Phases of Franchising Your Business in India – Every Business Owner should know

Written by Sparkleminds

Are you interested in learning more about franchising and how to franchise your business in India in the right way? This guide will teach you all you need to know about franchising, from the definition of a franchise to the specific actions required to start a franchise of your business in India.

What does it mean to franchise your business in India? Franchises are a legal and business structure that can help you expand your business.

When you franchise your business in India, you provide other people with the legal right to run their own businesses under your name and with the benefit of your trademarks, business systems, and training.

Franchise owners, in return for your investment in them, will secure, open, and manage additional franchise locations in exchange for ongoing royalty payments and a cut of the system’s gross profits.

In order to legally sell franchises of your business, you will need to have the necessary franchise agreement, pre-sale disclosures, and operational standards. To sell franchises, you must first have a franchise agreement (the legal contract that establishes the franchise relationship) and a franchise disclosure document (the pre-sales disclosure document).

Phases of Franchising Your Business in India – A Complete Guide

In order to grow your business in India, franchising may be the best option. However, before making the leap into franchising, business owners should familiarize themselves with the several steps that must be taken.

If you’re a business owner in India, here are the steps you need to take to franchise your business in India.

Phase #1: Feasibility Analysis

To determine if your business idea is fit for franchising, you should do a full feasibility analysis before moving forward with franchising. Analyze the demand, competition, scalability, profitability, and reproducibility.

Phase #2: Develop a Business Model which is easily replicable

Create a complete and repeatable business model that franchisees can pick up and run with minimal training. Its company’s branding, marketing, and training initiatives should be documented just as thoroughly as its day-to-day procedures.

Phase #3: Prepare the Legal Framework

Seek legal guidance to learn about franchise laws and regulations in India. In accordance with Indian law, draught the Franchise Agreement, Disclosure Document, and Operations Manual.

Phase #4: Prepare criteria for Franchise Selection

Create a set of standards by which prospective franchisees must pass if you want them to join your organization. Make sure you identify the correct franchise partners by using exhaustive screening procedures like interviews, background checks, and financial analyses.

Phase #5: Prepare Comprehensive Training Programs for Franchisees

Franchisees and their employees will need to be thoroughly trained in your company strategy before they can do it justice. Provide continuing assistance in key areas including advertising, operations, and quality assurance to ensure the continued success of your franchisees.

Phase #6: Expansion Strategy

Make a comprehensive strategy for growing your franchise system throughout the Indian market. Market need, resources, and your capacity to successfully onboard and train new franchisees should all inform your decision-making when establishing a base of operations and expanding into new territories.

Phase #7: Implement a Robust Marketing Strategy

To increase brand recognition and foot traffic at franchise locations, you need to have a comprehensive marketing and branding strategy. Create brand-consistent marketing materials, guidelines, and campaigns that may be adapted for use in other locations.

Phase #8: Implement a system to monitor the franchises

Establish a method for keeping tabs on and rating franchisee performance. Establish key performance indicators (KPIs) and undertake frequent audits to check for brand consistency and quality.

Phase #9: Constant Innovation of Products and Services

Franchise systems should be reviewed and tweaked on a regular basis to account for feedback from franchisees, customers, and market changes. Maintain a competitive edge and adjust your business strategy to the ever-changing requirements of the Indian market.

Advantages & Disadvantages of Franchising Your Business in India

Pros Include:

  • The power to increase system sales by opening new locations that franchisees pay for, build, and run.
  • When you franchise, your franchisees will provide the cash and resources you need to grow. This is different from organic growth, which requires you to keep investing money and managing it with your own team.
  • You’ll also get royalties and other fees from franchisees. As your business grows, you can improve your supply chain and take advantage of economies of scale.

Cons Include:

  • You’ll have fewer controls over franchise locations, you’ll have to provide ongoing support to franchisees, and you’ll have to follow the law.
  • When you grow your business organically, you have direct control over everything. When you franchise, on the other hand, the success or failure of new locations will rest on how well your franchisees do.
  • You’ll also need to train and help those who partner and follow the laws and rules for franchises.

Steps to Franchise Your Business in India

In order to sell franchises, provide support to franchisees, and expand your business, you must take the necessary legal and business steps toward franchising. Your first order of business should be to have your franchise expert design a Franchise Disclosure Document that follows all applicable regulations.

If you want to sell franchises in a state that requires an FDD to be registered or filed, you’ll need to do the same thing.

Here are the crucial steps to franchise your business in India.

  • Find out if franchising is the right choice for your business..
  • Issue your franchise disclosure document
  • Make a plan for running your business.
  • Register your brands
  • Set up your franchising business.
  • Register and submit your FDD
  • Make a sales plan and budget for your business.

Cost of franchising your business in India

There is no set fee to franchise your business. Understanding the distinction between franchise development and sales is essential for a thorough cost analysis of the franchising business model.

