How to franchise a Manufacturing Business?

Written by Sparkleminds

In India, one of the industries experiencing rapid expansion is manufacturing. The “Make in India” programme was introduced by Indian Prime Minister Narendra Modi to promote India’s manufacturing industry and boost the country’s economy internationally. By 2022, the government wants to add 100 million new employment to the sector. 

According to preliminary estimates of the gross domestic product for the first quarter of 2021–2022, India’s gross domestic product (GDP) for the first quarter of FY22 was Rs. 51.23 lakh crore (US$ 694.93 billion) at current exchange rates. In the third quarter of FY22, the manufacturing GVA at current prices was predicted to be US$ 77.47 billion.

By 2030, India can contribute more than US$ 500 billion yearly to the global economy and become a major centre for manufacturing. 

The second quarter of FY22 saw capacity utilization in India’s manufacturing sector rise to 72.0%, according to a poll done by the Federation of Indian Chambers of Commerce and Industry (FICCI), showing a considerable rebound in the industry.

How to franchise a Manufacturing Business?
How to franchise a Manufacturing Business?

As this industry is growing rapidly, let’s talk about how you can franchise your manufacturing business and make your business a brand. 

How to franchise a Manufacturing Business?

A fantastic strategy to accomplish business expansion while reducing the overhead costs associated with opening additional locations yourself is to franchise your manufacturing business. In essence, when you franchise a manufacturing business, you are renting to another businessperson the right to utilise your brand, business model, and standardised operational procedures. The franchisee receives a tested business plan and continuing assistance to help the venture succeed in exchange for the franchise fees and royalties paid to you. Although franchising a manufacturing company might be difficult, it can also be financially and professionally rewarding.

  1. To decide whether your business should be franchised, perform an objective business analysis. Think about if your goodsor service is distinct enough and competitive enough to be profitable in a variety of marketplaces and appealing to many other business owners. Is the company producing a sufficient profit (with high margins) to support growth? Is it simple for another businessperson, managers, and employees to copy the business model? Is the business’s target market substantial enough to warrant many locations?
  1. Formalize your business’s activities into a detailed strategy that is simple to follow. From the time you buy the opportunity until the first year or two of profitable franchise operations, you should cover as many operational facets as you can.
  1. Write a guidebook on marketing and branding strategy. This unique handbook will assist the franchisee in bringing in more clients and building up brand recognition for your company. You must make it apparent how to use and enhance the company’s brand and image as a component of an effective competitive strategy.
  1. Draft your leasing, royalty, and franchise contracts; have a franchise attorney or other expert with knowledge of business entity franchising evaluate these forms.
  1. If franchising your business changes your state tax liability, register your business with the secretary of state. If this procedure applies to your circumstance, you should confirm with your local office.
  1. Register your company with the secretary of state if franchising it affects your state tax obligations. You should verify with your local office if this procedure applies to your situation.
  1. Employ a service and support team to guide your franchisees’ efforts. Franchisee inquiries and quality assurance can be addressed by your service and support team. Set high internal standards for service and demand them. 
  1. Make sure to carefully vet and choose your franchisees before marketing and selling your franchise offer. Keep in mind that their success will determine yours.

Advantages of franchising a business. 

The advantages of franchising don’t solely apply to the franchisee, of course. The franchisor should also weigh the pros and cons before deciding to enter into this business model. First, let’s explore the benefits of franchising that the franchisor can enjoy.

1. Access to capital

One of the biggest barriers to expansion for manufacturing business is the money it costs to expand. And while there are several business loan options, they don’t always pan out. Franchising your business will take some time and money on your end, but it also has the potential to make you a lot of money in the form of franchise fees.

Expanding your business as a franchise allows you to expand with little debt. The business expands as capital becomes available from franchisees instead of taking on debt through loans. The franchisor also shares minimal risk with the franchisee because the franchisee puts their name on the deed for the physical location of the business and lowers the franchises overall liability.

2. Efficient growth

Opening the first unit of a business is costly and time consuming. Opening a second unit can be almost as difficult. When that burden is shared with another business owner, it makes the process more efficient and takes the onus off the initial business owner.

When trying to grow your manufacturing business, starting a franchise can make opening multiple locations a much simpler process.

3. Minimal employee supervision

One of the big stresses as a business owner is hiring and managing employees. As a franchisor, the only support that you have to provide to the franchisee is training and business knowledge. In general, the franchisor has no hand in the management, hiring, and firing of employees.

This minimal employee supervision allows the franchisor to focus on the growth of the business instead of day-to-day operations. Instead of worrying about whether an employee shows up for their shift or not, the franchisor is focused on the big picture for business success.

4. Increased brand awareness

One of the many benefits of franchising is increased brand awareness. The more locations the brand has, the more people who are aware of the brand. And the more these customers come to know and love the brand, the more profitable and successful the brand can be. This increased brand awareness of a multi-location franchise can be highly beneficial to the franchisor and their franchisees—a win-win.

5. Reduced risk 

One of the biggest benefits to the franchisor in a franchise agreement is the ability to expand without an increase in risk. Because the franchisee takes on the debt and liability of opening a unit under the name of the franchise, the franchisor gets all the benefit of an additional location without taking on the risk themselves.

Additionally, the franchisor is often further insulated because the franchise is incorporated as a new business entity, leaving the original business owned by the franchisor as a separate entity from the franchise. A franchise lawyer can help to set up the terms for this type of protection within the franchise agreement.

Connect with sparkle★minds  if you are interested in franchising your  business. Over 500 + clients of sparkle★minds  have franchised their  businesses and have achieved great business results, so why are you waiting? Get in touch with us!


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