insights Into The Legal Aspects or Franchising,

" .Fr,an'c/Jising, jI.' papular snds fast gfOwin'g concept, has msde a remarkable place amongst the messes. Its presence, now~a~ deys, is so strongly left that if an individual needs to start ,a business venture, his mind cannot escape considering Franchisinlr es one of th,f;! high perfornl'ance based "optiom". Despite the benefifs ,and a.dvantages; it

Of('€;(S1 it is hard to believe that there is no

specific legisJation or rules applicable to franchising as yet. Indian law does not define .franchising and hence the arrangfJ'm!ent Is governed ptifl1arUy by the

"Law of Comrsa". ~o"owi'ng are some Statutes", Roles . R,egula#ons that are indispensable to the existence of a trsncbise dCreement and setting up ois f,anch;se business. ail

1. Law of Corn ract: According to the lndian Contract Act, 18,71 every frall'1,ci1ising relerionship is a conlra.cLuallreladon h,ip and thus ,enforceable b'y ~aw .. Although every ,ccmtract need not be in widtirn,gl it is allways advisable 10 have a formal and written Franchise: Agreement to preciseiy Ilay down the rights and obi i gation 50 of the 'rrand"l,i ser and franchisee. This would help resolve aJ~ly future deadlocks and disputes.

In this issue we would bring you the fo~ lowing details:

Insights Into The

Legal Aspects 0', IFraflclhl!ii1l18

Page 01-03

From· the Chairman'S Desk

04

Obligations Of A Franchisor & A FralF'!:chisee To Follow lin A r- r a:nchi se Agreeme:Jillt

05-0'6

Fran Buzz 07 ~oa

Hot OppornJlr1,ily or 'the Month 09

AIFI, exclusi ve i ntervi ew with ~.S .. BhaJlar CEO & MD of

Cocoberry 1 0 .. 11

About If A 1 .2

1. ~nleth.'!cLuCliI Property RiGhts Law: Siince aU dhe franchQsea:greements involve some form ofh'ansfer of iwnle~iiec~LJlall pro~~erty~ it is ,iimper6!tive to ihav,e t1Jn IliI nder.$tandi~ r1ig of the ]5iBJUI€S related to the ~a,ws proooctingll"'lEl!

~nte lleetual Pmpemty I~.i ghts, For examp ie,~the ffanchisee should makesure that he, whh ~ts ac~i:OIDS or inactions, does not dHllilte the brand lBiflld goodwilllas,sodated with ~he trademark. S~mila.r~'yf ~he fil";tlilr:l,chiSJOO must not divulge, any confictentiai informatlon If'egarn:Hng the trade Secrets &: k r'low-how dll! "i'rlg or even Ipo~a temminalHon of [he franchise agreemenr. POSit term use or trademarks and misuse of the rrrghts are also few impertantissues thar should be kept in mh"ci.

3. Consumer Protection. Complla,kits and i~ga:11 .l)c.'tionrmm ccnsurners is a pOh:!\f1tla~ issue bha.t both the parnes in a fmnchrse egreernent must k>e;ep in mind. Foil' e.x;a.n,~pl~i under the Consumer protection Act, '1986~ a consumer can hold ~he rj'anch~:sor (H the 'franchisee liable for any defective ~O;Qd:slseNke sLlppll'~edlby the ha nch i see. Til 15 Aot Irs, of v i~al !I,ign] fi cance fer ami f &: B franch~5e. business .. lt may .5111'50 be possible fOil a rr,am::h,isee to act ,jn the C1},p,adty of a oonsumer and SUI€'! th!e firanchj'sc'r om the above m:ein~ion~ grounds. Thus, pravisions to minimiz!e- these liabilities arrrsh'lg due to such risks shculd be. properliy docurnented iln the fr:allch lse .E'lgreel1lel1~.

4. Foreign Remittances: Forelgn IlEx:challf'l,ge Management Ac[ (.lFIEMA) 2'000 and ~he :l"egu~a:Uolt:ls of RB'II cnm~ itnilO the picC1iure wh:en lit ~:s the lil13Jtier of F DI' and one P(:l,rty is ,!i!j foreign ern'tli'ly. The c:onfl ueree of the two 'then govern the. terms of paymenit such as franchise fee, rnaiF!la,gelf'fllenl rEef royalty tor use of tradernsrks and syslems, tramll:j'li"lIg expenSe5J advenisernent cOfltrihu~ion. etc, Thesa ICar'l1 be n~H!f'iliUecl mai~'e foreiigiril lranchisor wlitnout any approval provided '~:he appropr~ate nomenda!tiJ.JIre is. used to denote sJlJjlch payments.

