Franchising in India is growing at a very fast rate and becoming a popular business model. Franchising, a form of entrepreneurship, could be a growth engine for the Indian economy in the coming years. The growing market has attracted foreign investors and India has become an important investment destination for the global retail chains. Globalization, liberalization and privatization have particularly changed retailing and resulted in the emergence of a new environment suiting consumers’ changed attitude and purchasing practices. India is the second most attractive retail destination globally among the 30 emergent markets. The present paper makes an attempt to study the growth and prospects of retail franchising in India.

Franchising is a close and continuing collaboration between the two companies, namely, the franchisor and his individual franchisees for the sale of commodities, services and application of technology in the market (Doherty and Alexander, 2004). The franchisee pays an initial franchising fee, periodical royalties and promotion fee to the franchisor. In return, the franchisee is allowed to use the brand name, trademark, commercial and technical methods, the operating procedures or other intellectual property rights. In the emerging market, the franchisee benefits from the ongoing support in terms of periodic system-wide programs and promotions, new product innovations and development, superior market research and guidance. Overall, the chances of succeeding are greatly increased by the globalization of consumer markets and the past accomplishment in reproducing the business format in heterogeneous locations around the globe.

Among the franchisees, a distinction can be made between single unit and multiunit franchisees. Multiunit franchisees own more than one unit and only franchisees that excel in their activities are granted the possibility of unit growth (Alon, 2001). Other members of the franchising network are the master franchisees. When franchisors expand their business in other countries, they can assign a master franchisee who makes franchise agreements on their behalf with sub-franchisees in a specified territory. Indirect franchising, i.e., use of a master franchisee to develop a territory or a whole country, is a common approach employed by franchisors in emerging markets. Master franchisees receive the accountability to select other franchisees, to offer training and coordinate activities with local franchisees, monitor performance and implement the franchisor’s strategies (Welsh et al., 2006). The advantages of this system include access to resources, knowledge of the local market, more adaptation and the possibility of developing a successful franchise. The indirect system also has disadvantages, including lower profits for franchisors and franchisees and monitoring issues due to absence of direct control. Success will be determined by the capabilities and resources of the master franchisee.

Entrepreneurship Development Journal, Growth Prospects, Franchising, Franchisor, Franchising Model, Music World, Reebok, Development, Franchisee Relationship, India.