Written By: Gouri Ghosh  

The food franchise industry is growing not only in the metro cities. 

It is expanding in tier 2 and tier 3 cities also. In these cities, people are expensive in their food and other activities. So the demand for food is increasing in these cities. 

Different new food brands are coming to the market with zero royalties.

This is helping you to start your business without any pressure. Earlier, while entering into any food franchise, you had to give a part of your monthly sales to the brand. But today, with the food franchise model having zero royalty, you can enjoy your earnings without any pressure.

This is a golden opportunity for those who want to start their business in small steps. In this blog, we will tell you about the food franchise model with zero royalty, which brands are offering this model, and whether it is right for you or not.

What is a zero-royalty food franchise?

A zero royalty franchise is an easy and viable option for you if you’re planning to open your business for the first time. With this model, you just need to pay the franchise fees once. After this, you won’t be required to share your sales with the brand. Therefore, this model makes the business of a food franchise with zero royalty easy to operate compared to the conventional model of running a franchise business.

This model operates in the following manner:

• You just need to pay the franchise fees once.
• You won’t be required to pay the royalty fees on your sales.

With conventional franchise business models, the brand takes 4-10% of your sales every month. Therefore, even if your business earns low profits, you’re required to share your profits with the brand. But in the case of a food franchise with zero royalty, the scenario is entirely different. Therefore, the benefits of this model are as follows:

You get to keep 100% of your earnings.  

• The brand earns from the setup fees, raw materials, or backend services.
• Therefore, this model has become popular among the public to open a food franchise with zero royalty in India.

What are the reasons for the growth of zero royalty franchises in Tier 2 cities in 2026?

Zero royalty franchises are growing fast in Tier 2 cities. That's why these franchises are matching perfectly with the requirements of both business owners and customers.

Here are some reasons why zero royalty franchises are doing so well in Tier 2 cities:  

• Lower rent: Rent is very low compared to metro cities. This means your overall investment will remain under control.
• Customers are price-sensitive: This means you have to maintain tight margins. This is why saving on royalties is important.
• Faster returns: With zero royalty, you can recover your investment fast.
• Low competition: There are fewer big brands in these cities. This means you have a better chance of grabbing the market.
• Growing demand: The demand for eating out is increasing. Young consumers and working professionals are the target audience.
• Easy to start small: You can start small and then expand your business.
• Better cash flow: You won’t be required to pay royalties every month. So, your cash flow would be smooth.

That’s why food brands are focusing on Tier-2 markets. You can expand your business easily. You get the best opportunity to run a profitable business with a food franchise with zero royalty.

Top zero royalty food franchise brands in India 2026

Here are the top homegrown brands offering zero royalty or low royalty business models, especially for Tier-2 cities.

Tea and beverage franchises

The tea franchise business is highly suitable for Tier-2 cities. They are the best option if you’re looking for a food franchise with zero royalties.

Yewale Amruttulya

• This is a tea business franchise, popular in Tier-2 cities.
• Offers a food franchise model with zero royalty.
• This model operates on a simple takeaway model, occupying 100-200 sq ft.
• The investment is around ₹10-12 lakhs, while monthly sales can be ₹1.5 lakh - ₹3 lakh.
• The profit can be ₹40K - ₹80K, while ROI can be achieved in 12-18 months.

Reason why the business works:

• High repeat customers ensure consistent daily sales.
• The tea-making process is simple, hence easy to operate.
• Less space is required, hence reducing costs.

Tea Hub

This is another tea business franchise.

• Operates on a low-cost model, occupying less space.
• This business model operates on zero royalty.
• The investment is around ₹2 lakh - ₹5 lakh, while monthly sales can be ₹80K - ₹2 lakh.
• The profit can be ₹25K - ₹50K, while ROI can be achieved in 8-12 months.

Business advantage:

• This business attracts consistent customers.
• This is advantageous for first-time business owners.
• It is simple to operate because there is no need for highly skilled labor.

Low-investment QSR and fast food brands

QSR brands are witnessing rapid growth as more and more consumers prefer quick and affordable food options. These are the best options if you are looking for a food franchise with zero royalty.

Zorko

• This is a fast-growing QSR concept with flexible formats such as kiosks, takeaways, and cafés.
• This concept offers a food franchise with zero royalty and requires a small to medium-sized space.
• Investment: three to five lakh. 
• Sales: two to four lakh per month.
• Profit percentage: 30-35%. 

 Potentiality:

• This brand provides different kinds of dishes that targeting broad range of customers.
• Due to high growth, this brand creates trust in tier 2 cities also.

Xero Bites  

• It is a cloud kitchen and takeaway business that serves quick bites such as burgers and wraps.  
• It is based on the zero royalty model with minimal space requirements.  
• The investment is between ₹3-5 lakh, with sales of ₹1-2.5 lakh per month.  
• The profit is expected to be between ₹30K-₹70K, with an ROI of 8-12 months.  

The benefits of the business:

• The lower investment reduces the overall financial risk.  
• It helps reach more customers through the online platform.  
• The business requires fewer staff members, which is beneficial.  

Biryani Express  

• The business is based on the popular food item biryani.  
• It is a quick-service business with a food franchise model that requires zero royalty.  
• The investment is between ₹5-8 lakh, with sales of ₹2-4 lakh per month.  
• The profit is expected to be between ₹50K-1 lakh, with an ROI of 10-14 months.  

