Post on 07-Apr-2018
8/6/2019 Franchise Investor Buying Behavior-15!07!10
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FRANCHISE INVESTORBUYING BEHAVIORInvestor Survey Chandigarh Chapter
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Investor Demographics
68%
17%
4%5%
5% 1%
Investor OccupationProfile
Business
Professional
Corporate employee
Others
Govt. Service
Home maker
35%
29%
24%
2%
5%5%
State Participation
Punjab
Chandigarh
Haryana
Rajasthan
Delhi
Others
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W hy do intend to invest in a franchise business ?
A good sign thatmost of the
investors (32%)realize that itsdifficult to start aentrepreneurialventure fromscratch so expecta lot of handholding from the
prospectivefranchisor.
32%
20% 20%
13% 11%
4%
Wish to be an entreprenuer without
having to start from scratchSurplus Cash
Vacant Space
Self Employement Opportunity
Quit Job
Secure way of doing business
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S tate wise reasons for taking up a franchise
A veryconservative
investor whointends to takeup a franchiseonly because hehas a vacentspace primarilybelonged to
Punjab cities CHANDIGARH
HARYANA
PUNJAB
RAJASTHAN
DELHI
OTHERS
Surplus Cash Quit Job Vacant Space Good Self-EmploymentOpportunity
Secure Way ofDoing Business
Entreprenuer withoutstarting from scratch
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Preferred Sectors for franchise opportunity
On an averagemost of theinvestors (97%of the sample)were clear abouttheir choice ofsectors yet theyhad 3-4(average )choices in theirmind. Opting forvery conservative
choices indicatesa risk averseinvestor.
3
35
55
1110
1318
19
2124
31
5690
Home Furnishings & Interiors
Home BasedAutomotives
Florist
LogisticsTravel & Tourism
CDITFinancial
Real Estate
ConsultancyHealthcare beauty & Fitness
Entertainment
Fashion
Education & Training
F&B
Next big sectorsfor the Region
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Reasons for choosing the preferred Sectors
From the survey results it appearsthere is a major possibility that a
investor will buy a franchise onlyif is convinced that it will ensurehim bright future as well as highreturns .Evidently Investor from the region
do not consider franchising as alow cost business
114
45 43
15 13 8
Bright Future of thesector & High returns
Low Investment
Prior Experience andarea of interest
Easy & Hassle free
Lack of competition
Have required pre-requisites
Investorbuys a
franchise fora betterfuture
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C apital Profile
ClearCharacteristics ofthe investor fromthe region are20-30 year oldhaving selffunded Rs 10-30lakh investmentmajorly from abusiness familybackground, mostly unsure of thereturns 2%
2%
8%
13%
13%
19%
43%
80 - 1 cr
60 - 80 lakhs
More than a crore
Less than a lakh
1 - 10 lakhs
30 - 60 lakhs
10 - 30 lakhs
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Investment Profile
66%8%
3%
23%
Financing Investment
Self funded
Loan fromfriend/relative
Loan from bank
Both self funded andloan
47 46
31
23
11 96 2
Expected Rate of Return
20 - 30 perc
Not sure
10 - 20 perc
30 - 40 perc
More than 50 perc
Looking for monthlyreturns
40 - 50 perc
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Expected Returns on investment
Investor aged between 20 -30yrs(which is the largest investorcategory) were primarily not sureabout the kind of returns they wereexpecting from the investment.Assuming 30-40 yr old investor isrelatively more serious than the restan average return expected is 30-40 % which is quiet contrast to theaverage return assured by thefranchisor which is 20-30%.Hencedifference in expectation can led todifficulty in selling the franchiseconcept
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Expected time to realise the rate of returns
A visibly impatient investor ,a 0-2yrs timeline for expectation can leadto some serious implications on longterm franchisee satisfaction.However the large cap investors(more than 80 lakhs ) expect 3-4yrs to realise their rate of returnsA small port of investor mostly agedmore than 40 expects a return on
investment which is more than bankrate or could give them a monthlyincome(2% per month)
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Expected C hallenges From franchise business
A major reasonfor a investor notbuying a franchise
could be lack ofexperience,perceived fear ofstiff competition.There seems to bea huge need fortraining servicesfor franchiseestaff as it isconsidered one of
the biggestchallage13
23
28
29
43
52
81
Lack of freedom in taking decisions
Possibility of conflict
Transferability of business know-how
Adapting to company policies, procedures
Training self/staff
Stiff competition
Lack of experience
Expected C halleges
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Widescreen Test Pattern (16:9)
Aspect Ratio Test
(Should appearcircular)
16x9
4x3
Looking Forward for future insightful and mutuallybeneficial interactions