S. Ta,xalinn: The fifaH'l:chisnr'sililoomein !:he form of rovalties orr:raiF1:chise fees is treated and taxed under the lncorne lax Ad 1961 and is :5ulb]ectedl to tax deduction at the appHcaJble rates, Thi s appll ies irrespective ofthe fact Wh'l':llher a franeblsor is a Foreign o.r an Iindian entity. Simi'~arly, the taxes such as local sales tax, property tax OJ withholdingtax vary from region to regiion. NevertheleSlS." a lot depends on how ~"I,e franchise agreemef1!;t is. S(rucuJH'edl ,a.nO' ~he t'reall les thaJ ex ~S~: between the' 'cO'ulnrtries.,

fl, Competition Ad: With 'tM,eadver'lt or globaUzatiolFll and llberallzadon lin 1991 t Competition Ac~ as amended ~n 2007, shr'ned i·ts. foeus from I ctllm.~ng monopelies to pro:molt!lng heal~hy i(ompeIDi~iolfil' .. The Ipmvi5~0l11S. lin respect [10 anti-compeUuive, agreernems and abuse of cklmi If'lanl posluens thus came into effect. The Competition .Aict basica~ly prohibits any arrangemen[jactivi:ty with respect to producrlon, supplYI' disl1ributJion~ storage or acquisition t~at C2111:8eS or Inkely to cause all'll appreciable adverse ;awfe:ct onCiomp~tntion within India. Fellewingareiha arrangernenes lhat could affect~he hea !thy !ip i rit 0 f cornpetit io n:

" Directly or ~ ndlil~ecdy determines the purchase or sa ~1f3 price;

i!!!i ,[In.'lIi[s· or ccntrcls pmducLion, 5UPP~Y1

mill rkets, techn i cal develop m enl:yi nvestment or ,p rov lsio 111 o€ services:

.• Shares Ilhe market or SOI.UC'e of prroduction or provl sian of serv ices by way of allocation of Beogli~lphic:a.r areas of tile market, 0'1' typ@ of goods or services, or number of customers

in the market or in any other simi:lar way;

'. Directly or indirectly results in bid fligSil1!15 or c ,u u si ve b iddi ng;

7. Tun i au s Li abll By: Any act, by the frill:! h lsor or f('al1,dh~see wh,ich caused hali'm (0 aily,perso:l'il or IPwperty is actienableuader the law O'F Torts. A tortuous liabi,llity could arise ill Eli franchise agreemen in '(he case of NeglNg.enae Cilnd Vicarious liability,

6. labour Laws: Labour Laws are essential in h,iimchis'i:II1S in relatlon ~,oLne number of outlets or officE's, wi1I':!'rr'@ rem.ployee.s a,!'@' recruited. Eve'nJ the fra.nchise agreement cannot derogate 'me Qlpplicahil11ty of the labour laws, whether it: is m@ndon~d or not. The Labour Laws oomp,ris a number of Acl:51 which a domestic or foreign franchisor must know before taking upthe franchise roule 10 expand the business.

Some or the Acts, ewe ApiPn~nl"h::es, Act, 1961; Contract Labour Act, ~. ~nn,~ Emp.byee...s Provident Fund alne! M,[scelll,aneou5 Provision Ac~ 195,2 etc.

9', Properly Laws: Laws affecting the real estate and leasehold property form an essential part of franchlslng, It is nec@ssary toearefu I'ly E,v,aluate· the prop~rty laws and ciet·ermillnll!' that whe-ther the franch~sing scheme is possible or not.

10. W ighLs &. M~a.5ures: The Standards of We·jghts and Measures ACl, 197'£1 and 'the

rules under it come ,irllto effect if the franchise arrangerners deals. wirth ihe sale or distribution of g,oods by weiight, measure or rU.lmbe.r. T~li:s would connote that under ihe Act memioned above, all the cnmrncdities which are to be sold in packages. must conrorm to certain stand rds and e·ach package mll~l have certain declarations. ThIJsJ depending upon the nature of the franchise business; both the parties have to cornpl y to these 10000WS.

BREAIKING BOUND'ARIES IN 2011

Dear Friends,

Let me: rak€' thls 0pp0rlulnity to

i n,h'orl Lice you to IIFA's N e!w:S.1 eUer - Fra(n)ews. W~dtrlfa(n)ews, We a,~m. to bri!rlg forth the latest developrne ruts lalk~ng place in the fit'arl(:::lh~se sactnr, llhelreby increasing awareness in~he franchise community. This newsletter would also ad as a p~,atr©rm for allthe starr-ups as wel~. as e5[,al~nshedl brands, 'U::) showcase the buslness pO~i2ntla.1 aflld seek potentiai franchisee's attention.