Franchise Development Stage

Here, you’ll go through all the steps necessary to franchise your business. The steps from releasing your FDD to registering your FDD and developing your franchise sales strategy are all covered in this article as part of the franchise development stage. All the groundwork must be laid before franchise sales can even begin.

Franchise Sales Stage – How to Sell Franchise of Your Business

This is the point at which franchise sales can begin. Although this is not a one-and-done procedure, planning and budgeting your franchise sales efforts for the first 12 months as a franchisor is necessary. This includes recruiting suitable franchisees, selling franchises, and building your franchise system.

Now it’s time to get started with Franchising Your Business in India.

How to Start Franchising Your Business in India – Key Takeaways,

An excellent strategy to grow your business in India is through franchising. It enables you to make use of the assets, knowledge, and funding of regional business owners who are enthusiastic about starting and running a company using your brand name.

  • Evaluate your business to know if you are franchise ready.
  • Establish the franchise business model as per your requirements
  • Get compliant with the legal framework.
  • Identify untapped markets where you are looking to expand your business.
  • Prepare a criterion to screen your potential leads.
  • Get the FDD and necessary documents prepared.
  • Prepare a robust training and support system that you would render to your potential franchises.

Once you have completed these steps, it is now time to launch your franchise business in India.

Conclusion,

You’ve made a great start by reading through this article. Start putting together the ideal team to help support and guide you through franchising your business now that you have a firm grasp of franchising and the stages required.

Sparkleminds is committed to assisting businesses of all sizes in expanding through franchising, and we would appreciate the opportunity to discuss your company, your plans for expansion, and whether or not franchising is a good fit for you. Call us today to learn more about our franchise development services and how we can help you turn your business into a profitable franchise.

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Become a franchisor in 2023 – Definitions, advantages & disadvantages – A complete guide

Written by Sparkleminds

Want to become a franchisor?  Heard this term many times but wondering, how you can become one.  Here’s a complete guide that will give you a clear definition of a Franchisor, the pros and cons of becoming a franchisor, how to franchise your business in India today, and more about franchising in India.

Who is a Franchisor?

Franchises are agreements whereby one business grants another the right to use its trademark, business model, and other proprietary assets in order to offer its goods and services.

The original company or one that already exists will be the one selling the trademark. The local entrepreneur who invests in these rights is known as a “franchisee,” and the new enterprise is known as a “franchise.”

Understanding What it Means to Become a Franchisor in India

Typically, three payments are made to the franchisor: the initial franchise fee, an annual fee, and a cut of the branch’s revenues. In addition, it can include additional service fees.

There are benefits and drawbacks to being a franchisor, but overall, it is a viable business option, especially for large, established businesses. A franchisor-franchisee relationship is fundamentally that of an advisor and advisee.

Here’s the role of you as a franchisor:

  • The franchisor offers ongoing advice and assistance with basic business decisions including hiring and training employees, opening a storefront, promoting its wares, securing supplies, and so on.
  • The franchisor’s role as a guide does not end once the partnership has been established and mutual success has been achieved.
  • Some franchisors are more vigilant than others in monitoring their franchisees to ensure that they are upholding the standards, quality, and values of the parent company.

Benefits of Franchisor

Now let us understand what are the benefits of a Franchisor in India are.

1. Opportunities for Growth

Franchising is frequently used by multinational corporations to increase their presence in new markets throughout the world by tapping into the expertise of franchisees in those regions.

The franchisor company entrusts the franchisee with the obligation of regional or international expansion and the right to award additional franchises to other businesses.

In exchange for using the franchisor’s tried-and-true business strategy, market dominance, and brand name, the franchisee bears the cost of opening a location and pays royalties to the franchisor.

2. Increased Market Share

Franchising is a great strategy for a business to expand its presence into new markets while also gaining market share with little to no additional investment. Because franchisees are also business owners, they have a vested interest in the success of their locations and must bear the costs associated with running a business, including payroll.

Even if individual franchise locations generate less revenue than they would if they were part of a larger chain, lower operating costs can nevertheless make franchisees more profitable overall.

3. Scalability

Franchise agreements can be tailored for high-volume national expansion or low-volume regional expansion, depending on the company’s needs, resources, and production goals.

4. Additional Revenue Sources

Ongoing royalties paid by franchisees are an extra source of revenue for a franchisor. Depending on the franchise agreement, royalties might comprise a variety of payments beyond the initial starting fee and monthly charge based on a percentage of the franchisee’s gross sales.

Disadvantages of a Franchisor

Every business comes with its own benefits and risks.  Now that we have seen the benefits of becoming a franchisor in India, now it is time to understand the disadvantages.

