5 Requirements for starting a franchise business in India

 

Many business owners in India find it easier to start a franchise rather than their own company.  Franchise owners offer operational and marketing support and brand equity and have a track record of success.  But to select the right franchise in India, the franchisee must do adequate study and diligence.  You need not be worried.  FranchiseBazar is here to help and walk you through the fundamental requirements you must set up before starting a franchise business in India.

 

But first, let us look at “What is a Franchise Business in India?” One of the main ways in which foreign companies and brands have grown stronger in the Indian market is by adopting the franchise model to expand their businesses.  The franchiser (also the franchise brand) is involved in the processes and offers to the franchisee (also known as the owner of the franchise outlet), with conceptual, structural, legal as well as training support in exchange for a support fee and royalty payments.

 

Furthermore, this is a win-win for both the franchiser and the franchisee, where both earn from owning and operating the franchise.  The franchiser gets to expand his presence in untapped markets, which in turn boosts the market share as well as revenues, once the franchisee has access to the brand’s devoted clientele, legal counsel, creative support as well as training support. Thus, franchising is the most valuable and practical type of business opportunity in India.

 

Types of Franchise Business in India

 

Product Franchise

 

Also known as distribution franchises in India, these are product-driven franchises, where the franchisee distributes the parent company’s products and services by typically using its branded trademark, but not the entire business management system.

 

Investment Franchise

 

These are large-scale franchises that require a significant amount of capital investment, for example, hotel chains, or even large restaurant chains.  By acquiring franchises of these, the franchisee typically invests money and hires either its management team or the franchiser to run the business and generate a good return on investment.

 

Job-Franchise

 

This is a low-cost franchise that can be operated independently or with a few staff.  All the franchisee needs to do is pay the required franchise fee along with a few initial costs, like equipment, basic materials, and vehicle charges if required.

 

Conversion Franchise

 

This is a process by which an existing business becomes a franchise or if an existing business that has multiple locations, decides to switch to a franchise structure.

 

Business Format Franchise

 

This is a franchise that operates the business and markets the products or services by using the franchiser’s trademark as well as the entire system.  The franchiser will be providing the comprehensive agreement and procedures needed to cover every aspect of the business model adopted.  Nevertheless, this also includes both initial and ongoing training and assistance.  Furthermore, this is one of the best and most common types of franchise system in India.

 

Now that we have seen the different types of franchise businesses in India, let us understand what the 5 Requirements are for starting a franchise business in India.

 

Market Research

 

When you are planning to open a franchise business in India, the first step you must learn is to know more about how franchising works in general, like what you need to expect and also how to choose from all the available opportunities.  Once you have identified your niche from a few franchises in India, you would need to do research and select the best franchise in India which meets your requirements.

 

Understanding Industry Dynamics

 

While you understand how franchising works, it is also important before you do anything else, you need to gain first-hand understanding, and preferably some experience of the industry in which you intend to start a franchise business in India.  Understanding the framework, laws, rules, and regulations involved, the best industry practices, competitors, and the market cycle is quite crucial.  By understanding these, you will be able to apply that knowledge to innovate or maneuver over other players in the industry.

 

Capital Investment

 

Having capital money to invest in a franchise is significant because this is a cash-intensive business.  This is because you will need to spend money on setting the brand outlet, furnishing the interiors to the brand standard, hiring the required staff, and covering the operational costs.  Nevertheless, you will also be sharing a portion of the profit with the franchiser which is known as a royalty fee.  Thus, financial backing is quite important to keep you afloat until you start turning a profit.

 

Location

 

Depending on the franchise business you choose to invest in, you can consider leasing or buying a space, and the franchiser can advise some of the best locations.  Deciding a location right for the business in high-traffic areas or near malls depending on the industry type is advisable as that will bring in good customer walk-ins.

 

Preparing the Franchise Agreement

 

Once you have met all the requirements, now it is time to finalize the very influential franchise agreement.  A franchise agreement is a document between the franchiser and the franchisee, charting out major points of the arrangement, between both parties.

