How to Start a Franchisee Business
A franchisee business is a type of business in which the owner, known as a franchisee, has the right to use the name and business model of a larger company, known as the franchisor.
In exchange for this right, the franchisee usually pays the franchisor a fee, as well as a percentage of the business’s sales.
The franchisor typically provides the franchisee with training, support, and access to its business systems and processes.
This allows the franchisee to start and operate their own business using the established brand and proven business model of the franchisor.
Franchising is a popular business model adopted by many entrepreneurs as it reduces the risk of failure associated with new business ventures.
India has become a major hub for franchise business opportunities due to its growing economy and population.
Steps to start a franchisee business in India
These are the steps usually required to start as a franchisee –
Research Potential Franchisor Options: Before you make any decisions, you should research potential franchisors to determine which franchise is right for you.
Get to know the franchisor and what type of business you will be operating, such as the franchise fee, royalties, and all other associated costs.
Assess Your Financial Situation: A franchise requires a significant financial investment.
Estimate the amount of money you will need to get started and make sure you have the necessary resources to do so.
Consider The Location: Location is paramount to the success of a business, especially for a franchise.
Analyze where you want to set up your franchise and make sure that it is an area that will attract customers.
Look Into Legal Requirements: Before you begin operations, you must comply with specific legal requirements.
Obtain the necessary permits and licenses from local, state, and/or federal government agencies.
Be Prepared for Training & Support: Find out what kind of training and support the franchisor offers to their franchisees.
Make sure you are familiar with the franchisor’s operations so that you can run the business successfully.
Finalize Your Financing Options: Once you have determined how much money you need to get started, decide how you plan to finance the venture.
Consider traditional loans, personal savings, and/or investor funding.
Start Your Franchise Business: After completing all of the above steps, you are ready to get your franchise up and running.
Follow the franchisor’s operational procedures and begin offering your services.
Common Steps to Register as a Franchisee
Companies have different requirements from a franchisee. But usually the process to become a franchisee follows some common steps.
Let us take the example of Amul Milk. The general steps to become franchisee of Amul Milk would be as follows –
- Visit the corporate website of Amul and register yourself to be a franchisee.
- Submit relevant documents, such as your bio-data, a No Objection Certificate from your local municipality or government authority, any retail outlet/business related paperwork, and a photograph of the shop.
- Attend a meeting at the Amul corporate office. This is your opportunity to pitch your business proposal to the officials and make a case for yourself as a qualified franchisee.
- If your proposal is accepted, you will be required to pay the franchisee fee to Amul and sign the franchise agreement.
- You will be provided all details regarding the franchise business model and the amount of support you will receive from Amul.
- Start ordering your Amul milk and other products from the Amul distribution channel.
- Advertise and promote your business, as per the guidelines given by Amul.
- Receive payments from customers as they purchase products at your store.
- Maintain periodic contact with the Amul corporate team to provide them with sales data, feedback and insights.
Advantages of a Franchisee Business
There are several advantages of expanding and operating a franchise business in India. Here are some of them:
Low Investment: Operating a franchise business in India requires a relatively lower investment than setting up a business from scratch and this makes it an attractive option for entrepreneurs.
Access to an Established Brand: As a franchisee, you get to operate with the brand image of a well-known company and take advantage of its marketing power.
Support: Franchisors provide support to the franchisees in order to ensure the success of their venture. This includes providing guidance and access to resources as well as training and technical support.
Ready Market: Most of the established companies have already done the market research and identified the market for their products or services, so the work of setting up the market is already done.
Low Risk: Since the franchisor has already established its presence in the market, the risk of failure is significantly reduced due to the presence of a reliable customer base.
Despite being a popular business model in India, there are certain drawbacks that come with franchising.
These include high fees, lack of control over the operations and the décor of the outlet, as well as restrictions imposed by the franchisor.
It is important for prospective franchisees to understand these risks before investing in a franchise business.