1. Capital Investment

It takes a substantial time commitment and financial resources to launch a franchise. Developing the business, opening a flagship location, creating legal documents, developing marketing and packaging strategies, and finding and training franchisees are all essential expenses for every franchisor.

2. Risk of Failure

A franchisee may prove to be a bad fit for a number of reasons, such as being irresponsible, difficult to work with, or unable to successfully operate a firm, even if the franchisor has done its due diligence. There are additional possible scenarios in which the franchise loses money. There is still risk involved in investing in a franchise, even if the business model is tried and true.

3. Loss of control

At the outset, franchisees sign contracts promising to adhere to their franchisors’ guidelines regarding training, behavior, and other matters. However, this may not be the case once the novelty has worn off.

Disagreements are inevitable given that franchisees are people with their own views and temperaments; a franchisee could become stubborn or difficult, or they might not be able to implement changes as easily as the franchisor had intended.

4. Legal and Regulatory Costs Can Be Expensive

Legal action may be required if a franchisee refuses to cooperate or otherwise shows to be a bad option; this can be costly and detrimental to a franchisor’s reputation among other franchisees.

In addition, the Franchise Disclosure Document (FDD) and other regulatory documents necessitate the services of an attorney because of state and federal rules regulating franchisees.

Steps to franchise your business in India – Become a Franchisor in 6 easy steps

The best approach to expand your business across all of India is to franchise it. It’s also a fantastic opportunity to supplement your income. Offering a franchise involves entrusting a portion of your business to an unknown individual. That’s why it’s crucial to research the franchisee’s history.

Here are six easy steps to franchise your business in India.

1. Standardization – The term “standardization” refers to the practice of producing identical results consistently. This will ensure that customers at all of the franchise’s locations have the same consistent product flavor.

2. Ensuring a proper distribution network – Since the franchisor needs to ensure consistency across all outlets, it is important to have a proper distribution network, to ensure the same product/services across all outlets.

3. Have a proper support team – The prospective franchisee has to be assisted by a competent team. They will advise the prospective franchisee on the franchise’s history, past achievements, investment requirements, and potential returns.

4. Marketing Strategy – The franchisor should be actively engaged in online activities and have a strong social media presence. The franchisor must set up some funds for marketing the franchise system.

Key Takeaways – Role of a Franchisor in Franchising Business in India,

  • Franchises are agreements whereby one business grants another the right to use its trademark, business model, and other proprietary assets in order to offer its goods and services.
  • Because franchising allows corporations to leverage franchisees’ in-depth familiarity with local markets, it is frequently used by multinationals to increase their presence around the world.
  • A franchisor must allocate funds for research and development, a flagship location, legal document creation, marketing and packaging strategies, franchisee recruitment and training, and operational costs.
  • Franchises are subject to state and federal rules, which necessitate the use of an attorney to create the Franchise Disclosure Document (FDD) and other regulatory documents.
  • Franchisees are typically not protected against their franchisor’s bankruptcy by the terms of the franchise agreement.

Franchise Your Business FAQs

Q.1. How can I become a franchisor of my own business in India?

Once you have analyzed that your business is successful and are looking to expand it across the country, you can become a franchisor of your business with proper planning and strategy in place.

Q.2. Why would a business choose to franchise in India?

Most business owners choose to franchise because it provides rapid growth with less exposure to debt or the need to use equity financing. Since the franchisee is responsible for raising all startup funds for a location, franchising provides a means for businesses to expand without having to put up their own money.

Q.3. When should a business consider the franchising model in India?

Franchises typically only accept businesses that have been established for at least a year and a half. However, that figure may be higher or lower than stated, depending on the sector. In the first two years of operation, franchising can be helpful for some businesses.

Q.4. Is franchising good for small businesses in India?

Franchises have a higher success rate than other company models, but this does not necessarily translate to better profits. Of course, the higher success rate will cost you more in franchise fees. If you don’t have a lot of expertise in the business world, a franchise may be the best option for you.

To Conclude,

Your level of dedication to the franchising process should be the deciding factor in whether or not you take the plunge.

It would be irresponsible for privately held companies to consider not investigating franchising as a growth and expansion option. However, not every company can benefit from franchising as a means of growth. If you’re an entrepreneur thinking of testing out the franchise market, there are a few things you need to know first.

Get in touch with us at Sparkleminds to know how to franchise your business in India.  Our expertise in franchising has helped various businesses to grow domestically and globally.

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Why franchising is the ideal form of expansion – Know the expert’s opinion.

Written by Sparkleminds

Why Franchise your Business?

You might be aware of the term “Franchise” or “Franchising”. So ever wondered how to become a franchisor and expand your business across the world? Yes? then you would be glad to know, business owners tend to adopt a franchise model than starting company-owned outlets.

