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Article by Mohan Babu


Can the franchising model work for Indian IT houses?

Corporate America has perfected the art of franchising. MOHAN BABU writes that the Indian software industry can effectively follow this model of business expansion for greater global status

An interesting business model perfected by hundreds of business in the US is the franchising model. Entrepreneurship has always been a strong component of the American economy and in their quest to live an “American Dream”, individuals have long dreamt of starting their own businesses. However, because of the complexities involved in starting and running an own enterprise, individuals have received the support of large businesses. Corporate America has perfected a win-win business model that basically translates to franchising, a model whereby the franchiser provides support for marketing, gathering leads, brand name and support and the franchisee operates the business independently.

Franchising is a method of distributing products or services. At least two levels of people are involved in the franchise system: (1) The franchiser, who lends his trademark or trade name and a business system; and (2) The franchisee, who pays a royalty and often an initial fee for the right to do business under the franchiser’s name and system.

Perhaps the most famous franchise model is McDonald’s, which, with its golden arch has built a presence all over the globe. Almost every kind of business, from a pizza outlet to supermarket chain, hotel chains and even consultancies can be franchised. An interesting website,, managed by the International Franchise Association (IFA), provides a wealth of information on franchising. IFA is a membership organisation of franchisers, franchisees and suppliers.

Interestingly, even accounting partnerships like Andersen and other Big-Five consultancies closely resemble a franchise model. A typical “senior partner” of a Big Five is akin to a franchiser. The partnership

operates, using the KPMG/Accenture/CG&EY (etc) process, but is responsible to bring about a growth in the business, manage clients, hire and manage consultants, branch billing and operations. A share of the profits of the branch is generally funnelled back to the head office. They act as their own boss but have the protection of their head office.

Can the franchising model work for Indian software and IT houses? Sure it can. Say, for instance, if Wipro wanted to expand its operations across America, but did not have the time, resources and local market know-how to invest in offices, they could explore the franchising model. Individuals with resources and contacts with an understanding of the local market at the grassroots may be willing to franchise the Wipro brand.

Like any other franchise, they would own the branch, handle the marketing, project management and delivery of solutions, billing, etc. Along with all this, they will be in a position to tap into Wipro’s global network as and when the need arose. Wipro too would benefit from a greater exposure to their brand. With Indians getting exposed to international business practices, I see a growth in this model.





About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    For FAQ, Trivia and Information on Life in America, visit the Ask-A-Desi section

    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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