Giaur::tv Mary ... , Chi.'irmi!.fl, WII

If's. my si,ncere' hope jhat Frdl:(o)@ws would successfully help ~n d~s5eminatill'1g~ranchise knowlecge to the entire franchise fratemity .• In acldt~io:l"lr i $[rongly believe [hal It would asslst franchisors ~n rea.chi,ng out to the i r potenti al i nv.estors.and i n tu rn aidtheasp i r il ng entrepreneurs to get

~ hel r deslred b r,a nds,

Gaurav Marya

Chairman I II rndian FrOlin ('hi~ M!>Oda,tronUFAl

~ 1!f1d'i3 n Fr·ar:lIi:::h tse

'O'B L ~ GAT ION S 10 F .A ,,, AssocIation

FRAN'CHISOR & A FRANICH~SEE

TO FOLLOW liN ,A FRANCHISE AGREEMENT

A (rliJ'nchlse; ~~r:e"'#:;:nt ~:~ a legal document thift composes the rights· and obligations of flui! franchisor end th,e' franchisf!t!s. It is an officidl arran:gemen.t that binds both the' parties together. ,Any act auts.ide the' p,,-escrlpNon of the a,{tfreen1,ent would be considered an attempt of breach of the] agreement. Hence # is excBedii1gJy jrr~poJtant for both the parties In adhere to' the' obhga',tions I'nentia.ned in the franchis_e' agfreem,ent in spirit. Some of the tJ.b-ligations' that both the parties sholuld tollow are:'

Obligations of the Iran hisee:

1 . S arvlc 5 to pruvid d: The agreement must lucieUy lay down the dudes nd services that <ill franchisee is expecnsd to render, ~~

possJ~b le, a separate schedu le COli I d be attached to the ,ag:reemerillfror seeking more clarity,

2. M'nimum ~nvcslmenL and lnfrastructure:

The franchisee hasto make certain amount of lrrhlal iniV,€stmefllt to. set up a ranchise business. Toget!her with this, he may ailiso have to lnclude additional or specific equipments on being partieularly asked by the franchisor,

3. Location of the franchise outlet: The lecarlon IJ,f a fran. hlse outlet should be decided with ihe prior consern of ih ' franchisor. The reason being that the success or failure of a franchise business depends a lot enthe posldoning of he O'LJlUet. The franchisee, in the ag;reeme:l"llt, could also be obll'flg,.illted fmm rIIot startlng any compet;~ ng ItnJ'5~ ness in the same area I .r locatlon after the terrnlnetion of ~he agreement.

4, Operanng Manual: Th franchiser can also provide ill franchisee a J~ManUriIl" that would help the fram:hi!fee iill1J perionnnil1g his obUgatk:irlis. This could contain ~nfQm'I.ation om property specification, the la:YO'IJ[ 'Of the franchise outlet, hiring policy that needs. to be followed, outfits of the staff members, training and education to [be impaned r manner 0 the marketing 'rhe franchise.

5. r1rotection or lntellectual properly 8, know how: It must be stric~ly ob~igat€d '~o the franchisee notto dlivlIllge any secrets related to ~he 'trademark or know how. for this, the' franchisor must stipulate negative covenants to protect the [Flitellrectual property diit,d. confidentia:11 ill'formatilOIn. .

fl. Restriction on SuppUen.: The iral'1lchiso·r CM restrictthe ~I'anchisee from buying me rnererlal from alii and sundry' and may compel hi rn 'to pu rchase from s;pedfi,ed vendors, probably with whom the franchisor shares good In~gotiatll11g power. his may also be to ensure ohe qllJlarty and standard of IF.i1€!' product

dellii vered. -

7. Ac::(:ounts and lnvcntory A'.IIdlil,s; Periodic inventory ami account audits 'Gllillflil be sought b}J !he franchisor with a view to supervising the activities 0.' Ll e DuslIness operauons,

Bes~des thls, the franchisor can also ask the franchisee to provlde periodic reports enthe fi[JI nctlonl l~lg ,a nd performance of th e franch i se business,

8. Manflgemenn &- Control: A 'brand' is like an offspring fora. vralll'hchi&or Whikh it wants to rear it up .careful~'Y Z1F1!d emI5ur,es~haJt it is in safe hands, iLlikew,ise, rill franchisor for his personal 5~i:Madion may want the. franc hisee :~o personally parl'icipar€! i.ri, the manag;emellt and operation of the business, This woulid be 10 ensure-that the business liS run smoc}thly.

