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The India Franchising Blog Please visit the India Franchise Blog on http://indiafranchiseblog.blogspot.com/ as we have moved all content from here to that site.

WEDNESDAY, MARCH 31, 2010

Destination Maternity Opens 2 More Motherhood Maternity Stores In India PHILADELPHIA, March 31 /PRNewswire-FirstCall/ -- Destination Maternity Corporation (Nasdaq: DEST), the world's leading maternity apparel retailer, announced the opening of two more Motherhood Maternity® shop-in-shops in India. Motherhood's trendy, affordable maternity fashions are now available for the first time at the Mantri Mall in Bangalore, India and the Korum Mall in Thane, India. Motherhood Maternity shop-in-shops are found in Mom & Me® stores which are owned and operated by Mahindra Retail, part of the Mahindra Group, Destination Maternity's franchisee in India. Mom & Me stores offer an extensive range of pre- and post-natal products including maternity wear, baby clothes, toys, wellness products, nursery furniture and more. Including these two new locations, there are now a total of eleven Motherhood shop-in-shops in Mom & Me stores in India. Under a multi-year franchise agreement, Destination Maternity has granted to Mahindra Retail, the master franchise, the exclusive rights to operate branded retail locations and market merchandise under the Company's Motherhood Maternity, Destination Maternity®, and A Pea in the Pod® brands in India. Mahindra Retail is part of the Mahindra Group. The Mahindra Group is one of India's leading federation of companies with operations in several key sectors of the Indian economy. About Destination Maternity Corporation

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Destination Maternity Corporation is the world's largest designer and retailer of maternity apparel. In the United States and Canada, as of February 28, 2010, Destination Maternity operates 1,689 retail locations, including 711 stores, predominantly under the tradenames Motherhood Maternity®, A Pea in the Pod®, and Destination Maternity®, and sells on the web through its DestinationMaternity.com and brand-specific websites. Destination Maternity also distributes its Oh Baby by Motherhood® collection through a licensed arrangement at Kohl's® stores throughout the United States and on Kohls.com. In addition, Destination Maternity is expanding internationally and has entered into exclusive store franchise and product supply relationships in India and the Middle East. About Mahindra Retail Mahindra Retail is an extension of the Mahindra Group's trading foray in the domestic India market. Apart from distributing toys, games and wellness products under licenses from various international brands like Mattel® and NUK®, it has now entered into a unique venture with the launch of Mom & Me stores, which specialize in infant and maternity care. Mom & Me stores are built around the unique needs of mothers to be, young mothers, infants and children up to the age of nine. The absence of a single retail outlet addressing mother and child product and non-medical advisory needs is the most critical need gap that Mom & Me seeks to address with a one-stop store for moms and kids across the country. Mom & Me stores carry a range of the best international brands and private labels to give Indian mothers unparalleled choice. Mom & Me now has stores in Ahmadabad, Bangalore, Delhi, Ludhiana, Mumbai, Pune and Vadodara. About Mahindra Group

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► ► April (24) ▼ ▼ March (22) Destination Maternity Opens 2 More Motherhood Mate... Timex To Expand Further Into Tier 1 & 2 Cities wit... Top 100 Franchise Business Opportunities In India Multiple Brands Open Joint Franchise Stores Start A New Franchise Business In India: Franchise... Educomp To Open 75 IIT Coaching Franchise Educatio... Taco Bell Opens Its First Restaurant In India India and USA launch a Joint Initiative for SME's.... BigShoeBazaar.com Builds Offline Presence, Begin w... Laptop Service Franchise Company ClubLapTop to Ope... Educational Institution Bill And What It Would do ...

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The India Franchising Blog: March 2010 Mahindra is a US $6.3 billion Indian multinational company. It employs over 1,00,000 people across the globe and enjoys a leadership position in utility vehicles, tractors and information technology, with a significant and growing presence in financial services, tourism, infrastructure development, trade and logistics. The Mahindra Group today is an embodiment of global excellence and integrity.

Women Taking On Franchise Opportunities In India

Mahindra is one of the few Indian companies to receive an A+ GRI checked rating for its first Sustainability Report for the year 2007-08 and has also received the A+ GRI rating for the year 2008- 09. For more information, please visit www.mahindra.com

Retailers Treading Carefully on Realty Deals and N...

Destination Maternity Corporation (the "Company") cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this press release or made from time to time by management of the Company, including those regarding international expansion, results of operations, financial condition, and various business initiatives, involve risks and uncertainties, and are subject to change based on various important factors. The following factors, among others, in some cases have affected and in the future could affect the Company's financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any such forward-looking statements: the impact of the current global economic slowdown on the retail industry in general and on apparel purchases in particular, our ability to successfully manage our various business initiatives, our ability to successfully implement our merchandise brand and retail nameplate restructuring, the success of our international expansion, our ability to successfully manage and retain our leased department and licensed relationships and marketing partnerships, future sales trends in our existing store base, unusual weather patterns, changes in consumer spending patterns, raw material price increases, overall economic conditions and other factors affecting consumer confidence, demographics and other macroeconomic factors that may impact the level of spending for maternity apparel, expense savings initiatives, our ability to anticipate and respond to fashion trends and consumer preferences, anticipated fluctuations in our operating results, the impact of competition and fluctuations in the price, availability and quality of raw materials and contracted products, availability of suitable store locations, continued availability of capital and financing, goodwill impairment charges, our ability to hire and develop senior management and sales associates, our ability to develop and source merchandise, our ability to receive production from foreign sources on a timely basis, potential stock repurchases, potential debt prepayments, changes in market interest rates, war or acts of terrorism and other factors set forth in the Company's periodic filings with the Securities and Exchange Commission, or in materials incorporated therein by reference. SOURCE Destination Maternity Corporation Tags:A Pea In The Pod, Baby Franchise, Baby Products Franchise, Baby Stores, Destination Maternity, Franchise Agreement, Kids Franchise, Kids Stores, Master Franchise, Maternity Fashion, Mom and Me Posted by Amit Nahar at 11:24 PM

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Recommend this on Google Labels: A Pea In The Pod, Baby Franchise, Baby Products Franchise, Baby Stores, Destination Maternity, Franchise Agreement, Kids Franchise, Kids Stores, Master Franchise, Maternity Fashion, Mom and Me

Timex To Expand Further Into Tier 1 & 2 Cities with 20 Franchise Stores

Hospitals take to franchising In India For Their E... TCY adopts Franchise Fee Refunds After 1 Year If f...

Budget 2010: What it brings to the franchise indus... MAAC to add 30 training centres by March 2011 Top 100 Franchise In India: India Franchise Rankin... Franchise Industry Reforms Road Map : A Wish List ... After Dominos Another Franchise Company Career Poi... India's Airports Aiding The Growth of Food Franchi... KFC Franchise Expanding In India ► ► February (20) ► ► January (11) ► ► 2009 (21) ► ► 2008 (1)

ABOUT ME

Amit Nahar Am a Specialized Franchise Consultant, having consulted, some of world's finest franchise companies. Lead a team of professionals involved in pioneering work in franchising at www.SparkleMinds.com & www.FranchiseBazar.com and in some way or the other catalyzing franchising specifically in the developing countries. My family is based at Bangalore/India, while i practically live outta suitcase.Am married,have a son and a daughter :). Occasionally also speak on various platforms, am a columnist and a blogger, off-course also tweet and mentor CEO's and Business Founders.Believe strongly in being the change that I want to see the world to be. View my complete profile

Timex to open 20 franchised stores in tier I and tier II cities Last updated : March 31, 2010 03:33 IST Timex Group, an Indian based watch maker company is planning to launch 20 franchised stores across the nation in the next fiscal year in tier I and II cities like Guntur, Kakinada, Asansol, Hazaribagh and few more to expand its footprint. The company is also planning to expand its presence in cities like Delhi-NCR region, Pune, Hyderabad, Ludhiana, Ahmedabad, Bengaluru, Chennai, Kolkata and Mumbai. Presently, the company is operating 70 stores across India, both in kiosks and exclusive brand outlets EBO (The Time Factory format). The company requires an investment of Rs 10 to 15 lakh and an area of 120 sq. ft for Timex kiosk. While for The Time Factory, a

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The India Franchising Blog: March 2010 franchisee requires an area of 450 to 650 sq.ft and an investment of around Rs 20 lakh. Timex Group is expecting a growth of 10 per cent in the current fiscal year as against three per cent growth in 2009-10. Tags:Watch Franchise,Watch Retail Store,Low Investment Franchise,Top Franchise Posted by Amit Nahar at 11:19 PM

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Recommend this on Google Labels: EBO, Franchised Stores, India's Top Franchise, Low Investment Franchise, Time Factory, Timex, Watch Franchise, Watch Retail Store Location: 20.593684, 78.96288

MONDAY, MARCH 29, 2010

Top 100 Franchise Business Opportunities In India ENTREPRENEURS:START A NEW BUSINESS.EXPLORE INDIA'S LIST OF FINEST FRANCHISE BRANDS. Mar 29, 2010 – A look at the franchising Industry and the Top 100 Brands 2010 from different industries evaluated on the basis of their success, growth and concepts offered has been done by the franchising world magazine by Franchise India. The evaluation seems to have been done seeing the success and growth of the brand and how far they have been successful in retaining their success.A peek into the rankings reveals the following: Established franchisors: Established franchisors are referred to as Masters of Franchising. These brands have successfully grown over the past 10 years and have contributed greatly to the franchise industry. The survey has listed 30 franchisors representing 30 brands in various sectors of franchising like, Education and pre-school, F&B, Apparel, Florists, Gifts and Greetings, Consumer Durable, Fashion and Accessories, Beauty, Health and Fitness, Automotive, Financial Service, and Bookstore Franchises. Education Franchise: The most successful sector in the category of established brands is education and pre-school sector. Education franchising is the most established and lucrative franchise segment due growth of literacy rate and also due to the increase in disposable income particularly among the middle classes Moreover, the success of institutes such as Arena Multimedia, Cadd Centre, ICA, Jetking and NIIT show that the job opportunities in animation courses and the dependency on computers make more and more students opt for higher computer and software courses. With English language proving to be essential for job seekers, companies like Veta are the most successful franchises. Pre-schools are also proposed to be the best profit makers. With the increase in working women, the pre-schools are gaining momentum. Eurokids and Kidzee are among the top brands in pre-school category. F&B:Food Franchise: With more and more people preferring to dine out and celebrate the small moments of life, the F&B is the next prominent category among the established players in franchising. Among the Indian players Sagar Ratna (south Indian cuisine) and Club City (multi specialty chain) are included in the top 30 established companies. Kwality Wall’s (ice-creams), Monginis (bakery chain), Amul (milk products)have also been included in the F&B sector. Apparel:Garment Franchise: Franchisors in apparel segment have also established themselves successfully. Chhabra 555 leads the Indian wear category. Madura Garments, a readymade apparel chain and Raymonds, renowned textile company also occupy this section. They are followed by branded Western wear Spykar. Beauty Franchise, Health, and Fitness Brands: Healthy soul rests in healthy body is what all beauty, health and fitness franchisors swear by. This trend has prompted the beauty and fitness brands to establish themselves as successful franchisors. With Indians, getting more beauty and health conscious, this sector provides ample business opportunities to the aspirants. Shahnaz Husain Group and VLCC are top established franchisors in this beauty and fitness category. Thyrocare is a leading established Diagnostic centre, offering franchise opportunity. Fashion and accessory brands: With the changing preferences, there is a transition of

