Franchising has really taken off as a go-to strategy for businesses looking to expand globally. If you’re an entrepreneur or a business aiming for quick growth, the franchise model is a great way to expand your operations with less risk. India is really taking off as a great place for new businesses, and a lot of aspiring entrepreneurs are looking into the idea of creating a franchise model. Nonetheless, it’s essential to comprehend the procedures and expenses related to setting up and starting a profitable franchise in India. Everything from the preliminary planning phases to the whole cost breakdown will be covered in this blog post about what it takes to build a franchise model in India.
What it takes For Business Owners To Build A Strong & Successful Franchise Model in India
Building a franchise model in India can be a smart move to grow your business while keeping risks and operational costs in check. Launching a franchise network takes time, money, and paperwork.
Having a solid business plan, a good support system, and effective marketing strategies can really open up amazing growth opportunities in India’s varied and dynamic market when it comes to franchising.
Here’s a few points to keep in mind to build a strong and long-term franchise model.
1. See how your company might flourish running as a franchise..
Before diving into franchising, take a moment to think about whether your business is ready for that step. Spend some time considering these topics.
Is there a track record of success for your business model?
Hey, is your brand getting the recognition and appreciation it deserves out there in the market?
Can your operations be standardised and replicated effortlessly?
Do your products, services, or ideas stand out?
If you can say “yes” to these demands, it looks like your business might be all set for franchising.
2. Let us formulate a strategy for promoting your franchise business.
Build your franchise model with a solid franchise business plan.. This plan is going to cover:
Let’s talk about your business model, how you position yourself in the market, and who your target customers are.
Franchise Concept: Specify the kind of franchise (e.g., area development, single-unit, multi-unit, etc.) and the rights that the franchisee will own.
Include in your financial projections the expected income of the franchisor and the franchisee as well as their expected royalties, operational expenses, and franchise fees.
Describe your marketing strategy and how you plan to support and advertise the franchise network.
3. Put together some Standard Operating Procedures (SOPs).
The secret to every franchise’s success is consistency. To make sure all outlets run smoothly and consistently, create clear SOPs for every part of your business, like:
Let’s talk about how we handle operations and what our daily procedures look like.
Orienting and training individuals
Standards for marketing and customer support
Quality control steps
Organising the distribution chain and tracking inventories
This makes it super easy for franchisees to copy the business model and keeps the customer experience consistent.
4. Create legal documents
When two parties enter into a franchise agreement, it’s called a franchisor-franchisee agreement. Comprehensive legal documentation is necessary to safeguard your interests and direct the two parties’ interaction.
Here are the key documents:
The FDD has all the important info about the franchise, including fees, financial performance, what franchisees are responsible for, and their legal rights.
The franchising agreement lists out various obligations for both parties.
In India, these documents need to follow laws such as the Indian Contract Act, Consumer Protection Act, and Competition Act. It’s a good idea to bring on an experienced franchise lawyers to help you stay compliant.
5. Create a system to provide assistance to your franchise.
Particularly in the beginning, franchisees will require constant assistance from the franchisor. It is important to make a support system that includes all of the following::
Let’s kick things off with some thorough training on how the business runs, how to handle customer service, and some smart marketing strategies.
Promotion of the brand should be the focus of a comprehensive marketing plan that covers the entire country or a specific region.
Site selection, lease negotiations, inventory purchase, and other operational tasks can be assisted with.
Help franchisees enhance their operations through continuous training in the form of workshops, seminars, and evaluations held on a regular basis.
6. Let’s put together a plan for marketing your franchise.
After you’ve got the franchise model all set up, the next step is to draw in some potential franchisees. So, when you’re thinking about your franchise marketing strategy, you really want to consider including:
Creating a customized website for franchises’ assistance.
Advertising online and promoting on social media
Attending business expos and franchise exhibitions
Reaching out directly via emails and newsletters
Providing franchise incentives, such early sign-up reductions on franchise costs
Now let us take a closer look at the cost to build it.
Cost Of Preparing A Franchise Model in India – A Handybook For Every Franchisor
Creating a franchise model in India takes a good amount of investment. The cost really depends on how complex your business is, the industry you’re in, and the kind of support you plan to offer.
Here’s a quick look at the main costs you’ll come across when setting up a franchise business in India:
Legal Fees can vary quite a bit. For the Franchising Disclosure Document (FDD) as well as The franchise Agreement, you’re looking at around ₹2,00,000 to ₹5,00,000. The final cost really depends on the the attorney’s experience and how complex the contract is.
When it comes to developing a franchise business plan, hiring a consultant can set you back anywhere from ₹50,000 to ₹3,00,000.
SOPs, or standard operating procedures: Creating SOP manuals for different business operations can run you anywhere from ₹1,00,000 to ₹2,00,000. The costs might go up based on how complicated the operations are.
Franchise Marketing When it comes to web page development and design for a franchise, you might be looking at a cost ranging from ₹1,00,000 to ₹2,50,000.
Marketing and Promotion: The initial cost of franchise marketing, including internet advertisements and franchise expos, can range from ₹50,000 to ₹5,00,000.
Training and support setup: Creating a solid training course and assistance system can cost anywhere from ₹1,00,000 to ₹5,00,000. We might be looking at putting together some training modules, bringing on board some trainers, and building a support team.
One-Time Franchise Fees: When you’re a franchisor, it’s important to figure out the right franchise fee for potential franchisees. The cost of a franchise in India can vary greatly depending on factors such as the value of the brand, industry, and location, but can typically go up to ₹20,00,000 or even more.
Continued Royalties: Typically, franchisees give the franchisor recurring royalties, which range from 5% to 10% of their monthly gross sales.
Please note, the above mentioned amounts are just approximate and could vary from company to company. Depending on multiple circumstances, the cost of preparing a franchise model in India might vary anywhere from ₹5,00,000 to ₹20,00,000 or even more.
It might look like a big investment at first, but when you think about it, the long-term perks of expanding your business nationwide really make it worth it compared to those initial setup costs. Make sure you seek advice from professionals in financial planning, legal matters, and franchising in order to create a strong franchise network that generates steady growth.
In short, these 6 steps can help you build a strong franchise model of your business using the right cost analysis, anywhere in India. Reach out to Sparkleminds experts to help you start right away!
