Franchise Investor Buying Behavior-15!07!10

8/6/2019 Franchise Investor Buying Behavior-15!07!10

1/15

FRANCHISE INVESTORBUYING BEHAVIORInvestor Survey Chandigarh Chapter


2/15


3/15

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


4/15


5/15

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


6/15

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


7/15

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


8/15

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


9/15

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


10/15

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


11/15

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


12/15

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)


13/15

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


14/15


15/15

Widescreen Test Pattern (16:9)

Aspect Ratio Test

(Should appearcircular)

16x9

4x3

Looking Forward for future insightful and mutuallybeneficial interactions

Franchise Investor Buying Behavior-15!07!10

Documents

Transcript of Franchise Investor Buying Behavior-15!07!10