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The India Franchising Blog: March 2010 traditional market to being more trendy and contemporary markets. With mostly women and youngsters preferring to endow themselves with jewellery and trendy accessories, this section also occupies our list of top established brands. Tanishq and Titan are the top players in the section. Besides these, florists, gifts, automotive, financial services, consumer durables and book stores are the dominating established franchise categories. These sectors are also providing ample business opportunities to the aspirants to get associated with the successful franchisors. Having highlighted the top established franchisors in India the decision for all aspiring entrepreneurs to take up the franchise business is much easier now. explore the franchise lists that are available online. So, what are you waiting for? Explore the various opportunities available in India and start franchising. Posted by Amit Nahar at 3:05 AM

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Recommend this on Google Labels: Education Franchise, food franchise, Franchise Business, Franchise India, Franchise Opportunities, Franchising, Franchisors, Pre School Franchise, Start a New Business Location: 23.004243798643007, 77.53125250339508

FRIDAY, MARCH 26, 2010

Multiple Brands Open Joint Franchise Stores Re-feel ClubLaptop Opens A Joint Franchise Store in Jodhpur It is the biggest franchise store for the company till date at 700 square feet. It is a spectacular store has received immense response from the consumers so far. Within its inception of only two months ClubLaptop caught on the imagination of the customers and franchisees alike and now boasts of opening 16 franchise stores in 13 cities of India. However, the most spectacular Re-feel-ClubLaptop store so far has been the Jodhpur franchise store. Started on March 7, 2010, the franchise in jodhpur is the biggest one till date with an area of 700 square feet. Says Puneet Daga, the Jodhpur franchisee, who happens to be the owner of this store, “It was only because of encouragement and support from ClubLaptop that I could open this franchise store. They provided me with all sorts of possible assistance that I required.” ClubLaptop has embarked on an industry that has been majorly untapped. ClubLaptop is a first of its kind retail service chain that provides quality repair services at affordable prices. Moreover, it aims to be a one-stop solution for all kinds of queries on laptop care and accessories. Speaking about the store, Mr Amit Barmecha, Director Franchise Development, Re-feel and ClubLaptop said, “At Re-feel we use cutting edge technology and state of art equipment to ensure print quality and print quantity, both similar to the original cartridges. We target to open 250 Re-feel cartridge store and 300 ClubLaptop stores by the end of 2011 and contribute by setting quality benchmark in an otherwise unorganized market.” Echoing the enthusiasm, Mr. Daga said, “With increasing awareness among the Indian users about using environmental friendly and cost effective alternatives, we are positive about the store receiving a great response for both cartridge refilling and laptop servicing.” Mr. Daga said, “I have received a very good initial response and my entire team has been well trained and supported by Re-feel.” Clublaptop, the laptop service franchise specialist, offers a one stop solution for laptop repair and laptop accessories. Pioneered by young entrepreneurs, ClubLaptop is a unique initiative of establishing a chain of branded laptop repair stores in India. Customers will get fast, friendly, reliable and affordable laptop repair and care services from the store. ClubLaptop stands out to be a better alternative to the authorized service centers for affordable pricing, fast turn around time and world class service.

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The India Franchising Blog: March 2010 The Re-feel & ClubLaptop project is a pedestal to the cost cutting mantra of the corporate power houses. More than 10 billion cartridges are projected to end up in landfills. Considering, that one cartridge dumped, takes 400-1000 years to biodegrade, this a great environmental hazard. And unfortunately with every passing day, the problem is getting worse. The number of cartridges in landfill increases by 12 per cent each year. To the contrary, Re-feel, in the course of over two years, has saved over 4 Lac cartridges from being dumped into landfills and would save many more in the future. Discarding laptops due to problems is a common practice, thereby creating a huge amount of e-waste. Re-feel group is dedicated in providing low cost environment friendly solutions to the customers. With service, trust, knowledge & technology forming the core brand differentiators, Re-feel is a highly committed organization that offers superior solutions to its ever growing customer base through Re-feel & ClubLaptop Stores through out India. Re-feel Cartridge Engineering has been given the prestigious award for "The Emerging Company of The Year", 2009, at the Annual Franchise & Star Retailer Awards, 2009. Re-feel (re-feel.in) has also been ranked amongst Top 30 emerging franchisors and Top 100 business opportunities in India, 2009 by the Franchising World, Asia’s highest selling franchise magazine. Source: NewswireToday - /newswire/ - Kolkata, West Bengal, India, 03/26/2010 Posted by Amit Nahar at 4:14 AM

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Recommend this on Google Labels: amit barmecha, clublaptop, franchise development, franchise in jodhpur, franchising w orld, laptop service franchise, re-feel, refeel, top 100 business opportunities

Start A New Franchise Business In India: Franchise Opportunities pave way for the wannabe entrepreneurs Creating New Business Opportunities Through Franchise The franchise in India is emerging out as a new business option for many first timers to small scale entrepreneurs in India. That’s why a franchisor is usually seen searching for good franchise opportunities that would enable him/her to implement on a new business idea or ensure growth to the existing business. Franchise in India serves as a good alternative & provides business owners excellent franchise opportunities that can be handles on a trial & test basis. It is the franchisor of a reputed brand who would be responsible for laying out most of the rules upon which franchise opportunities seekers are needed to act on for bringing out instant visibility. However, one needs to carefully consider certain factors before settling for a particular franchise in India business from so many: Set your goal – Find out the possible causes for venturing into this business. How profitable it would be for you & what amount of ROI do you think this business can fetch you? One of the most important thing, are you committed to keep up with it? For increased business prospective, you need to generate business for the franchisor thereby highlighting it. Many franchise opportunities are of traditional types & don’t offer much in terms of monetary support & skill set. If you think you can run the business on your own without the necessity of all the franchise costs then it would be better to invest in it alone. Don’t initiate unless you have requisite funds – Some of the popular franchise opportunities come for a heavy price. In such cases you have to pay for hundreds of thousands of rupees annually as the annual franchise fee which may again vary from one place to another. What strategies the franchisors follow are not all same & differ a lot from franchisor to another.Read the franchise document properly and in particular the franchise agreement. One good example is the leading garment franchise Arvind who would sale goods on consignment orders & decided a commission for franchisees based on its value. Another one is the CADD, the training & education franchise company who fixes up a territory wise flat franchise fee irrespective of quantity.

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The India Franchising Blog: March 2010 In the earlier negotiation stage, the franchisor will try to make the offer look like attractive & their ROI calculations are most likely to be centered around the setup cost, initial franchise fee & royalty payments if any. Don’t forget that the business is not likely to keep growing from the first day itself & you will have to pay for the necessary requirements for a while. So avoid opting for the franchise in India franchise offers if you don’t have sufficient resources to continue with it for initial years. If you still have faith in your planning but facing fund crunch, forge partnership with some one who can provide you with necessary back up. In any case, don’t take the risk of staring it unless you have necessary fund. Posted by Amit Nahar at 12:37 AM

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Recommend this on Google Labels: Franchise Agreement, franchise costs, franchise documents, franchise fee, Franchise In India, franchise offers, Franchise Opportunities, franchise royalty, garment franchise, popular franchise

Educomp To Open 75 IIT Coaching Franchise Education Centres In 2011. NEW DELHI: Education content and service provider Educomp Solutions Ltd will open around 75 Indian Institute of Technology coaching centres in the upcoming fiscal, the firm said in a statement. The coaching centres will be opened on a franchisee basis.(IIT Coaching Franchise) "We have undertaken restructuring of our business recently and have created a new entity called Educomp Supplemental for our supplemental education business," MD and CEO Shantanu Prakash in the statement. Supplemental business includes tutoring, counselling and assessment. It plans to roll out other test preparatory material for BBA and medicine from 2011-12. Source:25 Mar 2010, 1307 hrs IST, REUTERS Posted by Amit Nahar at 12:28 AM

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Recommend this on Google Labels: coaching franchise, Education Business, Education Franchise, educomp, educomp supplemental, IIT coaching franchise, shantanu prakash

THURSDAY, MARCH 25, 2010

Taco Bell Opens Its First Restaurant In India Yum! is Largest and Fastest Growing Restaurant Company in India and Building Taco Bell into Third Powerhouse Global Brand Yum! Brands, Inc. (NYSE: YUM) announces the grand opening of the first Taco Bell in India by its international division, Yum! Restaurants International (YRI). Yum! is the leading restaurant company in India with its KFC and Pizza Hut brands. The introduction of the first Taco Bell in India reflects the Company's strategy of creating a third global brand. "We're delighted to be offering Taco Bell to consumers in India, a key growth market in our global portfolio," said Graham Allan, president, Yum! Restaurants International. "Based on customer feedback so far, we expect it will become extremely popular, just as it is in the United States. The Mexican-style food is perfect for the Indian taste palate and we will be offering a variety of vegetarian meals as well so that everyone can enjoy it." Yum!'s new Taco Bell international restaurant, located in Bangalore, India, is the country's first experience with the Mexican-inspired quick-service restaurant brand. Taco Bell's "Think Outside the Bun" positioning and brand essence is expected to resonate extremely well with India's young population. The new Taco Bell India menu features tacos, burritos, nachos, quesadillas and Crunchwraps, including spicier products tailored to the Indian market. The menu offers breakthrough value priced items starting at 35 cents. In addition, fifty percent of the menu features a vegetarian range of products specially created for Indian consumers including potato paneer burritos and crunchy potato tacos, among