Obligations for the Franchisor:

1. AS5i'st~ng ~rI deciding I he location; The franchisor 'may 00 obligated to hel;p and assist the fr~n(Jli5€e ln rfinding. OUllt [he appro,pl"ia.~e iocal:nonr depending UpOi1'l1 t-he needs oflfhe ffElnch isor;

2. Education & Trai ning; With~he aim: of mill~ntaining UU~ qualUyand standard of uhe business, it is neces:sary on the part of [he franchisorto trainand educate abou~ the new methoo$J equipmen~s <3J!'1dise:rvlices I~O the francbisee O:Fl, Ume~!y basis,

~,. Ifr~li\c.hi5ee's E).!dusivHy~ A franchisee may demand to be given exdu!l,ivityfor a 1P3rt:i,CILd:tu area wflh ,a. mothfe to llhrive we~ ~ ln tIn~5 busi ness, This would howe·ver depe~d uJlon '[he' negotia[~ng ;powe:f a,f [he partles Involved .. The franchisor sJlOuld see throujgh/consider a reQluest likie~h~s.

4. b.:!ga_1 and Regu'anory approvals: 6e,ior€ thecommencernent of afranchise business, ~€v€!I'~11 ~~g:al and regulatory appr(vval.s i!ir~ required! from the local and munlcipai bodies. In order to furnish 'this 'task smoothly the rrancillisol' should alwaysassisr lhefnranchise@ ~n procu ri n,g/g'f:u:it ng these appmval s,

5. Handl Fig OYer till!;! Opera~iuns; Manuall; An operation msrural is a collective set of insnuctlorts that comprises the spscifli:cations, standards ar~d opelf,ating pr,l)('edlllf'e~ that {II fram:hii SOT expect a mraJndli see to follow

:sui I1lgeruly. Any ani vnty go.ingag2lins't such ru ~ es woutlld vlolate tile sl'.;mclard business operancns,

6. Advertising ,& Promotion: This Jorms an

i m:pO'I'ltant markenngtou I Ih,a:t i 5 trequ i red by allIlI,¥ business tocateh Iheeyes of th~ p~ople., ThQ1ugh [he franchise business taken by a fnmchti5ee is a~rea.dy well ac:know~edg.ed by p€lopl,@~ i~ ls gUI] necessaryto af1ive~y promote the brand byadop~i,II'I.g va~~ous markenng and adi'V'emsing sltraJteglies .. It is thena franchis.ee maJY look for the ~,tlpport or~hie ~ranch i sor [0 hel p furnish ihe same, rh~s would ln [Urn help

i ncresse the O'V'e mil br-alin d reeogn iIi on r uitimaJleby tran'Slatiilllg into highturnover;

r. Olrnigoi ng so pport: Ttl€! frit!nClhi~5.@@can impose- an obligation on tlhe :franchisor m lake person al i nte rest iii 111 tthe~mnch i se and hel p' ~t grow and deve Ilop; For til i s, the fra neh i 5Dr is exp~(l~d to gulli:de th~ fran ch i S'@@ ~ IF'I, ,a II the activities ~hat ro:rm pari: &: parcel or the business operations. For instance providing r1egllJl,;u tralnlng to the 'emph:)'yeesl conuibuting hl giving ideas to promote the b:U'$~ness. giving continual recommendaticns onthe 31d~ert~sifl8 and IIl'll1erchla.nch:s,ing activities.lkeep,ing a c'heck 011 the admini.strat~ve and accounting pracnceserc .. A pr-oper arrd lreroi'lIJlte adherence 10 these

obihigations would certainly lead '~.c) a win-win shuatlen for bo~h[h(! parties and resu ~t i~n ,9. successful biUls.iness'lpmpnSmol1l.

Dunkin' Donuts joins hands with Jlu b~ I ani! Food work Ltd. r

Dunkin' Donuts, 'the world's

leadnnt!;l. bt!IJkedgoods and coffee cha~1i111 is continuing lits, steady expansion ,avrounld ~hegl,a!be' hy sIigning an ~gr~em,enl wiirhJubilanl food W[j,~ksLLd. (jFt) to enter t~~ in:diiiUil market, The master frallilichUse agreement calls for Jluoil,ClIlnn [Food Worb LOI develop i sub·;fra nch ise, and Qipera~e' mor:e~h'il1n SOD

Du Ilki n' iDolru .. us r~s;t.au fdfl rs throlijghoUil India over the next 15 years,. The first Dunk.in' DOri!JJls locatio!tll.5 tire expected to open by eaTI)! 2m_2. The Agr'i8@m~r:ul marks [he ~arge5[ IIF1Ilern:at!ionaj, store deve~Clpmelj'u cc:mmiln'1enL in Dunkin' Donuts' history.

