Stating a franchise business in India starts with selecting the right franchise brand, Understand the finance & investment and Completing the legal things. Follow a Step-by-Step guide to choose a brand, register and grow your franchise with ease.
Imagine owning a business where you don’t have to spend years building a brand, developing products or spending money on marketing. Instead of those things you can enter into a system that’s already a successful, trusted brand and it comes with a full blueprint for your success.
Sounds good? That’s what Franchise Businesses do
I know you’re searching for How to start a franchise business in India. The franchise industry in India is growing significantly with top brands expanding their business, giving chance to budding entrepreneurs to step into the ready-made business. How do you choose the right franchise? How much money do I need to invest? What are the legal formalities to follow?
Don’t worry, This article will answer all of your questions, from understanding what a franchise business is to choosing the best franchise business in India and its long-term success. By the end of this article, you’ll have a clear idea and step-by-step roadmap to start your own franchise business and make it more profitable.
What is Franchise Business?
A Franchise business is a partnership between two sides, the franchisor (Established brand company) and the franchise (an individual who going to invest). In exchange for an initial franchise fee and ongoing royalties, the franchisee gets the right to use their brand name, logo, and product/services and follow their experimented business model.
For Example, Brands like McDonald’s, Zudio and KFC are run through the franchise model. Instead of opening every store and managing them all themselves, they allow individuals to own the outlets and manage them under their brand name. The franchisee’s benefits are they are well well-established brand, loyal customer base, marketing support and operational training, while the franchisor plan to expand its brand presence to a wide range without managing each and every store directly.
In simpler terms, franchising is like renting a business model – You get everything on your hands from brand recognition to supply chains it will reduce the risk compared to starting a business from scratch.
Why Franchise Business in India?
India is one of the world’s fastest-growing franchise markets, with an industry that is valued at over ₹7,000 crores and still it’s growing. The rise of consumer spending, urbanization and more demand for branded products makes it a golden opportunity for entrepreneurs who want to start a business and people who want to start a business as a student.
Why is Franchising is Fastest Way to Start a Business in India?
Franchise isn’t like independent startups that take years or decades to establish well know brand, a Franchise business gives you an instant brand recognition, and proven systems with an operational support system.
Here’s why franchise business is the best choice for entrepreneurs:
- You don’t need to build a brand from scratch.
- Lower risk compared to startups.
- Training & Support from Franchisors
- Easier Loan Approvals
Who Should Start a Franchise Business in India?
First-time entrepreneurs who want to start a business with low risk and maintain the business with a complete business structure.
Corporate Employees who looking for a profitable exit from their jobs with recurring cash flow.
Investors searching for passive income opportunities to grow their money with low risk.
Serial business owners looking for opportunities to diversify their business industries and expand their business portfolio.
You don’t need a million-dollar business idea, You just need the right system and brand to succeed.
Why Start a Franchise Business in India? (Advantages & Disadvantages)
Advantages of Starting a Franchise Business in India
- Faster ROI – The Franchise already have a huge customer base, so You don’t want to wait for a long term to build your customers, you’ll start earning profits earlier
- Proven Business Model – The business has already done its market research and tested and It’s running successfully in some locations.
- Brand Value – Customers already know the brand, which makes it easier to attract them without spending money your own money on marketing.
- Franchisor Support – You receive training from the franchisor to run your business smoothly under their guidance and Marketing support.
- Higher Success Rate – Franchises have a much higher success rate compared to independent startups.
Disadvantages of Starting a Franchise Business in India
- High Franchise Fees – Some well-established franchise brands require ₹20–50 or even more investment to start a franchise business.
- Limited Business Control – Franchises must follow their brand guidelines strictly otherwise they file a case against you.
- Royalty Fee – You need to give a percentage of revenue that goes to the franchisor it will impact your overall earnings.
- Location Restrictions – You don’t get full flexibility in choosing the best place to start a business because they have some set of metrics with footfall or it needs to be a prime location.