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The India Franchising Blog: March 2010 others. "We are confident that Taco Bell will redefine the eating-out market in India with incredible taste catering to many consumer segments, day parts and occasions at an unmatched price," said Niren Chaudhary, managing director, Yum! Restaurants International India. "We are excited to be opening the first Taco Bell in India and we plan to expand it nationally as an incredibly vibrant and youthful brand." Yum! Brands is focused on developing Taco Bell into its third global brand after KFC and Pizza Hut. Taco Bell is the second most profitable brand in the United States. Over the past few years, the Company has expanded Taco Bell beyond Canada and Puerto Rico to other markets including Guatemala, Costa Rica, Panama, Dominican Republic, Guam, Iceland, Philippines, Dubai, Spain and Cyprus. Yum! is optimistic about the long-term potential of growing Taco Bell internationally. As of year-end 2009, there are more than 250 Taco Bell restaurants outside of the United States. India is a key growth market for Yum! Brands due to its extremely young and large population of 1.1 billion people, growing middle class and emerging economy. Over the past 12 years, Yum! has become the largest and fastest growing restaurant company in India by successfully developing a strong infrastructure, highly-skilled workforce focused on providing outstanding customer service and innovative, localized menus offering value options. By 2015, the Company expects to have at least 1,000 restaurants in India, up from 230 restaurants as of year-end 2009. KFC is the fastest growing quick-service restaurant brand in India with 72 restaurants in 13 cities as of year-end 2009. Yum! opened 27 new KFC restaurants in India in 2009, which is among the highest number of store openings in the country's quick-service restaurant industry. KFC is a young, vibrant brand in India from its contemporary restaurant designs featuring bold colors, open seating areas for large groups and flat-panel televisions to innovative marketing programs to unique signature products, including vegetarian items. Last year, the Company opened its first KFC Krushers beverage bar and store design in India highlighting YRI's popular new line of yogurt and fruit smoothies, dairy-based and soda-based drinks and teas. Pizza Hut has been named the "Most Trusted Food Service Brand" in India for the fifth year by The Economic Times (India), ahead of all other Indian and global brands, demonstrating its popularity in the country. As of year-end 2009, there are 158 Pizza Huts in 34 cities offering a range of localized products including masala pizza, chicken tikka appetizers and spicy Indian drinks. YRI is the largest division of Yum! Brands with more than 13,000 restaurants outside the U.S. and China Division. One of Yum! Brands' four key business strategies is to drive aggressive international expansion and build strong brands everywhere. In 2009, operating profit for YRI was $491 million. The year 2009 also marked the tenth year that YRI has opened more than 700 new restaurants outside the U.S. and China. Yum! Brands, Inc., based in Louisville, Ky., is the world's largest restaurant company in terms of system restaurants with more than 37,000 restaurants in more than 110 countries and territories. The company is ranked #239 on the Fortune 500 List, with revenues of nearly $11 billion in 2009. Four of the company's restaurant brands - KFC, Pizza Hut, Long John Silver's and Taco Bell - are the global leaders of the chicken, quickservice seafood, pizza and Mexican-style food categories. A&W Restaurants is the longest running quick-service franchise chain in America and amongst the most preferred fast food franchise globally. Outside the United States, Yum! Brands system opened more than four new restaurants each day of the year, making it a leader in international retail development. LOUISVILLE, Ky.--(// BUSINESS WIRE //)-Posted by Amit Nahar at 12:09 AM

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Recommend this on Google Labels: Fast Food Franchise, Food Brand, franchise chain, Graham Allan, KFC, Krushers, Long John Silvers, Niren Chaudhary, Pizza Hut, quick service franchise, Taco Bell, Yum Brands, Yum Restaurants

MONDAY, MARCH 22, 2010

India and USA launch a Joint Initiative for SME's. franchiseinindia.blogspot.in/2010_03_01_archive.html

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The India Franchising Blog: March 2010 India and the United States have launched a joint initiative for cooperation between small and medium enterprises, commerce minister Anand Sharma said. The initiative -- Integrating US and Indian Small Businesses into the Global Supply Chain - is aimed at expanding trade and job-creating opportunities for US and Indian small and medium-sized companies, the minister said. Noting that SMEs in India [ Images ] account for substantial part of domestic production and for 40 per cent of the manufacturing and exports, the minister said that SMEs, particularly the medium enterprises, are great incubators of technologies. Therefore, an initiative like this would make bilateral trade and commerce more meaningful. "We will ensure that the nodal groups that are responsible for the SMEs in both countries meet regularly to take it forward," Sharma told journalists during a press conference in New York at the end of his three-day visit to Washington. During his visit, Sharma met United State Trade Representative Ron Kirk and also addressed a meeting of the US-India Business Council as well the Brookings Institution. In October last year, over 50 chief executive officers of Indian SMEs met their US counterparts in New York at a two-day conference to explore opportunities for technology transfer and mutual investment. The delegation, led by India-based Indo-American Chamber of Commerce, comprised companies that represented industries like food-processing and agriculture, healthcare and tourism as well as civil aviation ancillary industries and legal process outsourcing. The first ever summit in the US also discussed opportunities in education in India. The SMEs from India are looking forward to their US counterparts to explore if they can give technology and machineries, said S K Jain, president of the chamber. "It's a two-way traffic -- we need the technology, brand and the franchisee and we have all the raw material and basic inputs," he said. Last week, Sharma had said that India and the US discussed in Washington the areas of cooperation, namely innovation and technology. "We would like India and the US to be true partners in developing new technologies that have applications across industrial sectors," he said. Sharma was in Washington mainly to sign India-US Trade Policy Forum Framework for Cooperation on Trade and Investment with his counterpart to strengthen the overall trade and investment cooperation. In New York, he also met Indian business leaders and entrepreneurs during a meeting organised by the Confederation of Indian Industry and Federation of Indian Chambers of Commerce and Industry. Venu Srinivasan, CII president and Rajan Bharti Mittal, Ficci president and ambassador Meera Shanker were present at the meeting. At his meeting with Kirk, Sharma raised India's concerns about visas for Indian professionals, restrictive trade measures and the need for reform of US export controls to promote high technology bilateral trade. In response to a question, Sharma said the US corporate leaders are of the view that there is need for creating greater sensitivity and awareness about visas, particularly among 'well-meaning but inadequately informed people' who feel because of incorrect perception, jobs are being taken away by India. "This was clear to my interlocutors that the issue should be addressed. India is not just an exporter of services but it is also a net importer. There is more or less a balance, but if there is a tilt, the tilt is in favour of the US," he said. The Indian companies, according to a recent report by PricewaterhouseCoopers and International Business Forum, have created $106-billion income within the US in the past

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The India Franchising Blog: March 2010 three years ending 2009, and created 300,000 jobs out of which 250,000 were taken up by the Americans. "It's a myth that jobs are being taken away by the Indians," Sharma said. "I have been urging the US CEOs that since they are aware of these facts they should sit with the members of Congress and give them the true picture, and when they are informed, they would withdraw amendments (read restrictions on travel by Indians)," he said. During his meetings, the minister raised a very important issue -- the benefits of commencing negotiations on a 'totalisation agreement.' Because of the absence of such an agreement, Indian companies in the US have been making double payments of social security, without getting any benefits. In New Delhi's [ Images ] view, restrictions on movement of highly skilled people from India to whichever country they go, come as a barrier to trade and commerce. "I, as their representative, would like to first uphold their dignity and right to travel as free citizens of the Republic of India to work in any country. At the same time, we respect the right of nationals from other countries to come and work in India. "Therefore, there has to be level playing fields globally," Sharma said in response to a question. Source:Suman Guha Mozumder in New York Last updated on: March 22, 2010 12:37 IST Posted by Amit Nahar at 11:38 PM

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Recommend this on Google Labels: Anand Sharma, Brand, Brookings Institution, CII, Ficci, Indo American Chamber Of Commerce, Ron Kirk, US-India Business Council

BigShoeBazaar.com Builds Offline Presence, Begin with their first retail store How big can BIG be? How much choice can make you shop till you drop? Spoilt for choice? All these cliche will acquire a new meaning when bigshoebazaar.com retail outlets open its doors for customers in Patna. The said store is located in Deo Siddhi Plaza, Kankarbagh, Main Road, Near Colony More,Patna, Bihar. This event marked the auspicious presence of Valmiki Singh, M.L.C. Bigshoebazaar.com introduces itself as India’s largest ecommerce store which is the first and only online shopping portal in Asia which provides a complete shopping solution of your footwear, have a diverse reach in more than 1500 cities in the country and 30 countries of the world. Bigshoebazaar.com consists of more than 85 brands and 15,000 designs on one platform. This family shoe store has variety for men’s, women’s and kids in formals, casuals and sports. There are shoes on discounts, the latest shoes as well as international brands. In the first of its kind format for retail business, Bigshoebazaar.com is offering its customers an experience which till date had been a fantasy. Bigshoebazaar.com’s multibranded retail outlets will not only have a huge collection under its roof, but will virtually have shoes from all over the world. The largest e-commerce company brings together all leading international and domestic brand like Woodland, Adidas, Puma, Reebok, Nike, LeeCooper, Red Tape, ID and the list just goes on and on. What’s more interesting for the customers of BSB is that you will not only find the International brands but also the national and local brands just within a single click of the button. The dispatch system is very fast and it just takes maximum 72 hours to get you your desired shoes. It is the only store that provides its customers more variety that a physical store can hold, they will get access to an unlimited virtual variety. The customer has to just log in to www.bigshoebazaar.com via a touch-screen kiosk and a whole new world of footwear

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The India Franchising Blog: March 2010 opens to him, giving him dozens of brands and thousands of shoes to choose from. But that’s not all whenever a customer is dissatisfied, he will be provided with all the customer support. The return policy is very efficient and is without any hassle or any cost or fee involved. The Company will take franchise route to expand its footprint. The first phase itself involves the launch of its first franchise store in East India in Bihar. The focus of expansion in the initial phase will be cities other than metros and will be looking to open more franchise stores across the country. Bigshoebazaar.com will set out its footprint in large metros in the second phase. Retail outlets with virtual access to the entire industry, will also help footwear industry clear its inventory faster, thus bringing a big relief to footwear manufacturers whose biggest problem has been real-time inventory clearance and all other troubles associated with it. “Our unique retail model offers vast choices to customer on one hand and helps the industry clear its inventory fast and in real-time on the other. Thus it’s a win-win model for all stakeholders. We are confident that this model will be hugely successful and become a benchmark for the industry,” said Manmohan Agrawal, Director of Bigshoebazaar.com. Posted by Amit Nahar at 11:30 PM