 

Conclusion

 

The bottom line is acquiring a franchise in India is a provision of a tried-and-tested model you are getting into which minimizes the risk involved in starting your own business in India from scratch.  So it is important to carefully understand all the terms related to the franchise before venturing into this business world.  We have consultants who can help and support you in choosing the right franchise business in India with various investment ranges.

What are the costs associated with opening a franchise?

 For each franchise model, the exact cost of a franchise varies, although most of them have comparable startup costs. While the franchiser will assist you with some of these costs—possibly through agreements it has with preferred vendors or by loaning you the money—the burden will inevitably fall on you to raise the funds. Additionally, you will need money to operate your franchise business opportunities until it turns a profit in addition to the funds needed to create and open it.

 

Let's explore some of the most common introductory franchise costs.

 

Franchise Fee

 

It's crucial to keep in mind when starting a franchise that you are essentially "renting" the brand from the franchise. Even though that brand has a lot of support and recognition, being linked with it still carries a cost. The amount fee typically varies depending on how much work is required to launch the franchise. Franchises that need you to choose a location, for instance, will cost more than mobile or home-based franchises.

 

The cost of your training and site selection assistance will typically be covered by your fee; as a result, the fee is higher for franchises that need a location. Each franchise has a different definition of what the charge includes. It may sometimes only act as a licensing fee for the right to utilize the brand. Be careful to precisely define what your franchise fee covers when conducting your preliminary study.

 

Legal & Accounting Fee

 

These fees are, of course, your responsibility, but they are well worth it. Anyone who is thinking about getting a franchise should speak with a lawyer who is knowledgeable about franchise law. Your chosen lawyer will be able to go over the franchise disclosure form and franchise agreement with you to ensure that everything is fair.

 

Depending on how much time your lawyer must spend on the documents, each lawyer will charge differently for this.  Additionally, you should begin working with a competent accounting firm as soon as you decide to buy a franchise. An accountant can assist you in setting up your company's accounts and records and in calculating the amount of working capital you'll need to launch and operate your firm until it turns a profit.

 

Working Capital

 

The amount of money a certain business has accessible daily is known as working capital. It's essential to have enough operating available capital to last for a specific amount of time. It may take only a few months, or it could take a few years, this relies on how much time it will take the company to start generating enough money to support itself.

 

The amount of working capital you'll need is often estimated by the franchiser, but you should confirm this with your research and calculations with the help of your accountant. Ask other franchise owners in the network how much they required or may have invested.

 

Build Out Costs

 

The building's construction and all associated costs, such as architectural drawings, zoning compliance fees, contractor fees, decor, security, deposits, insurance, and landscaping, are included in the build-out costs. They also include the cost of all furniture, fixtures, equipment, signage, and other building-related items. The build-out expenses, which differ significantly between franchises, will be estimated by your franchiser.

 

There won't be any buildout fees if you choose a home-based franchise, but there can be other costs, like for vehicles.

 

Supplies and Inventory

 

You need each of these to manage your franchise. Restaurants require supplies including meals, dishes, cutlery, and napkins. To provide their services, other franchises will require different things. You can get a list or an estimate of the things you will need to manage your franchise from your franchiser.

 

You will require inventory if you buy a retail franchise or another type of business that sells goods. Another expense that will differ greatly between franchises is this one, but your franchiser ought to be able to provide you with estimates.

 

Travel Or Living Expenses

 

For franchisees and frequently the franchisee's management team, franchisers will provide training. While the costs of travel and accommodation to attend training at a franchise's headquarters are typically covered by the franchise, this may not always be the case. Usually, the initial training lasts a few days to a week or more and is then followed by additional training back at the franchisee's site.

 

If not, calculate up how much the training-related fees will cost you. If travel and accommodation are not paid for by your franchiser, you should check that they are.