TB1t'!, COI:l,'1pal'liy's ernwy i,ma II!'!ldli;;)J fo,lllcws its, €xp~nsion over the pas! several yeaHi thr"Ou~~oU1l Eur-O!Je, ti~.e Middle East" Latin and SOlUth

A:m~ri (,1 as we~'11 as thE' As·i'<'I.-Pa,cifk: mark~t According In NiS'~li Tr.Elv~s, ,e:qJf}nSi0!110 ~ndia is an im~gra~palFl of DlJnkin~ DOJ1ILlls' intemalional growlh p ~arr1!. II As one or the 'Wol"l!d'5 faM~!lt"arowiij'\~ ~CO~i'II.,mil2.s a.jThL! I:he second man populous cOllintryr Iindia presents a !tremendous growlh opportunirly for DlLltFlkiln' DOfl!LiI~. We are espec ia Ily del ighl;ed ~htat we are ,entering lhecorun~,ry witih Jubiill~uf'll Fcnod 'Wmks~ a world-class food service cern pany, Ii said Mr. Tmvis, j'Wntha deep uli1Idersta r'ldi og, of the In:dui}li1 tOnlilum~rt .'!l.Olid opera:l:iof'Iii'!11 ,e~l1i:i5e and best-l n-class marke-Hng; j'l'Jbilant wHii piay a keY' role iln de'~iiveril~g GIrl our smtllo Ibr,~ng

Du nki r'l" Donuts cuffeer baked goods ~rnd !>Jl'8icks to rli;(.lre people arouad 'lhf! g[obe. We look fOr\IVa.itd 'le. a, I!O:iilg and mutually ben~f1dal ,allnalr1lo@.

Sou:rc,~; dunki~dcmu.fS..OOffl

Lencia explores Indian market

NMS jewsls., a .lTllanumctljJll'er of :silver j,ewelry u:5arli~ set fure,xp>f[!nsion ~In Iindia as rh exclusive ~ndliall'!l franc:::hi:llee ofdlE l.encia brand. l.encia is a ,Popula.r lradlem(l'Ifi~of lheEufo!pean des;ign hause, Zl~t~rn<ll Celj~ wli'lic:h eI1SLIIlr'eS, mooem andA'aw!~ss p~CodlLJl(Js.. lts namL;! ~5land_s fOT qLlali,tyS:ilve.r jewell)' of a premium ptl"k,e rangt:. Tada,¥, l.encla is a.vailabl€ ~'nll'!iglh[ ceuntrles ~hrough one

~ur1dred ie'lai I outlets"

NMS Jcw@ls, has engdg.oo fri:Jll'1I;corpr <II pOllct, of Franchise Illil1Id~af for .~xp<.msi,01l1l via t~,~ fmnchise route, siub .. franchising ret2lH ouUets acrnss tl?ecollllntry. NMS Jewe~s started operatlcns by olJbiolJlroill1g s.ilIVier jlewehy and exporting it to E.ulrope. Since 2iO0'4, it started 'i(s~'nh .. house d~~gn!ng and !TIall'r!~.!FfitcIUrirlig unit '1IIn Noveml:u~1I 20.09, '[he 00mpilliny starlleci marke[i~n(gLeJlld"!lrrt! Iindia. Dipesih SSlfli'a. NMS Jewe~~ ~ay5.,

they hav~ ~1:j.(Q@siiu IIV proven thel r cred ihi II~lY l:n malnlli{acllH~ nrg8lil'ld d;~igni ng and have sutista II'Ida I ~J;J;PlPowt backed byexperie'l1ce and ind~s~ry knowledge. tencia is quin~esiSerl'LlaUy an Eas!lefin European brand of silver jievl"e~!l'y '~ha~ IllilS risen to PQPf:j~a'lfulY ifilil ceuntrles like Slovenia, Se~bia, Croafia, Macedon~~" Bosnia and HeElegovilii:l •• Ma~~dQll"iia .ii.ifiI,d BlLJrljg~riar, 11'~di;;l is. ~~,@ of i~: first tora.ys, oUB1.d~ its googri!lphic2I111 '''comfQf[ zan€! markets ",