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FRIDAY, MARCH 19, 2010

Laptop Service Franchise Company ClubLapTop to Open 300 Stores By 2011 CLUBLAPTOP’S RESPONSE has been phenomenal so far. The company started franchising in December 2009, and within two months has opened 16 stores in 13 cities of India. The inquisitiveness of the people about the company has been so exceptional that the company plans to open 300 stores all across India by 2011. At franchise exhibitions, Clublaptop counter was always filled with more and more people, eager to know more about the company and their queries were cleared by the one-to-one sessions. The tremendous responses from franchisees and consumers alike have been taken in a positive way with the assurance of success guaranteed in future and a clear indicator of entrepreneurs seeking tech service franchisees. Chief executive officer of Re-feel, Alkesh Agarwal says, “There is a dearth of proper aftersales services in the laptop segment and services provided by the OEM are very timeconsuming as well as costly. Our focus is to offer quality services at a reasonable price.” Speaking about the venture, Agarwal emphasized, “We have excellent contacts nationally as well as internationally, and hence procure spare parts and related equipment from these locations. We have always maintained one objective and that is never to compromise on quality. Hence, it is our endeavor to offer the best services at reasonable prices. ” While speaking on the predominance of laptops in today’s world, Agarwal added, “These days, laptops are outshining desktops. A laptop offers mobility and ease of use, while desktops are on a steady decline, both in terms of usage as well as in sales in the metro markets. Also, desktops have proper after-sales support team, whereas in the laptop segment, dearth of proper services is plaguing the field. It is in this realm that we are targeting to venture into this segment,” Agarwal added. However, Clublaptop does not merely want to reach the pinnacle of success alone. With multiple franchisees as part of the Clublaptop family, the company aims to achieve success by enhancing the broader community of franchisees and consumers and in due course of time create an ambiance for the development of a good and responsible corporate citizen. Along with laptop services, Clublaptop plans to showcase a wide range of laptop

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The India Franchising Blog: March 2010 accessories. Hence, it aims at being a one-stop solution to offer quality service to laptops as well as provide the latest gadgets when it comes to laptop accessories. Posted by Amit Nahar at 4:59 AM

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Educational Institution Bill And What It Would do to Education Franchising In India. Education Franchise - Foreign Educational Institution Bill Posted on Tuesday, March 16, 2010 What did McDonald, KFC, Subway and the like bring to India? Well, a lot of good food, business for the local businessmen, work for the local lads, money for the Indian economy. The franchise model of business has worked wonders in the food sector in India. Relatively easy to set up, an instant brand recognition and invaluable assistance in terms of knowledge makes it an instant hit in booming economies like ours. Many other sectors have tried the franchise model as well - the hospitality industry for example. If everything goes right in the next few months in the Parliament we may see the same franchise business model in the education sector as well. "The Foreign Educational Institution (Regulation of entry and operation) Bill" is all set to be tabled in the parliament for discussion soon. The cabinet has cleared it and Kapil Sibal is confident that though parties like BSP, RJD and SP would oppose it, the bill would get acceptance in BJP and other sorted out parties and should get cleared without much ado. The Left is expected to rattle a little but they have been disarmed in the recent times by the UPA government's massive numbers. The bill, when passed, would be a big boost to the education system in India. If Universities like the Harvard, Oxford, Stanford and the like start to show interest in Indian education market we may soon move towards a standardization in the education sector which is the need of the hour. The education system in India in present times is raked by malpractices across all fields of study. Unification of education metrics has been echoed a number of times by the education minister and few other government bodies and this bill can do just that in an indirect fashion. A number of universities have had similar successful experiments in countries like Singapore specially in fields of technology, fashion and other contemporary fast paced courses. Education franchising would bring better education to the people of India, more robust education system and better education franchisers may evolve and more than anything else it would create a respect for Indian education scenario in the rest of the world. According to the current trends the Indian student is in high demand in the global market but the Indian education is looked down upon, this Bill may change the attitude of the world. Posted by Amit Nahar at 4:46 AM

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THURSDAY, MARCH 18, 2010

Women Taking On Franchise Opportunities In India From President to astronomers to actors to doctors to teachers to successful entrepreneurs the fair sex has in all. Women of today has now not only confined to kitchen and domestic jobs, she is now becoming the future of the franchising sector as many marketers are just ogling at the women entrepreneurs as out of the box thinkers and a challenge for the male dominated society. With India franchising sector growing day by day women entrepreneurs are becoming more active and weaving the stories of success in every field. Women in franchising business have got best opportunities to run business at their own pace and succeed in their own business.

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The India Franchising Blog: March 2010 “I have been associated with Avon from last two years and making handsome money in the business. I do not have to give full time to the business. With my all other responsibilities of family I am happy to work for Avon where I am the boss of my own. Thanks to Franchising that has come as a boon for the housewives,” lamented Asha, a housewife. Presently the young brigade specially women aged between 18 to 45 years have got more potential to do the business and has got control over the buying and purchase decision of the product. However the earning of women in this sector has increased to four fold with the influence of the fellow competitors. The Indian Franchising sector, which is estimated to be around Rs.10,000 crore is attracting lot of women entrepreneurs. Be it housewife or a professional, women from all walks of life are attracting towards this model of business. Gaurav Marya, President, Franchise India Holdings believes, “The franchising business is considered to be the best and safest option for the women today. The business gives return from 15 to 20 per cent. The fairer sex is making a consistent move in the business.” Tupperware, Oriflame, VLCC, Body Care, Talwalkars, NIIT, etc. are some of the franchise companies which is attracting lot of women to start their business. The franchisee doesn’t have to invest huge amount of money in the business. One can also start the business with a minimum investment of Rs.50,000 only. With the government policies becoming liberal for the business more and more women folks are entering this sector. Source:18. Mar, 2010 by Bhawna Satsangi Posted by Amit Nahar at 4:29 AM

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MONDAY, MARCH 8, 2010

Hospitals take to franchising In India For Their Expansions Considering the huge investment needed for establishing the necessary healthcare infrastructure in the country,franchising is emerging as a viable option for hospitals to expand to newer geographies. According to estimates, the healthcare industry in India is short of one million beds and this requires a capital investment of $30 to $40 billion. This is where franchising comes as a model for healthcare franchise to attract investments from non-medical investors. Apollo Hospitals is one among the pioneers to have sought franchisee model for its clinics. According to Ratan Jalan, former CEO of Apollo Health and Lifestyle and in-charge of the Apollo Clinics, ‘responsible franchising’ is a successful model for developing healthcare infrastructure. “Careful choice of franchisee and increased involvement of the franchisor, training, technologies and people selection is needed in healthcare more than any other business. Less than 10 per cent of Apollo’s franchisees have any medical background. But they have a passion for healthcare, quality and focus, besides financial resources. Substantial involvement from the part of franchisor, at least in the initial stages is crucial,” he said. According to Gaurav Marya, president of Franchise India, the franchisee brings in capital, local know-how and entrepreneurial enthusiasm to the business. “Currently, only five per cent of the hospitals in the private sector are franchisee-operated. But the potential is huge as healthcare is a highly capital-intensive business,” he said. V Vijayakumar, MD of V V Dentistree sees franchising as an option to replicate standardized protocols and practices in smaller towns. The dental chain with six centres in Chennai is looking at having a network of franchisee-operated clinics after it builds up the brand in all the four metros.

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The India Franchising Blog: March 2010 However, Dr Amar Agarwal, CMD of Dr Agarwal’s Eye Hospital finds that transferring the vision and ensuring the same-level of quality are major challenges in a franchising model. Posted by Amit Nahar at 11:10 PM

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TCY adopts Franchise Fee Refunds After 1 Year If franchise Location does'nt work : Another Franchise Strategy To Woo Franchisees TCY Scouts For Business Partners, Offers 'Zero Investment Loss Risk' TCY is taking the risk out of franchising. Offers to refund 'License Fees' if the franchise doesn't take off. Ludhiana, Punjab, March 8, 2010- TCY, the education services company, has unveiled a franchising model wherein a new franchisee enters the business with 'zero investment loss risk'. The company is now offering a clause in the contract wherein a new franchisee can exit the business without having to bear the licensing fee costs. TCY is currently operating more than 32 franchisees across North India and is looking for partners in Haryana, Himachal Pradesh and J&K. Aman Bansal, the business head of franchising division of TCY said, "Franchising is a proven and replicable business model but sometimes doubts remain in the mind of the potential franchisees. With our new contractual clause, if a franchisee wants to exit the business within one year of start of operations, we will refund the entire licensing fees." The two major initial outlays of starting a franchising business are the infrastructure costs and licensing fees. In the event of a franchisee location not working out, the company will refund the licensing fees while the infrastructure will remain with the franchisee. The company has been in the business for more than twelve years and has developed an efficient franchise business model which has proven to be robust and scalable. In fact, many franchisees that originally started out with one centre are operating multiple centres now. Another advantage for the potential franchisee is the instant brand recall that he would get by associating with an established business brand. Since TCY bears all the advertisement costs, the publicity costs are also greatly reduced for the franchisee. Notes to Editor About TCY TCY, also known as Top Careers and You, is one of India's most admired educational services providers in the education franchise industry. Its English coaching arm, BetterThink, has coached more students than any other entity in India. Operating with a hybrid offline as well as online model, TCY has carved out an identity in test preparation sector. TCYonline.com, the website of the company has over 7, 50,000 students from more than 1500 cities and town of India enrolled on it. On the website, students can take free tests from more than 50 categories. National Benchmarking Test (N.B.T.), a school programme by the company, has received rave reviews from schools across India. Posted by Amit Nahar at 10:46 PM

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FRIDAY, MARCH 5, 2010

Retailers Treading Carefully on Realty Deals and New Store Costs. Bangalore, March 3

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The India Franchising Blog: March 2010 The first signs of a receding recession is being reflected in retailers getting back their bargaining power in realty deals even though they are still taking a longer time to close. “Retailers will no longer sign rental agreements at terms which do not make commercial sense,” says Mr Arvind K. Singhal, Chairman, Technopak, a management consultancy firm. Retailers, who expanded because competition did, have learnt their lesson and therefore will not pay more than what their business model can support. Also, with retailers focusing more sharply on the cost of retail space, real estate deals have again become long and protracted. For per sq ft efficiency, retailers are now toning down their expansion plans. For instance, food retailer Spencer's rationalised its operations by closing down 150 stores in the last year and opening 35-40 stores because of high rentals and wrong locations. Similarly, lifestyle retailer The Bombay Store opted for expansion through mid-sized stores instead of larger ones, while consumer durable company TTK Prestige shut down or relocated 50 Smart Kitchen stores. This is in contrast to a situation couple of years ago when retailers would “rush” to occupy any available space, says Mr Farook Mahmood, Managing Director, Silverline Realty, adding, “The situation has changed from realtors' yesterday to retailers' tomorrow.” Retailers, then, ended up opening stores of wrong sizes, adds Mr Zahir Laliwala, Chief Executive Officer, SportXS, a sports gear retailing outlet. “Mall developers now understand the retailers' profit and loss numbers and they have learnt to keep their cost down and expect return on their investment on the longer period.” Unlike the pre-slowdown period, when valuations drove retailers' expansion plans, 2010 would see more realism, says Mr Sushil Mantri, Chairman and Managing Director, Mantri Developers, which has two malls in Bangalore. “Both retailers and developers (mall-owners) have become cautious in their approach... while retailers look at business sustainability, developers assess the retailers' track-record and the value-addition they would bring to their malls.” Rentals and lease values have gone up by 10 per cent in cities like Mumbai with low inventories. On the other hand, critical retail brands are also demanding that spaceowners ship in with them in doing up store interiors, says Mr Gaurav Marya, President, Franchise India Holdings. Bangalore, March 3 Posted by Amit Nahar at 10:59 PM

