Franchising sector may grow fourfold to $50bn by 2017: Report

According to a report the franchising industry can create 1.1 crore jobs by 2017

The growing preference for branded and quality products, coupled with increasing purchasing power, may help the franchising industry to grow four-folds to $50.4 billion by 2017, says a report.

"Shifting consumer trends, including growing preference for branded products, global exposure and use of international brands are driving the growth of franchising industry in the country," says the report released by KPMG-CII.

According to the report titled 'Collaborating for Growth', the franchising business was around $13.4 billion in 2012 and is expected to witness a compounded annual growth of 30% over the next five years which see the segment quadrupling to $50.4 billion by 2017.

The report further says that the franchising industry can create 1.1 crore jobs by 2017.

The report finds retail and consumer services sectors to emerge as high potential service areas within franchising.

"While the market potential is huge in the retail sector, it is estimated that franchising opportunity will be relatively high in consumer services, food service, education, health and wellness sectors. Cumulatively, these sectors have the potential to add 1 lakh franchisees over the next five years," according to the report.

Noting that franchising model is expected to be the preferred choice for retailers, especially in non-metro cities, the report says, "existing retail majors are under pressure to consolidate and increase their franchise network reach.

"While several multi-nationals such as Ikea, Wal-Mart, etc, are looking to establish their brands here, and franchising is expected to be one of the most preferred business formats among organised retailers to tap the emerging consumption boom, specifically in small towns and cities."

However, it warns that the new retail FDI norms will deal a big blow to retail franchising in the country.