After considering the advantages and disadvantages of franchises, the best franchise business in India can still be incredibly profitable if you choose wisely.
Best Types of Franchise Business in India
Not all franchises have the same business system. The Structure you’re going to choose will directly depend on your investments, level of control and profitability. Here are the four popular franchise models in India:
COCO – Company Owned Company Operated
In this franchise model, the company own and operate the franchise outlet directly. Investors provide capital and receive fixed returns on investments but don’t manage operations.
Example: Reliance Jio Mart and Big Bazaar
COFO – Company Owned Franchise Operated
The company owns the business, but franchisees manage the daily operations. This is common in customer service centres and logistics businesses.
Example: Amazon Delivery Centers and Airtel Customer Support
FOCO – Franchise Owned Company Operated
Here, the franchise owns the store, but the parent company controls the major operation to maintain the brand consistency.
Example: McDonald, Domino, Zudio
FOFO – Franchise Owned Franchise Operated
This is the most common and popular franchise business model, In this model you completely own and operate the business with their brand guidelines.
Example: Raymond, Baskin Robbins
Each and every franchise business model has their unique investment amount, control and risk, So choose the right franchise business that aligns with your goals, depending on your financial goals and management styles.
Step-By-Step Guide: How to Start a Franchise Business in India
After deciding on your franchise model Don’t Just start a business without any research. Now comes the real challenge of How to Start a Franchise Business in India Successfully.
It’s not only about choosing the right well-known brand and opening a store. The process involves market research, legal formalities, investment planning and strategic business location.
If you miss one step, you may end up losing your business or struggling with a business that doesn’t align with your expectations.
Step 1: Find the Right Franchise
Not all franchise businesses in India make you rich or profitable. It depends on choosing the right franchise that meets your budget, skills, interests and your locations.
How to Choose the Best Franchise Business in India?
- Market Demand – First analyze the market and figure out where the is demand and find if is there any franchise related to fill the gap. The franchise should have consistent customer demand. It could be any industry like Food, Education, Retail or Healthcare these always have a demand in the market.
- Brand Reputation – Make sure that the brand is well established because the brand will attract more customers and provide better support for long-term growth.
- Investment – Franchise price starts with ₹50k to ₹5 Crore or more. You need to choose a franchise business that aligns your goals and situations with your financial capability.
- Competition Analysis – Try to avoid oversaturated markets until you have a strong passion or interest in it. There are too many franchise brands on the popular market So, if you choose the highly competitive market you may struggle with sales to become profitable.
- Franchise Directories – Take a look at Websites like Franchise India and Bharat Franchise help to make your process simpler by comparing the franchise business ideas in a single place.
If you’re looking for a small business in India, focus on low investment highly profitable brands like Amul, Patanjali and more.
Step 2: Understand the Investment & Fee
Starting a franchise business in India involves multiple financial works. So, you need to understand the basic and more costs before making any big decision.
Franchise Fee
A Franchise Fee is a one-time payment to the Franchisor to use their brand logo and name.
Royalty Fee
It’s a payment franchise need to pay monthly or yearly (depending upon the franchise) as a percentage of the revenue to the franchisor.
Setup Costs
Setup costs include your Expenses for the property lease or advance, Outlet interiors, Equipment and inventory.
Marketing
Most franchises take care of marketing but, some franchises require you to contribute to their global or regional marketing campaigns.
Example: Getting a Domino’s Franchise in India costs around ₹1 Crore while starting an Amul Franchise Business costs you ₹2 lacks.
Step 3: Requirements & Registration Process
To operate your franchise business in India legally, there are some rules to start a business. You must need to complete all the required registrations and agreements.
Choose the Business Structure
Your business structure directly affects your taxation, liability and some legal things. I’ll share the popular business structure.
- Sole Proprietorship
- Limited Liability Partnership (LLP)
- Private Limited Company
Sign the Franchise Agreement
The franchise agreement is the most important thing and read the agreement carefully, if you have any doubt immediately sort it out with the franchisor.