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THURSDAY, MARCH 4, 2010

Budget 2010: What it brings to the franchise industry With most of the market signals remaining positive with Union Budget 2010-11, consumer is happy being at the center stage of consumption story and is in a better position than a year ago. However, challenges remain. Read on to know what is in platter for for the SMEs and franchise industry. Franchise industry has been looking forward several regulatory as well as policy reforms to facilitates its growth. A positive GST outlook by government and rise in threshold for tax compliances has been seen as a very positive move by the franchise industry. However the long impending demand of abolishing dual taxation on the franchise services has been clearly ignored by the policy makers. Presently both service tax as well as VAT are imposed upon the franchise services which distorts the franchise model completely.Morover service tax on rental proceed further makes deters the profitable feasibility. In all it has been the budget has been moderately favorable for the franchise industry. Gaurav Marya ,President, Franchise India Holding Ltd shares’’ The budget 201011 brings a reasonable assortment for small retailers as well as franchisors. While increased income tax exemption limits will certainly boost consumption, imposing service

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The India Franchising Blog: March 2010 tax on rental property distorts retail business models by making the accessibility of retail spaces precipitously expensive, hence making it unviable to sustain profitably.' According to D P S Kohli, Chariman, Koutons Retail India Ltd, ‘Overall, it has been a mixed budget for us. New tax slabs and rates have been introduced which would offer 60 per cent relief to the tax payers providing them with greater disposable income. This would provide the necessary boost to consumer’s spending a pre-requisite to unleash the true growth momentum of the retail sector. In addition, reduction of surcharge on domestic companies that the finance minister has announced is sure to accelerate the expansion plans for the retail players at home. However, industry status continues to delude the retail sector. This is a disappointment since this is the first step towards reforming the sector and organising the highly unorganised sector. The hike in the excise duty is also not favorable for us since this might directly affect the quality of production. Badrinath, Director, Accretive Global stated that the budget has both the shades of gray and white for the franchise industry he further explains detail implications The good news No change in service tax rates and the same continues at 10.3 per cent. The FM in his budget speech states that this proposal is “to maintain the growth momentum and also to bring about a convergence in the rates of tax on goods and services.” Small businesses stand benefited on account of lower direct tax compliance costs. The threshold for having the accounts audited for tax has been increased from 40 lacs to 60 lacs. Further, small businesses with turnover/receipts lower than 60 lacs can also choose to be covered by the presumptive tax system. The threshold earlier was only 40 lacs. The frequency of remittance of central excise is extended to quarterly basis from the current scheme of monthly payments for units operating under the SSI Scheme. As a welcome step, exemption from 4 per cent special additional duty of customs is granted to mobile phones, watches and garments imported in pre-packed condition for retail sale. The not so good news The FM has retrospectively amended the provisions relating to levy of service tax on renting of immovable property. The judgment of the Delhi High Court in the case of Home Solutions Retail is negated by making mere renting of immovable property liable to service tax. Further, much against the industry expectations, the FM has retained the CST at 2 per cent and the base rate of excise is increased from 8 per cent to 10 per cent. The FM has extended service-tax on health check-up services provided to employees of a business-entity or persons covered under health-insurance-schemes if such payment is made by the business entity or insurance company. This is likely to increase the cost of healthcare services. However, if carefully managed, the franchisee in this sector could claim credits of service tax paid on various input services such as renting of immovable property and franchisee fee which is currently adding to the cost of the operations. This could reduce the net price impact for the end consumer. As the franchise industry brings with its surge innovative new franchise business models to tap the potential of Indian consumption, it also demands a favorable ecosystem which can be realized by necessary monetary policy reforms. Posted by Amit Nahar at 11:32 PM

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TUESDAY, MARCH 2, 2010

MAAC to add 30 training centres by March 2011 3D animation and visual arts trainer Maya Academy of Advanced Cinematics (MAAC) plans to add 30 centres by March next year. The institute, which was acquired by IT training and education major Aptech in January

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The India Franchising Blog: March 2010 this year for Rs 76 crore, at present, has 70 centres across 40 cities. "We are planning to add 30 centres by March 2011 to strengthen our presence across tier I and II cities. We already have 70 centres, of which five are company-owned and rest through franchise," MAAC Vice-President and Head (Sales) Kuldeep Pareek told PTI. Asked if post-acquisition, MAAC would be merged with Aptech, Pareek said: "There would be a dual branding strategy and the students would have the choice of joining either. MAAC would continue as a separate brand." Tags:Education Franchise,Training Franchise,MAAC,Animation Franchise,IT Franchises,Maya, Aptech,Computer Franchise. Source:Press Trust of India / New Delhi March 02, 2010, 13:44 IST Posted by Amit Nahar at 2:00 AM

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Top 100 Franchise In India: India Franchise Rankings Maverick Franchise Brands launches India Franchise Rankings 2010 Inaugural India Franchise Rankings, a first of its kind, annual exercise initiated. Mumbai, India 2nd March 2010: With an aim to encourage and promote best practices in franchising in India, Maverick Franchise Ventures (MFV India) announced the launch of the first-of-its kind 'India Franchise Rankings 2010'- awards to honour the achievements and the entrepreneurial spirit of Indian franchisors. India Franchise Rankings 2010 is an annual exercise aimed at encouraging franchise companies. Despite there being several initiatives to award franchise brands, none of them have the a clear methodology on the basis of which they are ranked. The current awards gauge franchise recruitment progress and is where number and expansion driven, leaving behind a lot of more important parameters, no. of franchisee locations closed, franchisee profitability and success ratios. The franchisee - entrepreneur of today complements the core Indian values of respect, freedom and hard work. Franchising shapes the lives of 85,000 Plus Franchisees across India, these franchisee - entrepreneurs transform and mould the franchise system and spreads the same entrepreneurial idea, within their family. Considering the undividable association of celebration and entrepreneurship, MFV India decided to salute these 'solid gold franchisors' and acknowledge their contribution to the Indian Economy.

Speaking on this occasion, Dhawal Shah, Founder of MFV India said, that, 'We are pleased to launch the inaugural India Franchise Rankings 2010. Today's franchisees and businessmen are always on the lookout for franchise and business opportunities, but are not aware of various companies. With our propreitory index, we have developed a methodology for evaluating and assessing India's leading franchise companies'.

Silvio Zannoni, one of the investors in Maverick Franchise Ventures, on this occasion said that, 'Our Partnership with Way2Franchise.com has been quite successful in helping us launch unique-first initiatives like the India Franchise Rankings, Similar to our online franchise portal in Italy, we will definitely see us increase our market share in India as well.

Since, November 2009, the MFV India Team has been constantly examining franchisors and confidentially surveying franchisees. Participation in the franchisee’s surveys is anonymous; franchisees receive codes for confidentiality. Some of them, that prefer to speak over the telephone are not asked for their identity or location. Here is how we compile this mega-list--the first, best and most comprehensive franchise ranking in India. The process began in November 2009, when we asked franchisors to participate in this

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The India Franchising Blog: March 2010 year's survey. Each submission was vetted before being entered for data analysis, with 164 companies making the first cut. Of those, the top 100 companies made the Franchise 100 ranking, based on franchisee satisfaction and profitability.

Geetanjali Mehlwal, a legal expert and an experienced franchise veteran said that, 'India Franchise Rankings is a much needed initiative that will benefit everyone in the franchise industry in India as well as provide foreign franchisors with a fair idea about the performance of the Indian franchise industry'

All companies, regardless of size, are judged by the same criteria: objective, quantifiable measures of a franchise operation. The most important factors include financial strength and stability, growth rate and size of the system. We also consider the number of years a company has been in business and the length of time it's been franchising, start-up costs, percentage of terminations, and whether the company provides financing.

All the factors are plugged into our proprietary methodology, with each eligible company receiving a cumulative score. The 100 franchises with the highest cumulative scores become the India Franchise 100. Remember that the India Franchise 100 is not intended to endorse, advertise or recommend any particular franchise. It is solely a research tool you can use to compare franchise operations. MFV India stresses that you should always conduct your own independent investigation before investing money in a franchise. The winners of the inaugural annual India Franchise Rankings 2010 Competition honoring excellence in franchising are:

1 Raymonds 2 Angel 3 Subway 4 Eurokids 5 NIIT 6 Helen O Grady 7 Siyarams 8 Aptech Computer Education 9 Coffee Day Xpress 10 Reliance Money 11 Koutons 12 Career Launcher 13 TIME 14 Motilal Oswal 15 Institute of Management Studies 16 Spykar Jeans 17 Max Mind Abacus 18 Kwality Walls 19 Bachpan Play School 20 Levis

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The India Franchising Blog: March 2010 21 ICICI Securities 22 Animaster 23 N Power 24 The Apollo Clinic 25 VETA 26 Jawed Habib Hair Xpreso 27 Podar Happy Kids 28 Golds Gym 29 Cartridge World 30 Easy Bill 31 Sharekhan 32 Suvidha 33 Academy Of Broadcasting 34 Flair English 35 India Infoline 36 Karrox 37 Snap Fitness 38 Srinathjis 39 Way2Wealth 40 Abacus Mental Mathematics Academy 41 US Dollar Store 42 Texas Chicken 43 US Pizza 44 K Lounge 45 Sykes and Ray Equities 46 Fashion and I 47 Sarva Jal 48 The Loot Store 49 VLCC 50 Institute of Computer Accountants 51 English Express 52 Sykes and Ray Equities 53 Remax 54 Go Chaatz 55 iPlayiLearn

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The India Franchising Blog: March 2010 56 LJ Hooker 57 Avalon 58 Ace Tours and Travels 59 Clipso beauty School 60 Jumbo King Foods 61 Desk to Desk Couriers (DTDC) 62 Belmonte Apparel (S. Kumars) 63 Animation Traning School (ANTS) 64 Oxford Book Store 65 Zapak Gameplex 66 Time Zone India 67 Frameboxx 68 Castol Bike Zone 69 Tanclean 70 SVK Institute of Management 71 Pizza Corner 72 Re-Feel 73 Jetking Infotrain 74 Ideal Play Abacus (IPA) 75 Comfort Securities 76 Sagar Ratna 77 Sykes and Ray Equities 78 Mahindra First Choice 79 Zee Institute of Creative Arts 80 Russell's Institute of English 81 Geetanjali Group 82 Dandy Collection 83 Adidas 84 Kaati Zone 85 Gini and Jony 86 Kidzee 87 REBI 88 Baskin Robbins 89 Java Green