5aufice: .tamiem U'nilfNJ

A plea for I ndustrv Status to the Franchise Sector

flrBncllrni:se ~ectow in the wml~ry has demanded industry Sl.l[US f~c:m Go~emrnEH1L of lndla. Omcebearers of [!JiB I'nduan Fmm:his@ AsoodaTiOfil (lFA!,81. nOI1~profit QrgalniSi~tiO!1l"oepre5enltin~ the 5ectD:r, said this OlITl Hte sidelines o,f Business, OJil'P(l!rtL!lniri~ Shaow 211111 wnicn was orgOlinisedl joil1l,t:ly by lirA ~nd flf;:llnchise ~ndiia witlii ilie ~1.1ppofll or Mi!W1~8try of Mkro Smal~ iHiiO M~dium iEni,f!lrpnses (MSMIE}.The

i ncllllS!~ry is pr,es.ently \laluoo <lit US $ 1 0 b~ I! ion in

~ ndl a a nd is expect:ed to- to uch US S 20 bi llion by 2030 said lh@ Business h€:adi of WA, MohH Garnglaf'lri. "And ~f the Govt. Of ~ndia p'riovlides inch..Jl5:try status to the 'SedO!r the:re wm l1'lOl be any naws. as there will

bl'! Ipropeor guidelirrn!L:!5~' hI£! Ifurt.he:f mll'll1f'1 U ad,

The prov'isk)fl of industry SlaiJuS' would silll('eguard i nta rest of i filV@stoni 21s~h!:]! r~ wou lid be ,~,u nde~ ~ nes

for pmpeii nOIil.di:sdoiliyre aglfeeme'n~ between~he franchis@ irlok:ji!llrs and the inl,lestol"S.

At the S.'H1i'1~ time, w~~~ ilildlil,s~rt Sl:tl'tus, It~elf'~ will be value addi~ibl1li whflch wm attract big bt,iilnds IUEllifter Indialill mal:fk~,t.

.s(J~rm;;~.': li~e!i ()/ Indill.

Perfume Station seeks Francorp support for i; ts Expa n siol1i Strategy

,p,erfume Sta~ on by Ynrlk Transn€lJ:irc:mal Umited. ill tll!rnique cpr'licept of al {]O@./o perfume store joins hands wi~&l FmiFiIcorp, a part of Fralnchise lndla Group, '~or ilr.5

strategic na~i!onwide expansion. York Ti'ansrnaUonalllin1i'~ed ls a Hong Kong based pro{essiOl1a~~}i maJ'Iaged oompany wnkh has 16, Years. or eXpe'l':~Emce in P'enum.e I'ndustry wi:U" inlernatJionall presence in 15, cou n~rfies i nel uclirng Russia, Sri ngapoH~'1 USA" Ukraine and Mexico. It has been Inear~y TI 0 months since the exclusive direct retaill channel - PeITuIni1€ Stal"iQrII ,is' created in India siamting from jodhpur. Wi,th a. deep undle'rstand~l~g of ~he Indian perfume ma~~tt. the product array ls eccesslble with high value for money wil~hin an aiver.age range of INR 250 to INR

1500 and the collecticns h'ldude more than ~ 00 SKUs with

spoci:a~ ralrllge:s. for men, women and ch~ldrlen.lihe current geographical presenceis limited ~o,5 opemtionai stores ~n Jodhpur, Jlaipur, BeawaF1, Udaiptulr and A:hemdabad with a strong logi$1ic and supply d1iai~n manag~ment. At present, the company is operating on standalone tormalt howeVler, ~!'Iilend5 to follow bothtff;;€t standlalQlt!ie and kiosk. model while pend:ratlill1tg other markets.

5rmrce: Pil ,HOme,

Indlan 'FIsnc111se Associ allen

LO'OKING FOR, A DREAM JO,B IN

'F FlAN CH ISE I iN DUSTRY?

lOOKIN'G FOR

!R!'GHT P.'RO f: ESS I 0, NA l.s

TO DRIIVE YOUR IBtJS~N~SS?

WihYlgs?

It rita rIm't fi'mnee r

., Doma,ln Spec 1IICIty & E:xcILils~~It'i

II Know II! dge~ ud Informal HoI'! Sha rtn!l ~ CO'liI1mll;me~t iExlte:IItIl1:'e

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1. How and why was this company

on eivcd?

