How to Start a Franchise Business in India (Step-by-Step Guide)

Entrepreneurship remains a dream that comes alive only for a few, but the traditional means of building a business from scratch are daunting and perilous. To overcome this gap, franchising is stepping forward to provide a feasible option that allows the freedom of self-employment to be combined with the safety of a successful business model. The franchise business is growing by leaps and bounds in India, where it is expected to reach a value of $140 billion by 2028. The growth is driven by a rapidly growing middle class, rising consumer demand for quality products and services, and a friendly environment for new businesses.

No wonder an increasing number of individuals are learning how to start a franchise business in India to reap the benefits of this booming marketplace. This guide will walk you through everything you need to know, from discovering the basics to a step-by-step guide on how to start a franchise business in India, so that you’re correctly set for success.

What is a Franchise Business?

A franchise company is not a simple expansion of a business; it’s a proven model of partnership. Here, a franchisor (owner of the brand) allows a franchisee (individual independent business operator) to operate under its name, trademarks, and system of operation in return for an up-front payment and ongoing royalties.

It is this collaboration that allows business owners to enter into business ownership with the backing of a proven brand name, and franchisors expand their reach without owning and operating every outlet in the traditional way. It’s a win–win setup based on mutual prosperity.

To get an idea of how a franchise business works, let’s look at the most significant factors:

The Franchisor

The intellectual property, brand, and operating know-how are owned by the franchisor. They are responsible for:

• Provide an existing business model
• Provide training and support
• Follow brand guidelines and consistency

The Franchisee

The franchisee is the one who holds the business and puts the money into it. Their tasks include:

• Make payments of royalties and franchise fees
• Adhere to the standards and rules set
• Run day-to-day operations to increase the local market

The Franchise Agreement

At the core is a legally binding franchise agreement that specifies:

• Responsibilities and rights of the two parties
• Geographic restrictions and rights
• Financial performance and obligations

Franchising is a blend of autonomy and support. It is not the same as beginning a business from scratch because franchisees enjoy instant brand recognition, marketing clout, and operating assistance, and franchisors benefit from faster expansion with less risk.

Franchising vs. Starting Your Own Business

Below is a table summarizing the primary distinctions between the two business models:

Feature	Starting Your Own Business	Franchising
Business Model	Develop a new concept, brand, and operational system from scratch.	Adopt a pre-existing, proven business model.
Brand Recognition	Build your brand from the ground up, which is time-consuming and costly.	Benefit from an established, well-known brand and built-in customer trust.
Creative Control	Complete freedom to innovate, make all decisions, and adapt as you see fit.	Limited creative control; you must adhere to the franchisor’s strict guidelines.
Risk of Failure	High risk; statistics show that many new businesses fail within the first few years.	Lower risk; you’re using a successful, tested system, and support is provided.
Financials	You keep all profits, but must cover all initial and ongoing costs yourself. No royalties.	Pay an initial franchise fee and ongoing royalties and advertising fees to the franchisor.
Support & Training	You are on your own; all expertise, training, and support must be sourced and paid for independently.	The franchisor provides comprehensive training, operational manuals, and ongoing support.
Funding	It may be difficult to secure loans due to the unproven nature of the business.	Banks and lenders are often more willing to finance a franchise due to its proven track record.
Supply Chain	Must build relationships with suppliers and may not have buying power.	Benefit from the franchisor’s collective buying power, leading to lower costs for supplies.

Key Franchise Business Characteristics

• Known Brand and Reputation: The franchise owner receives from the franchise provider’s established brand recognition, client loyalty, and market trust.
• Checked Business Model: The franchisor supplies a detailed business plan that includes the standardized operations, training, and marketing strategies.
• Continuous Support: Franchisors offer constant support in marketing, supply chain management, and fault-finding in operations.
• Standardization: The franchised stores must maintain the same standards with regard to product quality, service, and brand image so as to maintain the franchisor’s image.

Types of Franchise Businesses in India

The Indian franchise market is very diverse, with enterprises cutting across large sectors. Some of the most prevalent types of franchises that you can spot are:

1. Food & Beverage (F&B)

It is one of the most seen sectors, with domestic and international brands thriving. Domino’s, KFC, McDonald’s, and domestic players like Café Coffee Day and Amul are a few examples. A sector like this has high consumer demand and an eating-out culture. The rise of cloud kitchens and delivery-centric models further fuels this growth, making it a lucrative sector for franchise investments.