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The India Franchising Blog: March 2010 90 Slice of Italy 91 ABC Montessori 92 Western Union Money Transfer 93 Multi Utility Solutions 94 Appin Knowledge Solutions 95 Talwalkar's Gyms 96 Ventura Securities 97 Reebok 98 Sharkey's Cuts for Kids 99 Tropical Sno 100 Vichare Couriers

Legal Disclaimer: Before making any commitment, or paying any money, it is essential that prospective buyers make their own careful enquiries, discuss the franchise opportunity with any other franchisees and take appropriate professional advice from an experienced franchise consultant.we ar any of our sponsors or endorsers or related companies will be responsible or liable for losses, costs and expenses, including consequential losses and any failure of business which may result from the use of this information or the use of or reliance on data contained in it. Posted by Amit Nahar at 12:42 AM

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MONDAY, MARCH 1, 2010

Franchise Industry Reforms Road Map : A Wish List to Govt Of India. Franchising paves way to entrepreneurship The magnitude as well as the future potential that Indian domestic consumption exhibit makes it an attractive destination for investments. However, statistical trends give a wider perspective of the potential of the Indian market. Yet the investments, both domestic as well as international have had always taken a conservative pace. Presently, liberalisation and market openings have facilitated the business dynamics to become more conducive for entrepreneurial activity. There has been a positive entrepreneurial activity in the business environment which is extremely important as the economic studies have repeatedly proven that innovation as well as entrepreneurship can propel the fiscal machinery of the nation. India has presented a curious case as entrepreneurial activity here always had its own implication. It has been observed that 90 per cent of start ups fail in the first year of their inception. There are many reasons for it. Firstly, the Indian market is testing waters in terms of readiness for newer business concepts and formats. Moreover, mature business systems are yet to be developed in terms of redesigning the whole process of starting a business which ideally should be a seamless process. Unfortunately, in India the burden of regulatory procedures as well as processes makes it strenuous for the entrepreneurs as well as innovators. As a result, most of the entrepreneurial activity is reduced to low involvement as well as low risk models. Franchising as an entrepreneurial route is extremely interesting and successful. The acceptability of franchising has been quite prolific amongst Indian business minds. According to the figure, 90 per cent of the

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The India Franchising Blog: March 2010 franchising ventures have a huge probability of success. This attracts many investors to invest in proven business models and concepts which involve less risk as well. This however is just the tip of the iceberg, although, there is a lot more to franchising than the apparent. Also, franchising in the Indian market becomes much more intricate rather than just being a low capital expansion mode. Industry status to franchising India is an attractive market for franchising. The expanded market size seeks deeper as well as broader market penetration. However, the demographic variables make this expansion a risky proposition, especially in a capital constrained market like India. India, as any developing country seeks investment, technology as well as business know-how from the developed countries. Foreign investments have repeatedly done wonders in turning the market game around as it tends to make markets more competitive for IT, retail, manufacturing or service sectors. The franchise industry in India is currently an anonymous contributor to the country's economy, which is not favourable for a sustainable growth. As Arun Khetan, Managing Director, The New Age Knowledge Solutions (NAKS) explains, "The status will not only have a detrimental impact on further proliferation of franchising but will also deprive excellent local brands the opportunities to come up with products/services that are of relatively superior value proposition compared to many foreign brands, which are much new to the Indian turf, in terms of knowledge of local preferences and delivery mechanism, but score out heavily in terms of resource deployment and hence are able to reap away most of the benefit." He further adds , "The need of the hour is that the Indian franchising be formally recognised as an industry, which would propel the action plan and processes of the industry and set the ball rolling, that would have a cascading effect on all the interfaces that are related to it either directly or indirectly." The policy makers must recognise the fact that this is a format segment that cuts across all the industries and that its presence in the Indian backdrop is real. Granting legitimacy would not only put an end to the shadow war but also make the world wake up to the fact that Indian policy makers are serious about the franchising business. This would have mammoth implications in terms of perception that overseas market carry about Indian franchisors and franchising products / services and bestow credibility (which, due to lack of Government sanctity currently rests mostly on private players who have forayed abroad on their own grit, merit and strength). Pave way to FDI reforms Historically, Indian policy makers had been skeptical about Foreign Direct Investment or FDI. A limit of 51 per cent on foreign investment in retail has brought in a lot of innovation in the market. International investors have always come up with India-centric policies. The importance of the franchising process is reflected in the retail and industries where nearly every retailer (in malls) and every major restaurant are franchisees of international as well as major national chains. Internationally, franchising is very well accepted and is entrenched deeply within USA, Western Europe, South Africa, SouthEast Asia. Ratan Jalan, Founder and Principal Consultant, Medium Healthcare Consulting Pvt. Ltd recommends, "The expected foreign investment reform in the forthcoming budget is likely to encourage international players to enter the Indian market. Hence, it would be pertinent for the Government to ease borrowing for players interested to open outlets for these international players." Currently, there are also restrictions on the number of shares a foreign company or person can hold in an Indian company if the joint venture option is considered. There are restrictions on payment of royalties if it is a technical collaboration agreement between the foreign master franchisor and Indian master franchisee. In the forthcoming budget, the Government would need to address some of these issues also in addition to the foreign investment reforms. Sonali Dey, Fox & Mandal shares, "Assuming that the current sectoral limit remains unchanged, FDI up to 51 per cent, may be brought under the automatic route. In addition, the prevailing ambiguity over FIIs should be clarified." Improved legal and regulatory framework While India has no specific legislation regulating franchise arrangements, there are a number of laws that affect the franchisor-franchisee relationship. Intellectual property, taxation, labor, competition, property, and exchange control regulations all influence franchising. Lack of appropriate format for franchising agreements can have far fetching impact on the Industry. Dey agrees it is seen several times that due to absence of any

franchiseinindia.blogspot.in/2010_03_01_archive.html

21/29

1/28/13

The India Franchising Blog: March 2010 franchising laws or any Government guidelines in India, franchisors tend to follow formats which are approved or followed in other countries. Also, it is seen that most of the times the franchisees do not have much bargaining/negotiating capacity in front of the giant franchisors. In view of the circumstance, it may be advisable if the Government frames certain guidelines taking care of the needs and concerns of both the franchisors and franchisees. Adding further, she said that it is important to have mandatory disclosure requirements. This will ensure transparency. Countries with specific franchising legislations or guidelines make it mandatory for parties to a franchise agreement to disclose certain factual information pertaining to their businesses. A franchisor should be required by law, to make certain disclosures to the prospective franchisee, via details regarding pending litigation and bankruptcy history, financial position, etc. In India, in the absence of any such Government guideline, a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures. Facilitate an industry centric credit infrastructure New-age small and medium businesses in India are seeing a transition from manufacturing to the service industry. There are 35 million SMB units in India of which retail sector constitutes 18 million units and service sector has 9.5 million units respectively covering almost 75 per cent of the SME sector. Franchising has been responsible for bringing structural growth and modernising the formats in both the service and retail-based small businesses. However, the mechanism for financing the franchise formats has not evolved, as the banks don't render industry specific funding options due to lack of knowledge. In order to bring an orderly growth in these sectors, it is important that the government makes a special budgetary allocation to franchising businesses in its SME finance allocated to the financial institutions. As new unit franchisees, growth in 2010 is expected to be 40 per cent. Credit is a major hurdle in the growth of franchising obtaining capital to finance single or multi-unit operations has been relatively difficult for franchisee entrepreneurs. No more than five per cent of the entire franchise financing requirement in India is met by financial institutions. Industry believes that as the risk involved in a franchise business model is optimised to a large extent, banks must offer an easy interest rate. A sound mechanism of franchising funding is hence very essential as non-availability of third party guarantee often proves to be a hurdle to obtain required funds. Internationally, particularly in United States, U.S. Small Business Administration (SBA) financing has played a significant role in helping new or small operators secure the necessary capital to start or acquire franchise units. The SBA and its sponsored loan programs are one of the best sources of capital to open a start-up franchise unit or purchase an existing resale unit for small-business franchise operators that would otherwise experience difficulties in qualifying for conventional financing or loans. Ninad Kapre, Managing Director & CEO of Aptech Ltd recommends that a lot more effort is required to institutionalise the funding infrastructure. Khetan agrees, "The current ambiguity in the Government's policy guidelines with respect to the franchising industry has left the franchisor and the franchisees at the mercy of the bankers /financial institutions that use their discretion to interpret and regulate the funding propositions from the franchising industry and are quite passive in their response towards franchising as a business model. This is a sad state and would be addressed immediately once the Government confers franchising with industry status." Remove dual taxation policy on the franchise systems Under Notification No. 7/2003 dated 20.06.2003, service tax is payable on the gross amount charged by the franchisor from the franchisee in relation to franchise. However, the definition of franchise services flawlessly comprehends the scope of the business activity. The implementation triggers a lot of impact on the operationalisation of the format. Today, Indian franchisor is subjected to dual taxation of service tax and sales tax. Product franchising is a mode of product distribution. Therefore, from cost price to sales price, there is VAT applicability. At the same time, franchisors are liable to pay service tax on franchise service given to the franchisee. To avoid a dual tax liability, franchisors prefer to give product outright basis with advance billing rather than on consignment basis and also prefer to call their partners dealers instead of franchisees to avoid the service tax accrual. The final burden of the service tax is passed on to the franchisee, as the franchisor is unable to forgo his share of franchise fees, which dampen the entrepreneurship of the small businesses. While, the taxes are nonetheless critical, however in a franchise operation the implication