Hence, your business has to set a milestone and understand from where you could start expanding. Because when you decide to expand, it can cost you a lot and being a startup, it becomes hard. Thus, the franchising model comes into the picture. If you opt for franchising; your major part would be to design a franchising model for the business. Once the model is ready, you are good to start with the expansion of business in the desired demographics.

Sounds easy? But this takes a lot of research about the territory, market demands, cost calculations and more of brainstorming. Furthermore, the biggest task is to find the appropriate business seekers as a franchisee. Therefore, the team of Sparkleminds comes in picture. We not only help you in designing the franchise model but also help you choose the most suitable one.

Should I Franchise my Firm?

Pondering upon should I franchise my business is common among business owners, regardless of the age of the business. The best way to upgrade your knowledge on this is- reading on topics or a discussion with a professional in this field. Sparkleminds has over 2 decades of experience in this industry. We provide complete support to growing/established entrepreneurs to learn about how useful it is to expand via franchise.

Is it the Right Time to Franchise your Business?

An entrepreneur must understand the right time to franchise one’s business. It is always great to start looking at franchising your business. Start the process only when your products or services have been accepted by the public, the market.  Moreover, the target audience is well defined and generating revenue for at least a year. There are a few products and services which are hard to franchise, but with our expertise, they are also franchise-able.

Start Franchising

One of the biggest dreams of an entrepreneur is to establish his/her business in every city across the world. It takes time and effort to reach that stage, in the industry you serve. There are a few points that need to be kept in mind before you start franchising your business:

  • Do you have a Set Business Model?
  • Do you have you the investment and Documentation in place
  • Is your brand marketable and Ready to be Adopted?

Is Your Business Franchise Ready?

There are 10,000 + companies in India that have used a franchise model for them for expansion. There are also close to 5000+ companies which are going to join the bandwagon in the next 12-24 months with this, the market is at a pedestal to offer a variety of franchise opportunities to the entrepreneurs to start a business.

Franchising is the most preferred ways to expand business in their home country and countries across the globe. Business expansion via the franchise mode has proven to be successful and effective, for large companies as well. Big brands have believed franchising as a successful means to expand base be it a mid-size or a small company

So, now you know the potential of franchising and what it can do to help you expand your business. Let’s start with the evaluation check of your business. You could also take the franchise quiz at Sparkleminds to get a score of where your business stands currently and whether you are really ready to start franchising.

  • Requirements to start a franchise

There are a few criteria’s that need to be in place before one looks at franchising their business.

Model Development

  • The first part is to have demonstrable success in place. You will need to have a few outlets, at least a couple, that are already profitable and have been running successfully for at least 12 months. This creates the base for the franchisor to learn and adapt to the customer requirements. In case the franchisor wishes to have the first outlets through franchises, then they may need to invest additionally from their end in the first couple of franchises until they have cracked the success formula and have at least one year of profitability in place for every individual outlet that is operating.
  • Legal Identity – It means that if you are selling a product or a service it is required to have a trademark/ service mark for the same.
  • Business Prospective – The business venture should be set up on long term goals and should be in a position to sustain for the next decade or more. The more unique your business, the better it will be Franchisable.
  • Franchisee Guidance – The business model of the venture must be easily explainable or teachable to the franchisee. The franchisor should be well-versed with the intricacies of the business, and should be in a position to give all the required training to all its franchisee and educate them on running the business successfully. The, required skill-sets for the franchise to function effectively should be taught to every franchisee owner and the skills should not be limited to the original franchise owner.
  • Resource Provision – The Franchisor should be able to provide brief information about the business along with the costs that could be incurred while setting up the franchisee. It is a must for a franchisor to abide by the protocols of the franchise business. Once the business is performing good, the franchisor can collate the operations and prepare a manual for further use.
  • Team Managing – The franchisor should be able to hand costs of the new franchisee and also train & educate them on spending the right amount of money to pay salaries or recruitment of employees etc.

How to become a franchisor

The process of expanding business starts when you have successfully established your first outlet and have a huge database of happy and satisfied customers. This is when you should look for other locations, markets and (or) cities for expansion. While making the plan, conduct the research about your requirements and the optimum locations for reaching out to the right customers.

Since India is well-diversified there are high chances of the products or the service to be accepted in other cities and expanding the market base. There are a lot of ways to expand your business in India i.e. Joint Venture with existing businesses, own stores or franchising to interested franchisor.

The most preferred method of expansion is by reaching out to the franchise consultants. So, if you want to contact one of India’s most experienced consultants then Sparkleminds would be the ideal platform for you. The Franchise Consultants at Sparkleminds can help you understand the potential of your brand, and also provide valuable insights on how to franchise your business and make the franchising process easy for you. We have been in the industry for over 20+ years and have worked with a plethora of brands. At Sparkleminds we have understood that every brand is unique and need a customized franchise strategy, support for the same.

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