written by | April 28, 2022

What are the Types of Franchises Available in India?

India is the world's third-largest consumer of goods and services. Opening a franchise in India is a fantastic chance for a multinational brand. India's most popular product categories include beauty, education, autos, wellness, fashion, and medicine. A different tiny franchise firm is operating in a different part of India.

For the finest franchise business, India is a hot market. The fundamental reason for franchise company expansion is that both the operator and the franchisee achieve sustainable growth. Before looking at different sorts of franchises in India, it's important to first learn about the franchise industry and how to get started.

If you work hard, you can make an endless amount of money in a short period in business. In today's world, India is one of the most important economic and commercial hubs in South Asia, and many multinational companies are flocking to the country to take advantage of different franchise opportunities.

Franchises aid businesses were looking to expand their presence in India and contribute to its economic development by generating additional jobs. Several of the main reasons people in India attempt to franchise their businesses are because of this.

Did you know?

Not all franchises cost tens of lakhs of rupees to launch and operate. You can start a franchised firm without needing to invest a lot of money.

Advantages and Disadvantages of Opening a Franchise Business

People look for development models, but they are unsure whether their venture will be profitable, so they are hesitant to take a chance. However, the potential risk in a franchised firm is lower because you have a well-established trademark business strategy.

Advantages

Following are some of the advantages of opening a franchise business in India

  • Reduced operating costs,
  • The rapid growth of local industry knowledge,
  • Trademark,
  • Technological knowledge and training,
  • For the franchisee, there is less risk,
  • Access to capital is simple.

Disadvantages

  • Strategy for a limited exit,
  • An expensive investment,
  • The parent firm has more power,
  • A portion of profits must be shared with the parent company,
  • Strict operating procedures.

Also Read: Invest in these Best Low-Cost Franchise Businesses in India

Types of Franchises

Product Franchise

his is the most frequent franchise you'll come across. These franchises are purely based on supplier-dealer agreements, with the franchisee being in charge of spreading the franchisor's goods and services.

A product franchise, for example, is when a retail store acquires a tea time franchise to supply tea and bread items. In such circumstances, the franchise is permitted to export or sell bakery items under the company's copyright and brand name.

Instead of giving the franchise in their whole company operating system, the franchisor usually licences the brand name. Product franchises generally deal with major items like electronic devices, coffee machines, and car parts. Product franchising, without question, accounts for the largest share of merchandise trade.

Job-Franchise

This is a much more individualistic franchise, with owners preferring to run a small business from their homes. A minimal cost franchise, such as this one, consists of a single individual selling items or services in a certain industry. The major benefit of a working franchise is that it requires very little capital.

Despite the modest initial investment and low operating costs, the company must register for GST if its yearly turnover surpasses ₹20 lakh.

This franchise can be used to run a variety of small and medium-sized enterprises, including gardening supplies and services, plumbing, business and residential housekeeping, smartphones and maintenance, property sales, childcare services, and so on.

Franchise for Investment

As the name implies, the most important component in this franchise is the capital. A huge franchise that demands a significant capital investment is known as an investment franchise.

Franchisees put money into their firm and either uses their executive team or hire some outside franchisor to run it. They generate value for money as well as capital gain in this manner.

This sort of franchise is typically used by large organisations such as hotels and restaurant chains. Because their yearly turnover typically surpasses ₹20 lakhs, the franchisor must register for GST to obtain a franchise.

Franchise Business Model

This is one of India's most popular franchise kinds, in which the franchisee develops their business plan while being supported by a well-known brand.

The brand owner only needs to give the necessary training and support to get the business up and running. The franchisor also provides the products and services. In exchange, they receive a royalty payment.

In a business model franchise, the franchisor may also give raw materials to the franchisee, as they normally strive for uniformity in the franchise's quality.

Food businesses like Amul and other global dining establishments like Burger King, Domino's, and others are the most well-known instances of such franchises.

Conversion Franchise

A conversion franchise is a partnership between a franchisee and a franchisor that has been altered. Many franchise models do this by turning their firm into a trademark. As a result, the company grows in the very same sector as the franchisees.

The company does use marketing and advertising campaigns, customer service criteria, and other methods of functioning. The company has the potential for very quick expansion in terms of numbers and royalties fee income because the franchisor frequently enhances purchasing savings.