Cooobe'rry was started in Februry 20019. After c detailed market intelligence SUNeYI II WM

GO 11\1 i nc~d lhal ~h~r@ was a h l.:I!fI~' ~(:OP€!! i 11 ~.he :I'E!,.ait~ alnd weUnes'S of foods tal-egofY in India. III was observed lhal although yogurt was not new to the food world, it was gail1ing substantial impol'itan e ,as a healthy and yummy treat, Thelrefm€!, ~o '1i!ll'gellihis particu I!ar se.ctOIl' I

de' ided to start the venture by the name of Cocoberry, "Coco" flrorn Cocoa beans, and !EBen)!1 from l,~e assortment of fruits. that 'We serve along w i~h fresh I y made 'N CI! ni~ht, f rczen yo gu FI,.

2. How much 'has. be[!n the lnvestmeeu so fat( W'e h~\I'oe invested over 10cr in the project so far,

J. Whall. is the' current ownership pattcm of h cornpenvt Illl other words. who arc the take holders?

Cocoberry is a p ri vatel y fam i II Y he I"JI Go,mpany.

4. Prlmarily if Cocoberrv offers frozen YOgurt5t why did YOLII divulge ~n 5<'1ndwkliles and pizzas/lea, coffee?

We always ilnrlend to serve the customers the ne:alth,iest food options. blended wtth taste, flavour arid variety. lin nov . tion in rood has al,w;t!,y:s been the prime area of fOC:i.:JJ~:i" Thereby. ~11'ong wntill fre5hly made NOI"II-Ipa~ Fr-oz,en yog,ur~ we a ~SD serve a selection of hot and oo:ld beverages such as: oo'lFfeesl leas, smeothtes find a var] ty o'f fresh'liy made sandwiches.

~11 an exclusive interview with

F ratnlews, CEO '& M D of Cocoberrv, J.S.Bhal,la discusses the inception and growth of his, company.

5. In how many loc lions in India and abroad does Cm:::oberry exist currcnL~y? Started: In Febt'tl<ll)' .20091 Cocoibeny ~oday has 25 outlets across Delhi & NCR" ChandJi:.g<lri1, Goa and Mumbai.We. are ,planfililil'lg to increase [he number of outlets from 25 in ~ DO hy the end of 2m 1. In the l'lJexr few rnnnths new stores will be opened in Ahmad:il.bad, Pune, BangaiorE!, and Jaipur.We are also exploding options to expand its operations in the imern. tional marker and are in the advanced 5Lit(fS of nnl61lli.z.in,g [he locations in some South East Asian countries S well as, in the Middl,e East

6, The note mentions Cecoberrv plans to c.xpand from 25 lo 100 localljuns. by Lhc end of 2011; how do you plan to chicve this lalfgeH

'We will be opening new ouiiets IiI[} more lei i s across the CQUl"IIlJry. We: have also entered in to strategic ILl ups with rnevles chalns (DT Cinemas), h(lo5p~'lalls, (Forti:s), IT parks to open locanens there,

7. What is your i nve trnent budget like?

We are gping to be ;ill''l'vesUl1g over H)O crnres in the next 3-4 years.

8. Wuuld all tbese flew o{jlll[!~.s. be ~hroqJJ:gh the lranchise route?

About 2.o-JO% of ti1e outlets would oJnly ,oiP@r~te under the fran(;hi.si ng route.

9,. Is 1llllefe any pmdlJcl Lnnovafiol1l in the orfe'ri'nglare you coming up wi,~h any n,ew ur(,cl'i ngs~'

Trends,slJg_geso[ ~ha[ SB!VOUI)I 's,naJ:~s like 'Y,oguFl: drinks and '¥ogmt WoOlJlII d b ~ £;,i§1"I i fi;canl ddvers for the growth o:r overall Health &: W€llr'I~s. Food sp':lU::e. Food m;:ll.mrf'a.~njlwers are l1~spoll1.ding to this growing dem~li1d by cmiJIting 1~~eltlILhrer products anci pack8iging those pfoduc~;s so that the l~e,@jlth beneF,~t:saJ'~ kept lntaet. l"iowev.e r, the comparrles have to move as, per the customers' psydhe. As· consumers these d.~y5 prefer taste stong w,u~1ll health benefits thereby a U

food inrlovallton demands,

s.omethinig unl,er~sUn.g & exci~rng~a evolve, We have a secret reel pe that too ki yea.r 10 deve lop, We 'We rIl't 1:0 the US and fUl'lmpe to ceme lIIp

w lrh a sou italb~ e CO ~ t:oc'[iOI1 or ingn3'd~elr1lts to finally arrive ,all

the frozen yoglLllrt.

