How to start a franchise business in India

by varun · Published September 29, 2020 · Updated December 24, 2021

Franchise Business model

A franchise is a license that a franchisee (Entrepreneur) takes from the franchisor ( parent company) to access franchisee’s proprietary knowledge, process and trademark to sell a product or provide a service in the name of franchisor. Prominent examples include franchisee of KFC, McDonalds, Baskins and Robbins etc. There are approximately 1,7 lakhs franchisees in India. Total market for franchisee business is expected to touch 100 billion USD by 2024. Let us discuss some important points on how to start a franchise business in India-

Established market – Getting a franchise reduces the burden of establishing a market for a new product. Moreover, it reduces gestation period to turn profitable as franchises like KFC or McDonalds already have an established product market fit. Franchise business offers a unique advantage to a new business owner which is not offered by most of other business.

Support – A franchisee gets every support and guidance from an established franchisor in each and every step from setup to delivery. This support includes technical and market oriented guidance. This helps a new business owner in getting started with a franchise business.

Reliability and acceptance – Product or service of the parent company has already been accepted by the market. A new franchisee just needs to market it properly to get full benefits.

Company policy – Every franchise has its own policy and a new entrepreneur has to work under the same policy. This policy could pertain to geographical areas mapped to it or product display. This policy is the initial document that is signed between both parties and it has to be abided at any cost.

Financial requirements – This can be divided into following sub categories:

Franchise fees
Operational expenses

This type of business works mainly on location as everyone wants to visit a nearest McDonalds or KFC that are situated in a shopping complex or a mall. A new entrepreneur will be guided at each and every step by the parent company from initial setup to delivery.

In this article, we have discussed important points related to a franchise business. Meanwhile you can read more articles on various business and business related licenses here.