The agreement is a legal contract that has
- Your rights and responsibilities as a franchise.
- The Franchise duration.
- Renewal, Termination and Royalty Payments terms.
Important Licenses
Get the required licenses depends on your franchise business industries, You may need specific licenses
- GST Registration – It Required for all kinds of business in India
- FSSAI License – For any kind of food related franchises
- Shop & Establishment Act License – Required to operate a commercial store.
For More Details: How to Get a Business License
Step 4: Location Selection
Your franchise location is going to play a major role in your business career. Pick a great location that has high footfall, increased sales, Easy transportation and long-term profitability.
How to Choose the Best Location for Your Franchise Business?
- High Traffic Areas – Shopping mall, Main Streets and Commercial Hubs.
- Target Audience – The Demographics should match your franchise’s target market.
- Competition Analysis – Ignore the location where too many similar businesses.
- Rental Costs – High rented areas will eat most of your profits, So before choosing the best place to start a business do some calculations of your break-even point carefully.
For Example: For food-based franchise colleges and IT parks are the best places, While fitness-based Franchises work best near to Residential Zone.
Step 5: Franchisor Training
One of the biggest advantages of a franchise business is the training and support from the parent company.
The franchise training program may differ based on industries as well as franchisors. Some popular trainings are
- Product & Services – Complete Understanding of the Brand Standards.
- Operation Management – Handle customers, daily operations & Inventory.
- Marketing Strategies – How to Promote your franchise on your Own locally.
- Technology & Software – Using POS System, Managing CRM or ERP Software.
Step 6: Launching & Growing
Once everything is set up, the real challenge begins when you start a franchise business and scale to become profitable.
Build a strong plan and strategies for your franchise’s success.
- Create a social media account and Google My Business to promote your brand through digital marketing to attract your customers.
- Provide Excellent customer services (Happy Customer = Recurring Customer = More Business = More Revenue)
- Manage your finances by tracking profits, and expenses and reinvesting to scale big.
Hire the Best Digital Marketer for Your Business
Mistakes to Avoid When Starting a Franchising Business in India
Most of the new franchise businesses fail because of their carelessness and some common mistakes they make. Here’s what you’ll need to avoid
- Not Reading the Franchise Agreement Properly, Some hidden things can lead to financial loss.
- Choosing the Franchise Based on Hype without doing any research.
- Avoiding the Hidden Costs in Investment Calculations.
- Non Negotiating Terms, You can negotiate the initial fees, royalty fees and territory exclusivity before signing the contract.
Read Also: How to Register Your Business
Conclusion
Starting a franchise business in India is one of the smartest and safest ways to enter into the entrepreneurship journey with low risk, managing a reputation brand and having a clear blueprint to success.
The important thing is which franchise brand you’re going to choose, Your financial planning and following the franchisor’s guidelines.
If you’re ready to start a business, start with deep research about franchise business ideas today. Compare the important things like investment, Brand value, Rules, Price Structure, ROI, Legal Process, and market demand for long-term growth and align with your goals and strategies to make your franchise business profitable and successful.
Do Banks provide loan for franchise businesses in India?
Yes, Most of the banks provide business loans for franchises under the government schemes like PM Mudra Yojana. Banks mostly prefer franchises because it has a proven success rate, So you got loan approval easily.
What is the Best Franchise Model to choose in India
The FOFO (Franchise Owned, Franchise Operated) Model is the most popular and profitable model in India, the model gives full control to the franchisees while following the brand’s guidelines.
Example: Raymond and Dominos
How can I apply for a franchise in India?
To apply for a franchise in India, Visit the brand’s official website, Go to franchise (Partner) page, Fill out the application form and they’ll contact you. Then you’ll discus about investment, location and background verification. You’ll then sign a franchise agreement and complete legal formalities before launching your business.