10. Whal is your current market shan." and what is yuulI"ac::hill'veml:!nL targel .& by when do you aim to reach ~L?

With n 95 % market share in lhefro1'en yQg'llrl chain segment, we are tod.~y India's Ilirst and largest premium fw,oz~n yogul't chain with lh~ wid@SL fllliNVliUrlk of 5[QmS across the COUIl1flry. A'ier g;aJ:i.lrni'l'lg astrong hold in O'e'lh~. Mli.llmba:i~ Goa

and ChandigiSlrh mar:ke[S~ W~ alr,e gOtr'!:g 10 expand their presence in Bangalere, Ahrnadsbad, Jaipull" ~ f'lid Ptline i i'I .<1 ·fEW rnonths, Cotobeutyi:5, all s,~t to experience atrlple d~glil growth in 'Ih@ }"fl'ars 101 come {rom 2.011 2 l'O2 01 3, as we a re expanding our pr,g~:'5.ence to O!l:hl@,r ,dti'~!!i in India as weU as abroad. We also 'intend to become mile o~ the world's la1fge:sr and (n,1!i1I2'Sl frozen yOg!!:lllrt re.I'.a.U

c ha ins, by ulme end ·01 next yea r.

11 . Which am tthe other In.dian pb.ycrs exist in the same segment as you? And arc there any inlE!Jrna~ iQ:I1Jal pLaycrsl

Besides Cocoberry, there are smsll 5poradk shops ~hal ha.v~ op~jiH!!d ny~iI1Ig '~o mimic our concept, G.mently we don't see malor cQmpet~tio.1fi! 1~lr1I tlhe market

12. Where does Cocoberry stand amongst l~u:!m?'

'Wea!F~ gllad being Ulefi.r,5t &. only premium rn:m'zen yogurt cilJ;a.in Wilh the 'WideS'~ pfies.ence across the country - Delhi, Curgaon, ChandigaJrhl M!i.lImb~~ &. Goa. S1DreS~fi! Ah~mdaha.cl, Puns, Ba.nga.lore: & ,[ai,pu.r are a.1I set In stan. ~~, f~·e com~lng, month all Febl'llllary.

'~'

1 J.. Whal is I~ he I:;!Y rren~ growth rase of the company?

W:e:'ve wl~hleM;ed a tremendcus 300 p~.IfC,en[ g,rD<wth [his year. Cocoberlry is, all set to experierree a tdph~! d i.gh growt~ i n ~hl;' y,e2l¥s to cemefrom 201:2 to 20'~:3 r as we areespanding OUt pJEi!sence :UO other cIties ln I ndla <:IS w,~11 as

abroad, We ~!I'I:~end to become the Wo(nld's, wide5!' and be'st frnzen yogunt and hea~thy food retail chain by the end o( next year.

14 .. , Wh.H is yom current production? ~s it scale-able and by hDW much!

'Wei31~ nota ffiilllnlllfa.d'l.lirklgj unit, However W(f:/ve plaeed special yogwt 'V'elndm,lf'!@, m8J,ch~!I1Ie;!1j in our o(H.i til ets, wh i'cIM prod L11CieS, heillt~y and fire5h yoglU I't,

15. What is your annual turnever!

Since we aJ'€ a. priva.tely hel1d cOn1P'2irl!lY ~ will rl!O( be able to share thefigeres

16. Whal kind of revenue figLIIr~S did the company see: Last year and what ~s the es1 U lin ate fo r I he next yl!ol rl

'We have ,;achiev,ed a 300% gr~lnldl1 is year C;;!Ol 0 10 1: 1 t Whereas.,. In .20011-12 dlilld .2.01.2-13 WB wilillll, also be aohievilr!lg a. healilhy tll'ip lie digh gro\Nth.

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Indian 'Frnchise Assndal"ilon is Indi's premier, lI'Ion-pol,iricL !I1!ol~for-proff body representing lndian Franchise Sedor. I FA's, endeavor is 10 promote, promulg ue and! popuL rlz the con ept of franehlslng QiS a mode of doling business, across the industry verticals and to nurture the entrepreneurlal skill 'of every Indian.

If A catalyses change by working 'Ck)S2~y with s"takehollders and pol i cymaker:5 0 n pol icy iS51J1 es, e n hanc i rag ,efficiency. compedtlveness alld expending buslness opportunities, for franchise sector through cl r,illnge of specialized se",~ices and globallinkage5. IFA.,;;!I,ls.o' provides, a pliltform for Franchise sector consen5UiS building <lind neIt\!\1orkilflg.,

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