Franchise businesses in India have been growing at a 30% to 35% rate on a Y-O-Y basis. The industry also contributes to around 2% of the country's GDP—the 5th largest in the world. While many think that opening a franchise business requires a lot of money and experience, the facts and figures tell a different story of franchise growth in India.
In this article are the top 10 franchise business ideas that are gaining momentum in the country and the most profitable ones. If you are in a dilemma about which franchise business ideas in Indiawould work out, you can find some interesting details about the industry in this article.
What is a Franchise Business?
Before finding out the most suitable franchise ideas in India, let’s recall what the term "franchise" means and how it works. So, a franchise business can be referred to as a business structure where an already established company or a popular company provides franchise rights to another individual or business entity to use their name and offer their products and services. Here, the latter gets a commission on every sale they make.
For instance, suppose ABC (the franchisor) is a renowned Mumbai restaurant that wants to expand. However, they don’t want to do it on their own. Instead, they are looking for business partners to whom they will offer franchise rights. Now Mr X (the franchisee) wants to open his own restaurant, so he purchases the franchise from ABC restaurant.
Here, Mr X will set up his infrastructure for the restaurant, have his employees, and take care of the daily input and output of the restaurant under the banner of ABC Restaurant. Now, since Mr X is using the name of ABC as he bought the franchise rights, ABC will take their cut of the revenue.
Suppose, in the franchise agreement, the revenue sharing has been decided as 60:40, where the franchisee will keep 60% of the revenue and the franchisor will get 40%. So, if in a month, there is a total sale of Rs. 500000, then Mr X will get Rs. 300000 out of it, and the remaining Rs. 200000 will go to ABC restaurant.
The main strategy behind franchise businesses is that the franchisor provides its name to a new business entity to grow its business for a share of the revenue.
Current Scenario of the Franchise Industry in India
This is one of the best times to think about franchise business ideas in India, as the industry is growing at a fast pace. It is anticipated that the franchise industry will become a Rs. 10,000 crore industry by 2024.
After the US, India has the most franchisers, which is close to 4600 presently. There are more than 1.7 lakh franchisees of these franchisers who operate over 2 lakh outlets in the country.
For instance, multi-unit franchises have grown by more than 36% in the past two years. There are national, domestic/ regional, and global brands that offer franchise opportunities in the country.
So, for franchise business ideas, one can opt for brands at these three levels. With so many franchisers, finding the rightfranchise business ideas in India is becoming easier.
For instance, if someone is looking to open a multi-unit franchise, then opting for a global or national brand would be great; for someone looking to open a single-unit franchise in a particular region, opting for regional brands can be great.
Similarly, someone looking for franchise ideas for small towns in India can opt for regional brands. In the franchise industry, 50% of franchisors are regional brands. Of the remaining 50%, 16% are global brands, and the remaining 34% are national brands.
The Top 10 Franchise Business Ideas in India
The most popular franchises across the country include beauty and wellness franchises, food and beverages, healthcare and diagnostic centers, and retail fashion brands. Here are the top 10franchise ideas in India:
1. Beauty and wellness franchises
With more people realizing the importance of self-love, they do not hesitate to take care and pamper themselves. This has, in turn, increased the number of people visiting spas and salons more than ever before.
In India, beauty and wellness franchises are growing at the fastest pace. Beauty and wellness salons offer franchises across the country, and even tier II and tier III cities are now becoming hotspots for these franchise units. Visit any mall, and you will know what we’re talking about!
2. Food and beverages
After beauty and wellness, the best franchise ideas in India can be regarding food and beverages. Indians love to eat and live to eat. Following this, so many regional, national, and global brands are offering their franchises to people who want to start their own food and beverage businesses.
If someone is looking for franchise ideas forsmall towns in India, then food and beverages can be one of the most suitable ideas. Apart from the multi-national food chains, there are many home-grown companies that offer franchises across tier-II and tier-III cities.
3. Healthcare and diagnostic centers
The younger generation in the country is becoming more inclined to have a healthy lifestyle. Regular health check-ups have increased in recent years, and people are looking for genuine diagnoses and laboratories to rely on for their healthcare. This has boosted the franchise business in this sector. Such franchises are especially popular in localities and communities with a higher age group, since having a healthcare and diagnostic center in their vicinity makes healthcare easier for seniors.
4. Retail fashion and jewelry franchises
People are shifting to branded clothes not only for maintaining their status symbol but for comfort and quality in more cases. This has increased the opportunities in the retail fashion and jewelry industries. There are many Indian brands that have multiple franchises across the country that one can opt for.
5. Automotive franchise
One of the oldest and biggest franchise businesses that have been around for years is automotive franchises. In simple terms, these are franchise businesses for selling automobiles. There are millions of vehicles that are purchased every year, and thus, this sector has immense opportunities for a franchise business. In small towns, bikes and scooters are bought more often than cars. Thus, it could be a good franchise idea for small towns in India to buy a franchise from an automobile company manufacturing two-wheeler.
6. Retail furniture and décor
People are also getting more inclined to decorate their homes on a reasonable budget, which has increased the business for retail furniture businesses. There are many regional and national brands in this sector that are offering franchise opportunities.
7. Pharmacy
Online medical stores are becoming increasingly popular due to the ease of purchase of medicines and their free delivery services, all at highly discounted prices. Thus, franchise businesses in this category are rapidly growing in every corner of the country, including in tier-II and tier-III cities.
8. Pre-school
Parents want the best education for their children, and, with the rising competition to get into big schools, pre-schooling has become a thing. Multiple pre-schools are operating in all the cities and small towns to help children grow, learn and get into prestigious institutions. A pre-schooling franchise in India can prove to be a very successful model if implemented and managed correctly.
9. Ice cream outlets
Nowadays, fresh ice-creams or ice cream art are becoming popular. There are many ice-crease franchises operating on an India basis and generating good revenue. Visit any high-street or shopping malls across India, spotting such ice-cream outlets is very common. Ice cream never goes out of fashion, and demand remains all year round.
10. Courier and delivery franchises
The courier service business is one of the franchise business ideas that is gaining popularity with people living in different cities away from their hometowns. As more people are relocating for their jobs, accessing quality and swift courier service is becoming critical. Food and article delivery is a hit amongst millennials and Gen Z living in different parts of the city for work and education purposes. Courier and delivery franchises can cash in on the huge demand for food/article delivery and courier services in India.
Investment Required for Franchise Business
The investment cost is something that bothers many people when they are looking for franchise business ideas. Usually, the cost or investment required for 50% of the franchise business ideas in India ranges between Rs. 5 lakhs and Rs. 10 lakhs. For some outlets, this can go higher, depending upon the brand, its market, reputation, and even the location of the franchise.
Wrapping up
To run a successful franchise business, one needs to find the right franchise business ideas as a first step. Franchise businesses are rapidly growing with so many domestic and international players in the industry, which suggests that this is one of the best times to start working on the dream of building a franchise business. Tata Capital could be your befitting financial and lending partner for your dream business venture. With loans up to Rs. 75,00,000 for a tenure of up to 36 months, you can avail of business loans from Tata Capital with interest rates starting at just 19%. Check out the specifications to obtain a business loan today and apply digitally right away!
03 October 2022
8 mins read
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