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Tata Capital > Blog > Loan for Business > An Ultimate Guide for Franchising Your Business in India

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An Ultimate Guide for Franchising Your Business in India

An Ultimate Guide for Franchising Your Business in India

If you want to grow your brand in India rapidly, franchising your business is a good way to start. However, whether you should convert your brand into a franchise or not requires some serious thought.

Are you planning to license out franchisees of your brand? If so, here are the two things to consider before going down this road.

Figure out an entry strategy

There are several franchisee models in India. These include:

#1 Master franchising

If you want to award franchisees by outsourcing the actual process, choose this model. Here, you can grant exclusive rights to a local entity to establish your franchise network. However, when you outsource your franchise development process, you must back your vendor with a significant monetary investment. If you fall short on funds, you can opt for a business loan to ensure you can timely invest in brand scalability through master franchising.  

In such a case, the outsourced company becomes the master franchisee responsible for doling out your franchisee to individuals who want it.

#2 Regional franchising

This model works much like the master franchising one, except it covers only specific geographies. Here, you can award exclusive franchise distribution rights to a state-specific entity. Given that different states in India have their own set of rules and fees for licensing, you can leverage this approach for seamless expansion.

Additional Read: Can you get a business loan for opening up a franchise in India?

#3 Direct franchising

As you may have guessed, direct franchising is when a brand directly establishes its network of franchisees. If you feel confident about preparing a revenue model, policy documentation, and adhering to legal compliances, this model is for you.

Here you retain more control over what is happening and how than other models. However, this model can prove to be challenging if you plan on taking your brand abroad.   

Ensure legislative compliances

Presently, India does not have specific legislation governing franchises. Simply put, as a franchisor, you won’t come across many restrictive laws. However, there are a few scattered regulations you need to comply with before entering into a franchisor-franchisee relationship. These include:

· The Indian Contract Act, 1982

· The Designs Act, 2000

· The Trademarks Act, 1999

· The Foreign Exchange Management Act, 1999

· The Copyright Act, 1957

· The Consumer Protection Act, 1986

· Income Tax Act, 1961

· The Arbitration and Conciliation Act, 1996

· The Competition Act, 2002

· The Patents Act, 1970

 So, before drawing up your franchising contract, make sure to go through these Acts or have your legal department review them.

Additional Read: Tips & Tricks to Grow your Business

The final word

Once you’ve got your entry strategy and legal compliances sorted, it’s time to start franchising your business.

If you are already all set with these two tips but need finances for franchising, turn to Tata Capital and get a loan at competitive business loan interest rates. We extend business finance at flexible repayment terms, minimal documentation, and relaxed business loan eligibility criteria.    

Whether you require funds for starting a franchise or for daily working capital needs, we’ve got you covered. So, don’t wait any longer! Instead, use our business loan EMI calculator and chalk out your business plan today.

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FAQs

Is licensing an alternative to franchising?

Licensing is not the same as franchising. Licensing gives rights to use a brand’s intellectual property, like its name or logo. Franchising, on the other hand, provides access to the full business model, including products, services, and operations.

How much does it cost to franchise your business in India?

The cost to start a franchise in India typically ranges from Rs. 1 lakh to Rs. 10 lakh. If your budget is under Rs. 2 lakh, you can still explore low-cost franchise opportunities.

Is franchise business profitable in India?

Franchise businesses can be profitable in India, but success depends on factors like the type of business, the location, and customer demand.

Which type of franchise is best?

Food franchises are often considered the best because food outlets tend to attract consistent footfall, as people often visit nearby stores when hungry.

Which franchise has the highest ROI?

Franchises with a high ROI vary, but it depends on the brand's reputation, market demand, and efficient operations. Popular food and retail franchises often provide good returns.
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