franchiseinindia.blogspot.in/2010_03_01_archive.html

22/29

1/28/13

The India Franchising Blog: March 2010 of these taxes are not justified and commonly led to situation where franchisors particularly, retail franchisors are shying to term themselves as franchisors and have diluted the business practices which are fundamental to the success of franchising format. Thus, the business practices that emerged further, complicates the franchisee-franchisor relationship, and also make the legal framework more tedious, in addition, the whole magnitude of the franchising industry is often misinterpreted. Agreeing to the point Akhil Chaturvedi, Director, Provogue (India) Limited says, "For the franchise industry to thrive successfully, it would require the abolition of service tax currently levied on transportation, rent and commission." Badrinath, Director, Accretive Business Consulting, said that the dual taxation status needs to be resolved. This has not only added to the cost of operations, but also has put the sector at cross roads. Further, not only retail, but also other sectors like software are facing a negative impact for the same. Both franchisors as well franchisees across sectors believe that franchise services should not be liable to service tax. There is a strong opposition from the franchisees as the franchise system in India is yet to reach a mature stage and hence the tax policy must facilitate the format to become more competitive. Sharing his views Kundan Kashyap, an Archies Franchisee based in Ranchi says, "Service tax should be abolished as the franchisees pay full VAT and hence dual taxation should be avoided. Government should understand the franchise concept is unique in the way that the most of the resources involved are invested by the franchisee." Sharing the same view, Chander, Franchisee of Catmoss based in Sarojani Nagar New Delhi says, "Service taxes causes unnecessary burden on the franchise service formats and cause operational hurdles." Service tax on rentals should be avoided Real estate has become one of the most important aspects of franchise preposition or for that matter a retail success. The rental lease cost could be a significant contributor to the franchisee's running cost. With service tax plus education cess at 10.30 per cent, every tenant will now pay service tax equivalent to six weeks of rent. The industry seeks abolition of service tax on the rental leases. Badrinath, suggests, "The applicability of service tax on rentals should be clarified." With the verdict of Delhi High Court in case of home retail already being challenged by the Central Government, it would be good if the Supreme Court could hear the case and provide the ruling at the earliest. In the retail sector, rentals being one of major expenditures, a 10.30 per cent of rent therefore is significant from both, cash flow as well as margin perspective` This would be a relief for a margin centric business like retail. Lack of structured industry specific measures prevent the business to avail industry appropriate benefits. Shubhranshu Pani, MD, Retail Services, Jones Lang Lasalle Meghraj recommended that pertaining service tax on the rentals should be clarified and freed from existing ambiguity. Over the last few years, there has been an increasing tendency to indiscriminately levy tax on contracts rather than tax on services. Ninad Kapre, also believes that there should be a simple tax structure which is implemented in a fair and transparent manner. Introduction of a flawless GST Eliminating the current system of dual taxation, application of a uniform GST, will have its own implications. Since GST is not just VAT plus service tax but an improvement over the previous VAT and disjointed service tax, the tax incidence will come down in case of goods. Tax experts are of the view that this budget is crucial for implementation of a comprehensive as well as flawless implementation of GST nation-wide to enable the economy to become more competitive. The GST implementation should be robust to involve the extended industries. Jalan explains, "In case of services, the incidence, and coverage of tax may rise resulting in higher prices. In this context, for the franchise industry, service franchising may be less lucrative. Supply chain efficiencies will further support this phenomenon. For goods, the existing rate is more than 20 per cent, but for services, the existing rate is 10.3 per cent since GST is expected to be in the range of 1216 per cent, the prices may rise in the services segment due to the rising tax burden." This being the last budget to be presented before the proposed implementation of GST, this is also the last instrument for the Government to step ahead to align itself with GST implementation. Among others, the Government should use this budget to align the rates of taxes towards the proposed GST rates. Further, it should indicate the roadmap for the publishing of draft laws and constitutional changes required thereto', Badrinath adds. Baba Chandok, Cartridge World Franchise voices the same and says, "The industry is hopeful that implementation of GST will be breather for the retail."

franchiseinindia.blogspot.in/2010_03_01_archive.html

23/29

1/28/13

The India Franchising Blog: March 2010 Introduction of composite scheme for threshold exemption Currently, the tax structure is certainly not conducive for a robust franchise environment. As a SME, the franchisee must be able to derive maximum benefit so that the same could be passed on to the end users. "Tax structure needs to be much more integrated with a long term approach." Speaking on the issue of a structured taxation policy for franchising Arun Khetan explains, "For example, in education franchising, the individual service provider is not exempt from the Service Tax Registration and payment if he/she is a franchisee where the turnover of the franchisor is above the exemption limit (currently Rs 10 lakh). It is but natural that the franchisor's turnover for the entire year would exceed this and as a consequence, all the franchisees, even if their individual turnover does not reach the exemption threshold have to get registration with service tax department, collect the service tax from students and deposit the same to the Government. While, such rationale is fine for consumer goods, but seems highly dual and confused policy for education and indirectly leads in suppressing the growth of education at some point in the value chain. Thus, a composite scheme for small business is the need of the industry to reduce the cost of compliance and hence encourage entrepreneurship. A composite scheme involving a threshold exemption of Rs 50 lakh is proposed by the industry. Abolition of CST Badrinath adds, "In terms of the initial agenda of the Central Government, CST was to be zero rated effective 1-4-07, but still continues at two per cent. It would be good for the Government to reduce the CST to one per cent and ultimately move towards a complete abolition with the introduction of GST according to the expectation of the industry. This would contribute in reducing the effective cost of inter-state purchase of goods and also in keeping the inflation at current levels, if not reduce." Withdrawal of stimulus Badrinath adds, "While there are much deliberations happening around the withdrawal of the stimulus granted in form of reduction in central excise and service tax rates, in the previous budget and thereafter, this does not appear to be the right time to withdraw the same. It is worthwhile to note that with the support of the Government, the businesses have demonstrated their strength to survive the recession and shown a positive trend as a year-on-year performance. While the performance from 2009 to 2010 is positive and growing, the overall growth from 2008 to 2010 does not appear impressive since the year 2009 was a slump. Hence, the stimulus should ideally be continued and help the industry completely recover from the recession. It could be withdrawn as part of the GST implementation. With the implementation of GST, the cost of tax in the supply chain is envisaged to be reduced, therefore, the cumulative impact of withdrawal of stimulus (added costs) and reduction in supply chain tax cost (benefit) is believed to be mitigated by the businesses. Withdrawal of stimulus could result in high service cost and goods and thereby, impact the growth of retail business. Further, with the inflation rate continuously rising, it does not again appear to be the right time for withdrawal of stimulus." Conclusion: The future of Indian retail markets seek organised and innovative business formats to ensure scalability which healthy franchise practices can facilitate. Hence, the policymakers must bring about industry centric reforms to unlock the potential of the SME. With the union budget 2010-11, the franchise industry's budget expectations would facilitate the necessary reforms and enable the sector to take the next big leap. Franchising has been a significant organiser as well as facilitator of small and medium businesses across industry verticals, thus galvanising the evolution of organised markets. Replication of structured business practices through franchising has contributed significantly in bringing a large number of business units under the tax net. However, policy makers are yet to deliver a conducive eco-system for the growth of the franchise community, which incidentally includes a new breed of Indian entrepreneurs. An intricate framework of legal policies supported by transparent tax policies as well as robust funding institutions is sought by the industry. Franchising paves way to entrepreneurship

franchiseinindia.blogspot.in/2010_03_01_archive.html

24/29

1/28/13

The India Franchising Blog: March 2010 The magnitude as well as the future potential that Indian domestic consumption exhibit makes it an attractive destination for investments. However, statistical trends give a wider perspective of the potential of the Indian market. Yet the investments, both domestic as well as international have had always taken a conservative pace. Presently, liberalisation and market openings have facilitated the business dynamics to become more conducive for entrepreneurial activity. There has been a positive entrepreneurial activity in the business environment which is extremely important as the economic studies have repeatedly proven that innovation as well as entrepreneurship can propel the fiscal machinery of the nation. India has presented a curious case as entrepreneurial activity here always had its own implication. It has been observed that 90 per cent of start -ups fail in the first year of their inception. There are many reasons for it. Firstly, the Indian market is testing waters in terms of readiness for newer business concepts and formats. Moreover, mature business systems are yet to be developed in terms of redesigning the whole process of starting a business which ideally should be a seamless process. Unfortunately, in India the burden of regulatory procedures as well as processes makes it strenuous for the entrepreneurs as well as innovators. As a result, most of the entrepreneurial activity is reduced to low involvement as well as low risk models. Franchising as an entrepreneurial route is extremely interesting and successful. The acceptability of franchising has been quite prolific amongst Indian business minds. According to the figure, 90 per cent of the franchising ventures have a huge probability of success. This attracts many investors to invest in proven business models and concepts which involve less risk as well. This however is just the tip of the iceberg, although, there is a lot more to franchising than the apparent. Also, franchising in the Indian market becomes much more intricate rather than just being a low capital expansion mode. Industry status to franchising India is an attractive market for franchising. The expanded market size seeks deeper as well as broader market penetration. However, the demographic variables make this expansion a risky proposition, especially in a capital constrained market like India. India, as any developing country seeks investment, technology as well as business know-how from the developed countries. Foreign investments have repeatedly done wonders in turning the market game around as it tends to make markets more competitive for IT, retail, manufacturing or service sectors. The franchise industry in India is currently an anonymous contributor to the country's economy, which is not favourable for a sustainable growth. As Arun.Khetan, Managing Director, The New Age Knowledge Solutions (NAKS) explains, "The status will not only have a detrimental impact on further proliferation of franchising but will also deprive excellent local brands the opportunities to come up with products/services that are of relatively superior value proposition compared to many foreign brands, which are much new to the Indian turf, in terms of knowledge of local preferences and delivery mechanism, but score out heavily in terms of resource deployment and hence are able to reap away most of the benefit." He further adds , "The need of the hour is that the Indian franchising be formally recognised as an industry, which would propel the action plan and processes of the industry and set the ball rolling, that would have a cascading effect on all the interfaces that are related to it either directly or indirectly." The policy makers must recognise the fact that this is a format segment that cuts across all the industries and that its presence in the Indian backdrop is real. Granting legitimacy would not only put an end to the shadow war but also make the world wake up to the fact that Indian policy makers are serious about the franchising business. This would have mammoth implications in terms of perception that overseas market carry about Indian franchisors and franchising products / services and bestow credibility (which, due to lack of Government sanctity currently rests mostly on private players who have forayed abroad on their own grit, merit and strength). Remove dual taxation policy on the franchise systems Under Notification No. 7/2003 dated 20.06.2003, service tax is payable on the gross amount charged by the franchisor from the franchisee in relation to franchise. However, the definition of franchise services flawlessly comprehends the scope of the business activity. The implementation triggers a lot of impact on the operationalisation of the format. Today, Indian franchisor is subjected to dual taxation of service tax and sales tax. Product franchising is a mode of product distribution. Therefore, from cost price to sales price, there is VAT applicability. At the same time, franchisors are liable to pay service tax on