2. EdTech & Education

India’s EdTech industry is experiencing a remarkable transformation. Valued at $2.8 billion in 2024, it’s projected to soar to $33.2 billion by 2033, reflecting a robust CAGR of 28.7%. Segments such as preschool are dominated by franchises such as Kidzee and EuroKids, whereas EdTech companies such as BYJU’s are expanding their physical learning centers. Franchise models in this sector, encompassing both B2B (schools, teachers) and B2C (parents, students) segments, are expanding rapidly, offering scalable opportunities for investors.

3. Fitness & Health

The fitness and wellness industry in India is on an upward trajectory, with projections indicating the market will more than double by 2030. Growing health awareness has fuelled fitness franchise growth. Corporations such as VLCC, Anytime Fitness, and Talwalkars supply tested and proven models for gyms, wellness centers, and clinics. Franchise opportunities in this sector, including gyms, wellness centers, and clinics, offer promising returns for entrepreneurs.

4.Retail & Fashion

India’s retail sector is poised for significant expansion, with estimates suggesting it could reach $1.3 trillion by 2025 and grow to $2 trillion by 2032. Retail, fashion, and specialty retail fall in this category. Reliance Trends, FabIndia, and others give franchisees a chance to leverage a developed retail network.

5. Beauty & Wellness

The beauty and wellness industry in India is experiencing robust growth, with projections indicating the market will reach over $20 billion by 2025. The beauty segment is booming, and Lakmé Salon and Naturals are some of the popular franchises that can offer a safe entry for entrepreneurs with well-developed training systems and brand recognition.

Benefits of Starting a Franchise Business

On the basis of how one opens a franchise business in India, there are certain salient advantages it possesses that distinguish it from a typical startup.

• Lower Risk of Failure: A franchise business is founded on an already proven and refined business model. This significantly lowers the risk of failure compared to launching an independent business venture from scratch.
• Trusted Brand Name: You don’t have to spend years and dollars building a brand name. The franchise name is already recognized and trusted by consumers, which translates to a customer base from day one.
• Extensive Support System: A franchisor offers an extensive support system, including training, site selection support, marketing assistance, and operating instructions. This babysitting is invaluable for new businesspeople.
• Less Complex Access to Capital: Banks and financial institutions are generally more inclined to lend for a franchise because it is seen as a less risky, stable investment. They are at ease with an established business model and brand.
• Economies of Scale: As a franchisee, you benefit from the franchisor’s aggregate purchasing power. Which means less for raw materials, supplies, and equipment, leaving your margins larger.
• Expertise and Training: You are given access to the franchisor’s experience and receive complete training, so you do not require prior experience in the specific industry to succeed.

Step-by-Step Guide: How to Start a Franchise Business in India

Franchise business in India is the finest way to be an entrepreneur without developing a brand from scratch. Provided you conduct research and plan well, you can acquire access to a proven system, leverage the prestige of a brand, and enjoy constant support from a franchisor. There are no guarantees for success, though it requires proper planning and implementation. Following is a step-by-step guide to help you start a franchise business in India:

1. Research the Market and Industry Trends

Before committing to any franchise, understand the market you’ll be entering. This includes:

• Demand Analysis: Is there real demand for the product or service in your chosen location? For instance, quick-service restaurants are booming in metro cities, while education and coaching franchises thrive in tier-2 towns.
• Industry Expansion: Study industries like food & beverages, retail, health & wellness, or education. These are a few of India’s most rapidly expanding franchise industries.
• Check for Competition: Who are your key local and national competitors? How competitive is the market?

This research phase prevents you from making costly mistakes and choosing a franchise with long-term potential.

2. Choose Your Industry and Niche

Upon doing market research, focus on narrowing down your options. Ask yourself:

• Do I want a low-investment business in India, like a food cart or kiosk, or a high-capital business, like a retail chain or hotel?
• Which industries align with my passion and experience? For example, someone with health experience may prefer a diagnostic center or wellness franchise.
• How much risk am I willing to take with my money?

Some would like zero-investment food franchises in India, where the majority of the setup is taken care of by the franchisor, and some would like high-margin retail or upscale service brands. Clarity here makes you focus on the proper subset of opportunities.

