INDIA: The Next Emerging Market.

Economic growth, purchasing power and the entrepreneurial spirit are paving the way for franchising's growth in this nation.

Having received more inquiries in the last six months than the last six years, from investors wishing to acquire master franchise rights in India, I decided it was time to explore the market, and learn first hand. I am delighted I did, as in conjunction with the Commercial Service, that organized some of the best Gold Key programs I have ever attended, I was very pleasantly surprised by the high level of interest in and the knowledge of franchising, plus the desire to own major franchise brands.

I must admit that in the past, I had not responded seriously to inquiries from India, due to a general lack of understanding with regard to franchising and a preponderance of joint venture, partnership and alternative proposals to expand in the market. I did successfully introduce a franchise six years ago, which is now thriving in India, but I am currently engaged in serious negotiations on behalf of two clients and actually expect to announce the appointment of a master franchisee on conventional master franchise terms, imminently.

The usual fast-food pioneers are setting the pace in India, but flexibility to adapt to the market has been the key to success. While visiting McDonald's, I was interested in sampling a McAloo Tikki Burger and instead of the Big Mac, observed consumers thoroughly enjoying their Maharaja Macs. A number of education franchises are growing successfully in India and I was particularly impressed to notice the indigenous brands that were successfully developing. In the IT sector, S. Kumar's has actually appointed 2,000 franchisees at an average investment of US $10,000 per location. This corporation is taking the Internet to the rural areas, providing access to all. Quite an astonishing feat, when you consider that one-third of the Indian population have yet to make a telephone call.

In addition to enjoying good meetings with well-qualified investors in Mumbai and New Delhi, I visited Hyderabad, one of the new hi-tech cities in India. It was interesting to see the sparkling new construction underway for corporations such as Sun Microsystems, yet across the street, local villager's were living in substandard housing and transporting their goods in oxcarts. In the center of Hyderabad, standing out from the aging retail outlets found in India, were a few very Western-looking locations for major brands and the Indian equivalent to Starbucks, Cafe Coffee Day.

During the last 20 years, I have seen other countries around the world rapidly develop franchise systems and, in my opinion, India is on the verge of repeating this type of success. I expect to introduce several franchise brands in the next few years and would anticipate rapid growth, as Indian consumers achieve a higher standard of living. Although there are one billion people in this large country, 2 percent of the population has per capita income exceeding U.S. $13,000 which is 20 million people--a number greater than Malaysia and Singapore put together. About 8 percent of India has per capita income exceeding US $3,500, which is 80 million people, and overall, India has more than 200 million people with growing purchasing power, who are looking for products and services to build their ever-expanding needs and satisfy their changing lifestyles.

Vigorous growth is currently underway in the health-care, fast food, entertainment and computer education sectors, but I anticipate attractive growth opportunities for a broader range of franchises. Although I am obviously optimistic regarding the growth prospects in this major market, there are still a number of obstacles to overcome, which include legal regulations and restrictions on royalties taken out of the country. Changes are anticipated in these government regulations to assist in the development of the Indian economy and with India becoming a World Trade Organization member, I would certainly encourage any well-organized international franchisor to now treat this market seriously.

Mike Minihane is president of Maret Corp. Inc., International Franchise Development Specialists. He can be reached at 805-379-2868 or via email [e-mail].