India is amongst the easiest countries in the world to start franchising your business or to buy a franchise business. Franchise Registration in India is simple as you could start franchising by a simple proprietorship firm which can be started within 3 working days. If you are looking at a partnership firm, you could finalize a partnership deed and apply for a PAN number from the income tax office, and get started in a couple of days. Hence you could buy a franchise or start your franchise company within 7 days in India. Does it get easier anywhere else?
Existing business owners need not go in for additional formalities to get their franchise registration in India done. They can start franchising from the existing firm. However, they will need to take a strategic decision, as franchising could bring in its own complications and liabilities and you may want to delink the franchise business with your ongoing business and go in for a new company altogether. You could take the franchise quiz linked above to get a score on how ready you are to start franchising your business.
There are certain state policies also which may be applicable to certain businesses. You may want to target specific cities for franchise expansion. Generally, your franchise consultant will be able to guide you on this and recommend a few test cities. Understanding the limitations, your target customer profile, and easy market acceptability are the first few factors that come to play while choosing your initial locations. Building an elaborate franchise marketing plan and allocating the budget for this activity has to be coupled with the franchise registration in India activity hand in hand.
Ministry of Corporate Affairs is the government body for businesses. Hence, the business needs to be registered under MCA before franchising. For Pvt Limited and Public Limited companies, they will have to follow the regulations set for them.
If the franchisor is from outside India, they can get in touch with international franchise consultants. We at Sparkleminds have helped several international companies to register themselves in India. Registering an International Franchise in India, especially with the restrictions on foreign currency transfers and repatriation challenges could be very daunting. Having an experienced franchise consultancy firm that could help you with all the Licensing, registrations, agreements, etc is very important.
The franchisor should have knowledge about regional tax policies. Also, if the franchisee is the shareholding company they need to comply with the regulations. Professional accountants will be able to assist the franchisor on this subject. Managing Currency risk is another important area as the initial investments will be a foreign currency but the earnings will be local currency. Certain protection is essential for managing currency risks. International insurers provide policies that can minimize cross-border risks. Your International Franchise Consultancy will be able to help you with all of the above.
There are several laws guiding the franchising legal framework in India. This includes the Indian Contracts Act 1872, Transfer of Property Act 1882, Foreign Exchange Management Act 1999, Etc. There are 15 other acts that govern businesses in India and you may want to be aware of all of them while you go about your Franchise Registration in India.