3. Shortlist Potential Franchise Brands

Based on your chosen industry, shortlist the franchisors. Compare:

• Brand Reputation: Is the brand familiar and valued? Consider user reviews and media coverage.
• Rate of Success of the Franchise: How well are the current franchisees? Are most businesses able to become profitable in a short time period?
• Market Presence: Is the brand growing aggressively? Are they choosy about partners to whom they grant franchises?

For instance, if your interest is in food, compare branded players such as Domino’s, Subway, or local chains. Each has a different cost, expectation, and support system.

4. Know Franchise Requirements

Every franchisor has minimum prerequisites. A few of the standard prerequisites are:

• Financial Requirements: Investment can range from a few lakhs to a few crores, depending on the brand. Royalties in the form of recurring payments are usually a percentage of sales.
• Location Requirements: Brands require good mall locations or high footfall areas, while some are open to flexibility.
• Experience Requirements: Franchisors want the franchisee to have prior business exposure or sector exposure.

It’s essential to know both the initial and ongoing costs beforehand, such as setup, staff, marketing, and royalties.

5. Read the Franchise Agreement

The franchise agreement is enforceable in a court of law, so don’t rush through it. Have a franchising lawyer read it over with you. Some points to consider are:

• Termination Clauses: In which scenarios may the contract possibly be terminated?
• Territorial Rights: Do you want properties with special privileges in your location, or maybe the franchisor is allowed to set up another branch nearby?
• Support Offered: What stage of training, advertising, and administration is the franchisor obligated to provide?
• Renewal Terms: What is the duration of the agreement, and what are the conditions after it expires?

This stage helps you to be aware of your rights and, at the same time, protect yourself from unexpected hazards.

6. Register Your Business Legally

After signing the agreement, register your franchise as a legal entity. In India, the most common structures are:

• Private Limited Company: The best option for both scalability and reputation.
• Limited Liability Partnership (LLP): Limited Liability Partnership Gives you the personal asset protection while providing you the flexibility.

Besides that, you will require these simply legal documents as well:

• GST registration for tax compliance
• Trade license issued by your municipal corporation
• FSSAI license for food-related fields
• Shops and Establishment registration for physical outlets

This process provides your company with a legal foundation and earns customer and partner trust.

7. Secure Funding

Franchises can be investment-intensive. If you don’t have the full investment, consider:

• Loan from Banks: SBI and HDFC, among several Indian banks, have dedicated franchise financing schemes.
• NBFCs or Investors: Secondary options for entrepreneurs.
• Government Schemes: Consider options like MUDRA loans for small businesses.

You could create an action plan indicating the expected sales, cost analysis, and strategies for the repayment of the loan. Not only does it make funding possible, but it also guides your operations.

8. Establish Operations

Here, your franchise is born. Work entails:

• Site Selection: Choose a site with good traffic and visibility. If the franchise is service-oriented, choose a site easily accessible to your target group.
• Store Design and Installation: Follow the franchisor’s interior design standards, equipment, and signage.
• Hiring Personnel: Employ and train staff as per the franchisor’s training manual. Most franchisors offer direct training support.
• Vendor Coordination: A few franchisors supply you directly with materials; others may require that you buy through approved vendors.

Setup is all about brand consistency and alignment, which are necessary for trust from customers.

9. Roll-Out Marketing and Promotion

Though the franchisor will provide national-level marketing campaigns, you must perform local-level marketing. Methods are:

• Social media advertising in your locality or city
• Local influencer or community group partnerships
• Flyers, banners, and local press advertising
• Pre-opening activities to generate buzz before opening

Most franchisors provide marketing toolkits and support to aid you in getting off to a good start.

10. Monitor Performance and Expand

Opening is only the beginning. Real success comes through constant monitoring and fine-tuning. Keep an eye on:

• Trends in Sales: Plot actual against projected.
• Feedback From the Customer: Use surveys, reviews, and direct feedback to improve.
• Operational Efficiency: Minimize costs without compromising on quality.

With increasing business, you can even increase by having multiple outlets. Most of India’s top franchisees started with a single outlet before growing across cities.

