Want to franchise your business in India? Have you wondered what it takes to franchising a business in India as a business owner? Or are you ready to start franchising? Many questions but the same answer – what should I look out for before franchising a business in India?
As we enter the new year, we have encountered many business owners considering expanding their business in India via franchising. The following questions will help you begin to analyse whether your business is an adequate match for a franchise or if you would make a good franchisor.
However, there is no perfect formula to determine these things. At the core of all these inquiries is that entering the franchisorship industry entails launching a whole new line of business.
To be a successful franchisor, it takes more than just being a great business owner of your current business. Nonetheless, it’s a solid beginning, and you may be prepared in no time at all with some extra deliberate work.
So taking it further, let us see some key elements you should know before giving a franchise of your business in India.
6 Key Elements That Franchisors Should Consider Before Franchising A Business in India
Here are 6 indicators which every franchisor should be aware of which are a clear indicator of whether your business is franchise-ready.
Indicator #1. Have I streamlined and structured my franchising business’s processes?
When you are a franchising business, one of the most important things that you sell to investors and subsequently offer to them is a polished system of operations. Your potential investors are interested in joining your brand (and are prepared to pay you royalty) because they want to take advantage of your knowledge, know-how, systems, and training.
In essence, you should be able to provide them with a “business in a box.” When compared to other entrepreneurs who start a new business and are responsible for learning all of the difficult lessons themselves, franchisees are in a class all their own.
Therefore, if you are contemplating franchising, you are most likely already possess one or more lucrative and well-managed company units. As a franchisor, it is your responsibility to condense your most successful business procedures and operational practices to development, manuals, and guidelines that franchisees can implement in a timely and efficient manner.
Suppose you want to establish a national brand. In that case, whatever processes you use need to be able to replicate themselves in a variety of market conditions with a wide range of franchise owners.
Indicator #2. Will the franchisee make money if they adopt my system?
An essential measure of a franchisor’s success is the level of profitability enjoyed by its franchisees. When franchised businesses make a profit, they’re happy with their investment, they show potential franchisees that they can succeed, they stick with the brand, they pay royalties well, and they follow the franchisor’s leadership.
Just because the parent company is doing well financially doesn’t imply your potential franchisees will be too. You may have saved money on the initial investment compared to other franchisees. In contrast to how you could have built up your business over time, they will put money into the whole system all at once.
Further, franchisees remit a brand fund fee and royalty on the highest-grossing portion of their revenue, which has not been paid by corporate units in the past. Even with these added expenses, franchisees should be able to turn a profit thanks to your robust operational procedures.
Indicator #3. Have I taken measures to safeguard my Intellectual property?
One of the main responsibilities of a franchisor is to issue licences for the use of their intellectual property, including trademarks. Having your trademark registered offers you the upper hand when it comes to using it in all states.
If you don’t have it, companies outside of your corporate divisions’ geographic area can legally utilise your trademark. Once you’ve registered your trademark, you may stop anyone from using it without your permission. Remember, this is important in this digital era.
You must be the first result that customers see when searching for the name of your company, rather than a competitor or competing system.
Indicator #4. What makes my franchise business model unique?
Businesses are competing for consumers’ attention in an overwhelming number of ways. Being different from competition is key to attracting and retaining customers for your brand. Customer recognition of your brand will increase if it is simple to do so.
As investors, prospective franchisees have a unique set of needs and priorities when it comes to allocating their capital. Franchises in the same investment class and businesses in the identical sector will be your main competitors.
Superior training, operational methods, manuals, reliable partners, creative use of technological advances, and efficient brand marketing are all ways in which a franchise can distinguish out from the competition.
High margins, recurring revenue, and diverse revenue streams are all desirable characteristics in a business plan. Additionally, the consumer factors must be considered. Having a distinct selling point for your brand gives potential franchisees confidence that their investment will be well-deserved.
Indicator #5. Can I plan to put investment into a franchising business?
It will cost money when you start your franchise. Be sure to factor in the following costs: trademark protection, new entity formation, certified statements of finances, legal fees for drafting the franchise agreement, brand standards manual development, state registration fees, and more.
To assist with the development of their franchise offering, some franchisors seek the services of franchise consultants. Investing in marketing materials, lead generation, and even broker contacts or sales personnel is necessary for franchise sales.
Also read: Cost to franchise your business in India.
The initial franchise fees are usually not a source of profit but a means to cover expenditures. The return on investment in franchising comes from royalties from successful franchisees, which are the main source of revenue and profit.
Indicator #6. Can I spend enough time to grow a franchising business?
Putting together a franchise agreement is a time-consuming process. Sparkleminds can assist franchisors in launching their franchise. This is possible by offering in as little as three months. However, successful completion of this process requires the owners to maintain focus, put in effort, and make decisions.
You are committing to a long-term partnership with your franchisees when you sign a franchise agreement. Even before the franchisee opens for business, the franchisor will usually give them several resources. This includes a training programme, advice on choosing a location and design, help with dealing with suppliers, a guide, and on-site launch assistance.
In the future, you and your team must be reachable for inquiries, continuing education, site visits, and conferences. To remain a brand leader and devote time to developing the greatest processes for franchisees, you need to invest.
To Conclude,
Franchising may be the best way for your business to expand if you’ve said “yes” to the majority of the questions. Don’t pass up the chance to grow your business. Create a steady stream of income, and connect with other like-minded individuals through franchising.
Connect with experts at Sparkleminds if you are ready to start franchising a business in India right away!