franchiseinindia.blogspot.in/2010_03_01_archive.html

25/29

1/28/13

The India Franchising Blog: March 2010 franchise service given to the franchisee. To avoid a dual tax liability, franchisors prefer to give product outright basis with advance billing rather than on consignment basis and also prefer to call their partners dealers instead of franchisees to avoid the service tax accrual. The final burden of the service tax is passed on to the franchisee, as the franchisor is unable to forgo his share of franchise fees, which dampen the entrepreneurship of the small businesses. While, the taxes are nonetheless critical, however in a franchise operation the implication of these taxes are not justified and commonly led to situation where franchisors particularly, retail franchisors are shying to term themselves as franchisors and have diluted the business practices which are fundamental to the success of franchising format. Thus, the business practices that emerged further, complicates the franchisee-franchisor relationship, and also make the legal framework more tedious, in addition, the whole magnitude of the franchising industry is often misinterpreted. Agreeing to the point Akhil Chaturvedi, Director, Provogue (India) Limited says, "For the franchise industry to thrive successfully, it would require the abolition of service tax currently levied on transportation, rent and commission." Badrinath, Director, Accretive Business Consulting, said that the dual taxation status needs to be resolved. This has not only added to the cost of operations, but also has put the sector at cross roads. Further, not only retail, but also other sectors like software are facing a negative impact for the same. Both franchisors as well franchisees across sectors believe that franchise services should not be liable to service tax. There is a strong opposition from the franchisees as the franchise system in India is yet to reach a mature stage and hence the tax policy must facilitate the format to become more competitive. Sharing his views Kundan Kashyap, an Archies Franchisee based in Ranchi says, "Service tax should be abolished as the franchisees pay full VAT and hence dual taxation should be avoided. Government should understand the franchise concept is unique in the way that the most of the resources involved are invested by the franchisee." Sharing the same view, Chander, Franchisee of Catmoss based in Sarojani Nagar New Delhi says, "Service taxes causes unnecessary burden on the franchise service formats and cause operational hurdles." Service tax on rentals should be avoided Real estate has become one of the most important aspects of franchise preposition or for that matter a retail success. The rental lease cost could be a significant contributor to the franchisee's running cost. With service tax plus education cess at 10.30 per cent, every tenant will now pay service tax equivalent to six weeks of rent. The industry seeks abolition of service tax on the rental leases. Badrinath, suggests, "The applicability of service tax on rentals should be clarified." With the verdict of Delhi High Court in case of home retail already being challenged by the Central Government, it would be good if the Supreme Court could hear the case and provide the ruling at the earliest. In the retail sector, rentals being one of major expenditures, a 10.30 per cent of rent therefore is significant from both, cash flow as well as margin perspective` This would be a relief for a margin centric business like retail. Lack of structured industry specific measures prevent the business to avail industry appropriate benefits. Shubhranshu Pani, MD, Retail Services, Jones Lang Lasalle Meghraj recommended that pertaining service tax on the rentals should be clarified and freed from existing ambiguity. Over the last few years, there has been an increasing tendency to indiscriminately levy tax on contracts rather than tax on services. Ninad Kapre, also believes that there should be a simple tax structure which is implemented in a fair and transparent manner. Introduction of a flawless GST Eliminating the current system of dual taxation, application of a uniform GST, will have its own implications. Since GST is not just VAT plus service tax but an improvement over the previous VAT and disjointed service tax, the tax incidence will come down in case of goods. Tax experts are of the view that this budget is crucial for implementation of a comprehensive as well as flawless implementation of GST nation-wide to enable the economy to become more competitive. The GST implementation should be robust to involve the extended industries. Jalan explains, "In case of services, the incidence, and coverage of tax may rise resulting in higher prices. In this context, for the franchise industry, service franchising may be less lucrative. Supply chain efficiencies will further support this phenomenon. For goods, the existing rate is more than 20 per cent, but for services, the existing rate is 10.3 per cent since GST is expected to be in the range of 1216 per cent, the prices may rise in the services segment due to the rising tax burden."

franchiseinindia.blogspot.in/2010_03_01_archive.html

26/29

1/28/13

The India Franchising Blog: March 2010 This being the last budget to be presented before the proposed implementation of GST, this is also the last instrument for the Government to step ahead to align itself with GST implementation. Among others, the Government should use this budget to align the rates of taxes towards the proposed GST rates. Further, it should indicate the roadmap for the publishing of draft laws and constitutional changes required thereto', Badrinath adds. Baba Chandok, Franchisee, Cartridge World voices the same and says, "The industry is hopeful that implementation of GST will be breather for the retail." Introduction of composite scheme for threshold exemption Currently, the tax structure is certainly not conducive for a robust franchise environment. As a SME, the franchisee must be able to derive maximum benefit so that the same could be passed on to the end users. "Tax structure needs to be much more integrated with a long term approach." Speaking on the issue of a structured taxation policy for franchising Arun Khetan explains, "For example, in education franchising, the individual service provider is not exempt from the Service Tax Registration and payment if he/she is a franchisee where the turnover of the franchisor is above the exemption limit (currently Rs 10 lakh). It is but natural that the franchisor's turnover for the entire year would exceed this and as a consequence, all the franchisees, even if their individual turnover does not reach the exemption threshold have to get registration with service tax department, collect the service tax from students and deposit the same to the Government. While, such rationale is fine for consumer goods, but seems highly dual and confused policy for education and indirectly leads in suppressing the growth of education at some point in the value chain. Thus, a composite scheme for small business is the need of the industry to reduce the cost of compliance and hence encourage entrepreneurship. A composite scheme involving a threshold exemption of Rs 50 lakh is proposed by the industry. Improved legal and regulatory framework While India has no specific legislation regulating franchise arrangements, there are a number of laws that affect the franchisor-franchisee relationship. Intellectual property, taxation, labor, competition, property, and exchange control regulations all influence franchising. Lack of appropriate format for franchising agreements can have far fetching impact on the Industry. Dey agrees it is seen several times that due to absence of any franchising laws or any Government guidelines in India, franchisors tend to follow formats which are approved or followed in other countries. Also, it is seen that most of the times the franchisees do not have much bargaining/negotiating capacity in front of the giant franchisors. In view of the circumstance, it may be advisable if the Government frames certain guidelines taking care of the needs and concerns of both the franchisors and franchisees. Adding further, she said that it is important to have mandatory disclosure requirements. This will ensure transparency. Countries with specific franchising legislations or guidelines make it mandatory for parties to a franchise agreement to disclose certain factual information pertaining to their businesses. A franchisor should be required by law, to make certain disclosures to the prospective franchisee, via details regarding pending litigation and bankruptcy history, financial position, etc. In India, in the absence of any such Government guideline, a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures. Facilitate an industry centric credit infrastructure New-age small and medium businesses in India are seeing a transition from manufacturing to the service industry. There are 35 million SMB units in India of which retail sector constitutes 18 million units and service sector has 9.5 million units respectively covering almost 75 per cent of the SME sector. Franchising has been responsible for bringing structural growth and modernising the formats in both the service and retail-based small businesses. However, the mechanism for financing the franchise formats has not evolved, as the banks don't render industry specific funding options due to lack of knowledge. In order to bring an orderly growth in these sectors, it is important that the government makes a special budgetary allocation to franchising businesses in its SME finance allocated to the financial institutions. As new unit franchisees, growth in 2010 is expected to be 40 per cent. Credit is a major hurdle in the growth of franchising obtaining capital to finance single or multi-unit operations has been relatively difficult for franchisee entrepreneurs. No more than five per cent of the entire franchise financing

franchiseinindia.blogspot.in/2010_03_01_archive.html

27/29

1/28/13

The India Franchising Blog: March 2010 requirement in India is met by financial institutions. Industry believes that as the risk involved in a franchise business model is optimised to a large extent, banks must offer an easy interest rate. A sound mechanism of franchising funding is hence very essential as non-availability of third party guarantee often proves to be a hurdle to obtain required funds. Internationally, particularly in United States, U.S. Small Business Administration (SBA) financing has played a significant role in helping new or small operators secure the necessary capital to start or acquire franchise units. The SBA and its sponsored loan programs are one of the best sources of capital to open a start-up franchise unit or purchase an existing resale unit for small-business franchise operators that would otherwise experience difficulties in qualifying for conventional financing or loans. Ninad Kapre, Managing Director & CEO of Aptech Ltd recommends that a lot more effort is required to institutionalise the funding infrastructure. Khetan agrees, "The current ambiguity in the Government's policy guidelines with respect to the franchising industry has left the franchisor and the franchisees at the mercy of the bankers /financial institutions that use their discretion to interpret and regulate the funding propositions from the franchising industry and are quite passive in their response towards franchising as a business model. This is a sad state and would be addressed immediately once the Government confers franchising with industry status." Abolition of CST Badrinath adds, "In terms of the initial agenda of the Central Government, CST was to be zero rated effective 1-4-07, but still continues at two per cent. It would be good for the Government to reduce the CST to one per cent and ultimately move towards a complete abolition with the introduction of GST according to the expectation of the industry. This would contribute in reducing the effective cost of inter-state purchase of goods and also in keeping the inflation at current levels, if not reduce." Withdrawal of stimulus Badrinath adds, "While there are much deliberations happening around the withdrawal of the stimulus granted in form of reduction in central excise and service tax rates, in the previous budget and thereafter, this does not appear to be the right time to withdraw the same. It is worthwhile to note that with the support of the Government, the businesses have demonstrated their strength to survive the recession and shown a positive trend as a year-on-year performance. While the performance from 2009 to 2010 is positive and growing, the overall growth from 2008 to 2010 does not appear impressive since the year 2009 was a slump. Hence, the stimulus should ideally be continued and help the industry completely recover from the recession. It could be withdrawn as part of the GST implementation. With the implementation of GST, the cost of tax in the supply chain is envisaged to be reduced, therefore, the cumulative impact of withdrawal of stimulus (added costs) and reduction in supply chain tax cost (benefit) is believed to be mitigated by the businesses. Withdrawal of stimulus could result in high service cost and goods and thereby, impact the growth of retail business. Further, with the inflation rate continuously rising, it does not again appear to be the right time for withdrawal of stimulus." Pave way to FDI reforms Historically, Indian policy makers had been skeptical about Foreign Direct Investment or FDI. A limit of 51 per cent on foreign investment in retail has brought in a lot of innovation in the market. International investors have always come up with India-centric policies. The importance of the franchising process is reflected in the retail and industries where nearly every retailer (in malls) and every major restaurant are franchisees of international as well as major national chains. Internationally, franchising is very well accepted and is entrenched deeply within USA, Western Europe, South Africa, SouthEast Asia. Ratan Jalan, Founder and Principal Consultant, Medium Healthcare Consulting Pvt. Ltd recommends, "The expected foreign investment reform in the forthcoming budget is likely to encourage international players to enter the Indian market. Hence, it would be pertinent for the Government to ease borrowing for players interested to open outlets for these international players." Currently, there are also restrictions on the number of shares a foreign company or person can hold in an Indian company if the joint venture option is considered. There are restrictions on payment of royalties if it is a technical collaboration agreement between the foreign master franchisor and Indian master franchisee. In the forthcoming budget, the Government would need to address some of these issues also in addition to the foreign investment reforms. Sonali Dey, Fox & Mandal shares, "Assuming that the current sectoral limit remains unchanged, FDI up to 51 per cent, may be brought

franchiseinindia.blogspot.in/2010_03_01_archive.html

28/29

1/28/13

The India Franchising Blog: March 2010 under the automatic route. In addition, the prevailing ambiguity over FIIs should be clarified." Conclusion: The future of Indian retail markets seek organised and innovative business formats to ensure scalability which healthy franchise practices can facilitate. Hence, the policymakers must bring about industry centric reforms to unlock the potential of the SME. Posted by Amit Nahar at 10:59 PM

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