Challenges in Running a Franchise Business

Although franchising has many advantages, it has its own problems. It’s good to understand them for a realistic approach towards how to start a franchise business in India. They are as follows:

• Lack of Control: As a franchisee, you are obligated to adhere to the franchisor’s rules and operation guidelines, which will limit your ability to be creative or make any decisions independently. For example, you would not be in a position to introduce new products or change prices without approval.
• Continuing Royalty Charges: In addition to the initial fee, you also have to pay a fraction of your revenue in the form of continuing royalties to the franchisor. This eats into your profit margins, especially in the initial years of the business.
• Depending on the Reputation of the Franchisor: The success of your business is based on the reputation of the franchisor. When there is negative PR for the brand, your company may suffer directly, even if it has nothing to do with your shop.
• Lower Profitability in Low-Cost Models: While the majority of low-investment business models, like certain zero-investment food franchises in India, seem appealing, they will have lower profit margins, and it might be hard to achieve substantial financial returns within a short period of time.
• Territorial Restrictions: The contract for the franchise may specify a restricted territory, which may prevent you from expanding or opening a new store in a high-demand location close to your initial location.

Tips for Success in Franchise Business

To be successful as a franchisee, being compliant with the rules is not enough; you must be proactive as well. Some of the tips are as follows:

Follow the System Faithfully

The system, which has been designed by the franchisor, functions. Avoid tempting oneself to make illegal changes. Adhering to the established operational and marketing processes is one determinant of success for a franchisee.

Build a Strong Local Network

Even though the brand is national, your customers are local. Network heavily within your local area, visit local events, and build acquaintances with other business owners to develop local traffic and word-of-mouth marketing.

Put Customer Service First

Even if the brand provides the product, your service does the rest. Excellent customer service develops loyalty and good reviews, which are key to long-term success for your outlet.

Manage Your Funds with Care

Keep a close eye on your cash flow, expenses, and profits. Understanding your finances is of the utmost importance in order to make the proper decisions and plan for future growth.

Embrace Ongoing Learning

The franchisor trains you, yet the business environment continues changing. Learn new market trends, new technologies, and business practices to be competitive and scalable.

Popular Franchise Business Examples in India

When you are planning to initiate a franchise business in India, it serves the purpose to observe examples that are already established and successful. Examples of successful Indian franchisees can be found in diverse sectors such as Food & Beverage (Domino’s, McDonald’s, Amul), Retail (FirstCry, Jockey, Lenskart), Education (Kidzee, EuroKids), Healthcare & Wellness (VLCC, Dr Lal PathLabs), and Services (DTDC, TumbleDry). 

These best-selling brands have high brand recognition and loyal customers, business models that can easily be converted to success for new franchisees. For more detailed information, check the various Best Franchises in India pages. Apart from this, there are options for every budget and interest, from a tiny Indian franchise business to a massive investment.

Conclusion

Franchising in India is a great way to be an entrepreneur with a lower risk profile. It means that you are going to start a business in a more organized way, which helps you to use a brand that is already known, a business model that has been tested, and a support system that is reliable. In a calm and detailed way, you can use the step-by-step guide to start a franchise business in India and also avoid the common mistakes that people make. 

The most important thing is to do thorough research, select a brand that suits you, and then, with determination and customer focus, bring your plan to life. If you are well-prepared, your franchise business can give you a good return and be very satisfying.

FAQs

What amount of capital is required to begin a franchise in India?

The initial investment of a franchise in India is relatively diverse, ranging from below ₹1 lakh for low-investment businesses like courier services to over ₹5 crore for large international brands. This total investment entails the opening franchise fee, operational costs, and location, equipment, and inventory costs.

What franchise is suitable for beginners?

The most profitable Indian franchises for a start-up are typically in the food and beverages, education, or home service sectors, with low to medium investment and great franchisor support. These markets have a well-established business model and great consumer demand, hence reducing risk and learning curve.

What is the most profitable franchise in India?

While profitability varies, one of the most profitable franchises in India has been quoted as Domino’s Pizza due to its strong brand name, efficient supply chain, and high customer demand. Also, KFC, McDonald’s, as well as the retail and healthcare industries’ franchises like Dr Lal PathLabs and FirstCry, are profitable.

How to start your own franchise in India?

To start a franchise in India, first conduct market research and prepare for the initial investment finances. Second, you must register your firm legally and inspect the franchise agreement prior to opening your outlet, hiring employees, and launching your operations with ongoing support from the franchisor.

What is the cheapest franchise in India?

The cheapest franchises in India tend to be low-cost businesses in business sectors like courier services, laundry, and food kiosks. Franchises like a DTDC Courier business or an Amul Ice Cream Parlor have minimal start-up capital involved, hence offering viable choices for new entrepreneurs.