Franchise Model in India – Heard this term many times and want to know how it works. Then you have reached the right spot. Here’s a complete guide which will take you through Franchise, Franchise Model and how it works in India.
Ready to get started? Read on.
Insights into How Franchise Model Works in India
How does one go about creating a franchise model that is genuinely unique? i.e., how to set up a business in India without much trouble.
Developing a profitable franchise model is no simple task, but it can pay off in huge dividends in terms of expanded business and higher profits.
The franchisor’s responsibilities in developing a successful franchise system include research and analysis, drafting a franchise agreement, formulating a marketing strategy, establishing a support infrastructure, and teaching and assisting franchisees.
The franchisor can develop a system that is simple to duplicate, profitable, and beneficial to brand awareness by adhering to these guidelines.
7 Key Components of Franchise Business Model
The franchise model contains essential components without which a business cannot succeed in the franchising industry. Let us look at how those components make up a successful franchise model in India.
1. Research & Analysis – Research and analysis are necessary before developing a franchise business model to establish whether or not the company is a good candidate for franchising. Finding potential buyers and planning for expansion requires studying the industry, the competition, and the intended clientele.
2. Franchise Agreement – The franchisor and franchisee enter into a formal contract described by the franchise agreement. This is in addition to any other monetary commitments, such as the franchise charge or royalties. Both the franchisee’s responsibilities and the franchisor’s duties are laid out in detail in the partnership agreement.
3. Promotional & Marketing Activities – Franchises can only thrive if they invest heavily in marketing and advertising. Creating a marketing plan to spread word about the company and entice new business owners to join the fold. Public relations, social media marketing, and traditional forms of advertising all need to be part of the marketing plan.
4. Franchise Training & Support – The franchisor must supply the franchisee with adequate training and ongoing support for the franchisee to be successful in operating the company.
5. Developing a successful franchise system – A well-thought-out franchise system from the ground up demands meticulous preparation and execution. The franchisor needs to create a model that can be applied by franchisees in a variety of settings. Creating SOPs, guidelines, and training tools that franchisees can follow is part of this process.
6. Financial Planning & Forecasting – Planning and forecasting finances are essential to running a profitable company. This requires formulating a comprehensive budget that accounts for the franchisee’s initial investment, ongoing costs, and possible earnings. The franchisee’s location, target audience, and level of competition are all factors that should be accounted for when making financial forecasts.
7. Growth & Expansion – Expansion and growth are the third and final pillars of a prosperous franchise business strategy. Part of this process is brainstorming ways to grow the business network and finding people interested in becoming franchisees.
Role of a Brand in the Franchise Model
Brand recognition is central to the franchise business model. Franchisors create brands, which consumers then purchase. The other entities pay for the right to offer these trademarked goods under the same name in a specific market.
Both the parties benefit from the established industry. In short, the investor profits from preexisting demand for the franchisor’s products, while the franchisor is able to extend the reach of its brand and revenue earning sources with minimal additional financial and non-financial investment.
Because the franchisor is promoting the franchise system as a whole and not just one location, the investor stands to gain as well.
Role of Franchisor-Franchisee – Their Relationship in success of Franchise Model
Respect, understanding, and support should be the cornerstones of the franchisor-franchisee relationship. Of course, no two partnerships are the same, just as no two people are the same.
While the nature of the franchisee’s relationship with the franchisor will vary from one company to the next, one constant remains: the franchisee/franchisor relationship is crucial.
Franchisor – The franchise is the entity that first created the business model, trademark, and operational procedures. When a company decides to franchise, they give new owners access to their tried-and-true business strategy, well-known trademark, well-established systems, and ongoing training and support.
Franchisee / Buyer – The Franchisee is the person or company that pays for the privilege of selling the aforementioned goods and services and employing the aforementioned tried-and-true business models. Although the franchisee is essentially purchasing an already-established company, they still need to put in significant effort to build brand loyalty in their market, and recruit top talent.
To understand the context of this, we will explain how to create a perfect Franchise Model in India.
Also Read: A guide to franchising in India, what to do and how to prepare your company for franchising in India.
Franchise Model Examples
- McDonald’s
- Subways
- KFC
Build a Perfect Franchise Model in 5 Easy Steps
Starting a brand isn’t rocket science, but it’s also not a walk in the park. As with any new venture, launching a franchise effectively requires careful planning, strategic thinking, and flawless execution. To sum up, before making any kind of commitment, there are a few things to think about.
Here are five broad recommendations for getting started in the right way.
Step #1: Are you prepared for this leap?
In India, the franchise strategy may not be the best option for some businesses. To make sure that your business is ready to make such a jump, you should first conduct preliminary research using a number of different approaches.
Before making a drastic change, it’s important to do some in-depth research on the market, weigh the pros and cons of this plan, and assess your financial standing.
Step #2: Understand the legalities of the business
There are a number of legal obstacles that franchise companies in India must overcome, such as registration and adherence to local laws. You can always hire professionals to assist, but it’s still a good idea to learn as much as possible about the legal paperwork process beforehand.
Step #3: Make the important decisions.
At this point in time, you will be presented with a number of important decisions. Think about what you hope to accomplish and what your preferences are as a franchise owner before committing to a particular franchise agreement.
Figure out where you want your business to grow. how much your share will be how you will get your business out there what kind of training you will give partners
Think about the big picture, the details, and everything else.
Step #4: It is time to register yourself as a Franchisor
Now that everything has been planned and done, we can take real steps to move forward. Talk to experts and write up the required paperwork.
Step #5: Get Key Players for your team
If you want to make something truly important, you need a strong, reliable group of people who all want the same thing. After you’ve signed up, it’s time to start looking for star players and building a strong team. Put the Board of Directors, Human Resources, and other important workers at the top of the list.
Of course, there are many more steps to starting a franchise business in India than just the ones listed. But these are the general rules to follow if you want to move in this way, so you can keep things quick, easy, and effective.
Must Read: Pros and cons of franchising, is it the right fit for your business?
Franchise Model in India FAQs
Q.1. What are the two primary types of franchise business models in India?
The Product Distribution Franchise Model and the Business Format Franchise Model are the two most common types of franchise models in use today.
Q.2. How does a franchise business operate in India?
A franchise business is easy to understand in terms of how it works. A franchisee buys the right to use the franchisor’s business’s trade secrets, processes, and trademarks, as well as to sell goods or provide services under the franchisor’s name.
Q.3. Why is franchising a better option to expand your business in India?
The business plan of franchising makes it possible for the brand to grow without these limits. The investor pays the brand license fees and ongoing royalty fees. The franchise business plan even makes it possible for the brand to go to places where it would have been hard to do so before.
Conclusion,
Sparkleminds is the place to visit if you want to know how a franchise is made or if your business or idea could be turned into a franchise. Also follow us on our social media platforms FaceBook, Instagram & Twitter.
