Opening a franchisee in India
The initial step in initiating in India a franchise begins with deciding on the city to be launched. It is recommended to start with big city locations such as Mumbai, Chennai, Bangalore, New Delhi and Kerala.
These cities infrastructure is better and the dispensable income of the clients also is at higher levels. The drawback in these cities in opening a franchise is that the markets are already saturated and the payment is immensely bigger than any second-tier city.
Starting in India a franchise business has been lucrative for investors in the past decade.
Steps to be followed to open a franchise
The entrepreneurs must possess a clear idea of the operations to start. Referring to open a franchise in India, the best options worth considering are restaurants, consumer goods outlets, after sales computer services, and printing and documentation services.
Considering a niche implies the owners should have enough experience. They can hire experienced managers or employees. However, it is also suggested to go for a franchise having established names so that the entrepreneur has adequate financial resources.
Formalities to be completed
Opening in India a franchise means there is a need to register with the franchise provider. After this initial agreement, registering with the ‘Ministry of Corporate Affairs’ is mandatory. If the franchise is not in India, they should have international brokers in contact and seek assistance from their brokers regarding the paperwork and know the details of the franchise type and size.
There is a need for the franchise provider to know about the licensing, ownership, and registration. However, starting in India a franchise for an international businessman means it will involve no operations. There will be no operations involvement if the international businessmen do not visit regularly or are not ready to stay here.
Franchisees are many and you can find one suitable for your budget. Decide the industry you wish to operate. Choose the industry that you are knowledgeable or have a few years of experience. Once you find any franchise opportunity, first get a free consultation. Only if you are convinced, go through the next process.
Here are a few vital points to be considered by every franchisee prior to signing a franchise agreement.
Brand Credibility – A credible brand is the one that is around for a period of at least five or more years. Find out the time how long it is into franchising. If it is another company’s subsidiary, research well to know the parent company.
Financial Stability – Go through the latest audited financial statements. It will disclose the financial stability exactly.
Core team – Understand their key management team, their credibility with customers and franchisees and their stand with the local Chamber of Commerce.
Future plans – Comprehend their further development plans, diversification, expansion, and its impact on the business dealings.
Demographic Analysis – There is a need to have a demographic analysis for the coming five years. This analysis is a data projection that you should have in detail as per income, age, and occupation.
Competitive Edge – Assess the market demands, evaluate the USP, analyze the potential of the product and understand its growth. Evaluate the local and federal regulations, standards, trademark, product warranties or copyright.
What you sell – The most important is product orientation in choosing a franchise. You are the investor and so you must know the service type or the product you will be selling. Get to understand if the service or product is being bought by you based on its demand in your territory or area or you are buying it on its merits.
Money matters -You have the right to know the money matters that involve franchise fees, yearly payment, payment related to the sales and the fees paid by the franchisor to you for providing continuous services to the clients, and royalty. Will the franchisor maintain provincial and federal registration?
Existing feedback of Franchisees – The existing franchisees will offer a real picture. You may get to know if there is any hidden cost involved; any quality vs price ratio, product quality and consistency of the delivery by the franchisor, and get to know if their franchise is truly profitable as anticipated.
Merchandise Sourcing- Get to know if source merchandise is mandatory from the supplier or franchisor. Also, understand the minimum merchandise to buy and the dictum for interrupted supplies.
Legal and contractual issues – Assess the franchisor’s legal track record. Check their permits or license, existing contracts; also verify their restrictions on staffing, selling, supply and pricing arrangements.
Dispute Handling – Ask the franchisees how it will deal with disputes. Are they responsive to the franchisee’s queries and offer an amicable approach?
Territory Exclusivity- A very crucial role is the location for any service or product oriented business. A location suitable for business should also be acceptable to the franchisor and get to understand if the franchisor allows opening other franchisees in the same vicinity. Also, ask them about your sales territory expansion or contraction possibility?
Franchise Contract- This is very important and so pay proper attention before signing on the dotted line. Take some time to read and re-read the franchise contract. Find out if the contract will protect you and also the franchisor. The obligation, rights, size/type of the financial and operation terms, should be stated clearly.
Site selection support- It is very important to know the support you will receive from the franchisor. Find the details about the assistance to be received from the parent company in site selection, store layout, and lease negotiations.
Sales Target- Find the sales target and also the practicality. It is important to know so that you represent the same to your franchisor.
Skill support- Understand if the franchisor will provide any skilled staff as a support to your starting business. Get to know how the pieces of trainings will be conducted or given.
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