Real estate agents, home health care, engineers, and conditioning systems are just a few examples of conversion franchising firms.

Is MSME Certification Required to Obtain a Franchise?

If you own a small or medium-sized business, you may be asking if an MSME registration is required to start a franchise. Although MSME certification is not required, it has various advantages, including the ability to get a franchise. Here's how it can assist you in purchasing a franchise and expanding your business.

You may need to seek business loans because owning a franchise requires a large financial investment. A modest DTTC franchise, for example, would need capital funds of ₹4-5 lakhs to handle trademark fees, gear, and other expenses. By obtaining your MSME certification, you increase your chances of obtaining the essential business loan to start a franchise.

You must also follow the government's and the parent company's rules and regulations while starting a franchise. Simple procedures are required, such as acquiring a lease, licenses, and certifications. An MSME license can help you develop confidence and credibility when applying for permits and licenses. You can also get reimbursed for the costs of getting your products ISO certified.

When you manage a franchised firm, you must pay any taxes. On the other hand, MSME-registered businesses are eligible for a Tax-Free Direct status in the first year of operation and can easily obtain an MSME loan.

Micro, small, and medium-sized firms serve as the country’s economic backbone. A franchisee is a wonderful opportunity for MSME enterprises to expand and grow to greater levels. However, because obtaining a franchisee can be difficult and costly, selecting a reputable organisation and adhering to all government regulations is critical.

The easiest method to boost your enterprise's performance in launching a profitable franchise business is to take small but practical initiatives like securing an MSME certification. 

With minimum documentation and easy qualifying, you can start with as little as ₹1 lakh based on your needs. You can get a loan in as little as three days if you have the necessary papers.

India Has a Multitude of IT Franchise Opportunities

In India, internet connectivity has risen dramatically in recent years, and it has now become a vital part of many households' and organisations' daily lives.

This has resulted in more chances for professionals and specialists, as evidenced by the increasing amount of IT companies giving licensing rights. With rising online activity and consciousness in remote and semi-urban areas, these businesses are projected to thrive in the future.

Also Read: Which Are The Most Profitable Franchises in India?

Women Can Start a Franchise Business

Independent-minded and educated women who want to make money and provide for their families or enhance their lifestyles choose franchise business options for women in India.

With increased stages of schooling and knowledge amongst remote and semi-urban women about their freedoms and possibilities, more motivated people are predicted to emerge.

The following are some of India's most popular franchise business options for women:

  • Beauty industry
  • Home-based business
  • The sector of pre-school and play school
  • Rentals of toys and books
  • Gyms and fitness facilities.

Conclusion

Given the current emerging trend in the country, starting a franchised firm is a fantastic option. One of the nicest aspects is that the leading company offers you services in which they advertise your company for you. So now that you've learned about certain top franchise businesses in India, you may pick one based on your preferences, location, and financial resources. Choosing a franchise allows you to embark on your entrepreneurial career with less risk.

Franchisees and franchisors alike benefit from many franchise business models. The National market is open to various types of businesses, and franchises are one of the most popular options. Franchises are opened by small and large businesses to earn royalty payments and establish their brands in other countries. The most crucial thing to remember is that a franchise's success is determined by its score, registered trademark, marketplace, and other factors. Investing, whether in a small or large quantity, is necessary. If you are successful and obtain a franchise, you must research all elements and need for the goods and services.

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FAQs

Q: When does a franchise need to register for GST?

Ans:

Despite the modest initial investment and low operating costs, the company must register for GST if its yearly turnover surpasses ₹20 lakhs.

Q: Which kind of franchise has a single individual running it?

Ans:

A minimal cost franchise, such as Job-Franchise, consists of a single individual selling items or services in a certain industry.

Q: What is the most common type of franchise model?

Ans:

The most common sort of franchise model and the one most commonly mentioned when discussing franchising is business franchising. Franchises are available in more than 70 sectors, with the most common being fast food, shopping, dining, marketing services, gym, and others.

Q: What is the benefit of acquiring MSME certification for your franchise?

Ans:

By obtaining your MSME certification, you increase your chances of obtaining the essential business loan to start a franchise.

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