and logistics.”

According to Harcourt, South Australia’s presence in India is also evident in the areas of renewable energy and climate change.

“It seems many international countries in India have got the message to ‘go south’ and, on current trends, Chennai will become more familiar to Australians,” he says.

“As Australia-India trade links start to widen and deepen, the relationship between the two will become more than the three Cs – cricket, curry and Commonwealth.”

This article first appeared on StartupSmart.