 

The Bottom Line

 

The cost of starting a franchise is equal to the cost of starting your independent firm. This is a crucial idea to understand if you're thinking about buying a franchise. Nevertheless, investing in a franchise is well worth it because of the assistance and training you receive in return. Register right away with Sparkleminds, and we'll help you find the ideal franchise opportunity.

A mode of business that creates an incredible opening for entrepreneurs to start a new business by giving the necessary confidence for the established brands or companies to expand taking a profitable lead for their better future is known as a franchise business in India.

 

Now let us understand what a franchise consultant is and how it matters to business or entrepreneurial enthusiasts in growth. 

 

Franchise Consultants are specialists in the field who can be strong in guiding and linking you through various resources and opportunities which will help you meet your business aspirations and goals. These are the experts who bridge and connect business opportunities with people who are ready to invest time, and money, as well as their aspirations too.  In other words, they are links in a chain that help a sector grow in length through the franchising business model.

 

Growth of Franchise Services in India

 

The Indian economy is booming with opportunities with an increase in people having the desire to start their businesses.  Nevertheless, the growing opportunities in various sectors have widened the scope of franchising in India, giving this segment a boost and franchise consultant services in India have witnessed a steady uphill growth.  India is known to have the second-largest franchising industry, and the need and demand for valuable franchise consultants in India shall always remain to exist.

 

Every city is seeing a rise in franchise consulting opportunities especially major cities like Bangalore, Delhi, Mumbai, and others growing in the size of infrastructure, the scope of investors, and industry sectors like food, lifestyle, fitness, technology, and retail.  What has advanced the growth is the increase in IT companies, which have a large working population, leading to high consumption, in turn making way to build and grow existing businesses in India based on the demand.

 

What is the Role of a Franchise Consultant in India?

 

·         If you are a first-time entrepreneur looking to start your own business or acquire a franchise in India, that’s where the role of a franchise consultant comes in.  They can help you evaluate your interests and goals with companies or sectors as per your interest routing through franchise ownership.

·         If you are a business owner or a franchisor, who is looking to expand your footprints across the country, franchise consultants help in getting you the opportunity to assess the opportunities in untapped markets, consider your business situation and find potential entrepreneurs who would wish to invest and collaborate in your expanding business venture in India.

·         Expert franchise consultants possess skills to narrow down your thoughts and ideas and evaluate the current market scenario bringing in the possibilities which eventually have a high scope to succeed.

·         Choosing the right franchise consultant means you need to search for a person with a considerable amount of experience having handled companies and candidates with a proven track record of successful growth and expansion.

Last but not the least, choosing a franchise consultant who has the franchise industry experience and comes with the knowledge and experience of franchising and business ownership is very crucial.  Don’t forget choosing the right fit will be a crucial decision as you would be investing time and money and would thus expect good returns.

 

These are the prime roles of most franchise consultants in India.  What makes FranchiseBazar one of the best franchise consultants in India, is its proven success record. 

 

FranchiseBazar has a professional focus which means they have energies which are entirely into the consulting business.  Having experience working with people who match your likes and a successful track record, with a reputation in the industry is a deciding factor for a franchising consultant.  They ask you the right questions to understand your requirement and take you to your destination without considering your benefits before yours.  FranchiseBazar has offered a variety of services to its clientele, has a huge base to support their work, and has a proven track record of doing business over the years, so why not go for the one where results talk more than what they do?

 

How to Hire FranchiseBazar Franchise Consultant Services?

 

Leaping into a new business or thinking of expanding your footprints can be a little daunting as you may not be completely aware of certain factors.  FranchiseBazar could help you overcome the initial concerns and guide you on the right path.  Furthermore, FranchiseBazar covers all the prerequisites of a franchising consultant as stated above and stands for its credibility.  Nevertheless, the advent of technology, online ads and social media has been a boost to making it easier for people to choose the right franchise consultant in India.  You can also seek aid from an existing franchisee to understand the real results of their franchise consultants during their process of franchising. 

 

So, call us +919844443200 today and Register To Take Franchise with the best franchise consultants in India.