The profit drivers:

• The demand for the popular food item is high.  
• It requires fewer menu items, which is beneficial.  
• The business is performing well in the online platform.

Affordable café and snack brands

Cafes are more popular in tier 2 cities, especially for young customers.

Beyond-Temptation

• It offer budget friendly cafe with snack items.
• In tier 2 cities, you need around 210 -450 sq feet space to open this brand.
• The investment would be in the range of 8-15 lakhs, and the monthly sales would be in the range of 2-5 lakhs.
• The profit would be in the range of 50K to 1.2 lakhs, and the returns would be within 12-18 months.

What makes it special?

• This café would attract young customers, especially students, as they would love to hang out in such places.
• Affordability would also be a factor for the consistent customer flow.
• This concept would definitely work in Tier-2 cities as the café culture is becoming popular.

Cloud kitchen and hybrid models

• Cloud kitchen is a good option if you want to start small with low investment and risk.
• Insta Bite
• Insta Bite specializes in pizza and fast food delivery services.
• It offers food franchises with zero royalty and requires very small space for the kitchen.
• Investment required is between 3-6 lakhs, and monthly sales are between 1.5 to 3 lakhs.
• Profit expected is between 40K to 80K, and ROI is within 8-12 months.

Edge in terms of operation:

• Low rental costs can be utilized to maintain better margins.
• The business can be easily scaled up with more items on the menu.
• The business is highly dependent on online delivery aggregators for growth.  

What  Investment & Returns You Can Realistically Expect

Starting a food franchise involves proper knowledge of investment and returns. This will help you avoid surprises and make your business more stable.

Investment

The investment varies according to the type of outlet you want to open.  

• ₹3–5 Lakh: This is suitable for opening a tea kiosk or food stall. This is a low-cost business and can be handled easily.
• ₹5–10 Lakh: This can be used for opening takeaway QSRs (Quick Service Restaurants). These are quick-service restaurants focusing on high volume and low seating.
• ₹10–20 Lakh: This is required for opening café-style food franchises. Café franchises include interior decor, sitting arrangements, and a variety of food items.

Returns

Returns in the food business depend on various factors such as location, pricing, quality, etc.

Monthly profit

• The profit can range from twenty thousand to eighty thousand
• Breakeven period
• The breakeven period for this business is 8-14 months, depending on the location.

What Are the Risks You Should Not Ignore?

It is highly advisable to start a food franchise as a business venture, but you should know that even the best food franchise with zero royalty in India has risks associated with it. If you ignore these will negatively affect your business.

Brand is not well-known:

 If you are into a food franchise business and your brand is not recognized, you may face difficulties in terms of customers trying out your food. This may affect your business directly in sales.

Unrealistic ROI promises:

 There are many food franchises that promise high returns on investment within a small period. However, you should know that there are many factors on which you will make money.

Lack of proper support after the setup:

 Some of the franchise providers are only interested in selling the setup. 

 Many outlets:

 In case the company opens too many outlets in the same region, it can cause division among the consumers. This can affect your sales, hence reducing the expected profit.

 Focus on selling kits, not building demand:

 Some of the franchises are only interested in selling kits, which means they don’t provide support in building demand for the outlet.

How to Choose the Right Zero Royalty Franchise?

These are some practical steps:

While asking the right questions, the following practical steps can be taken before investing in a franchise business:

At least 2-3 outlets need to be visited

This will provide an idea about the business performance by observing the outlets.

Actual owners of the franchise need to be met

Talking to the actual owners of the franchise will provide better information about the business, as their practical experience is far better than any other information.

Do not depend on brochures or sales pitches

This is because brochures will only provide information about the positive side of the business.

Read more: Best low-budget fast food franchises under ₹20 Lakhs

Conclusion

Tier-2 cities in India are becoming important growth centers for the food business industry as these cities have lower investment risks, growing customer demand, and fewer competitive challenges compared to metro cities. In 2026, homegrown food franchises with zero royalty are becoming popular food business opportunities for entrepreneurs as these opportunities allow entrepreneurs to start small and recover their investment quickly.

But for these opportunities to become a profitable business space in Tier-2 cities, entrepreneurs need to make smart choices. To make smart choices, entrepreneurs need to research the food franchise business, analyze demand, and assess the actual performance before investing in these opportunities.

FAQs

1. Are zero royalty franchises profitable?

Yes, they can be more profitable because you will not be paying royalty every month. However, your success depends on your sales and location.

2. What is the average investment?

Most food franchise opportunities with zero royalty vary in the range of ₹3 lakh to ₹10 lakh.

3. Is zero royalty more profitable than other franchise models?

Yes, because it gives a cost advantage. However, other franchise models have a stronger brand.

4. Can I open multiple outlets in the franchise?

Yes. Since the profit will be fully in your hands, many entrepreneurs open more outlets in the franchise.

Disclaimer: The brands mentioned in this blog are the recommendations provided by the author. FranchiseBAZAR does not claim to work with these brands / represent them / or are associated with them in any manner. Investors and prospective franchisees are to do their own due diligence before investing in any franchise business at their own risk and discretion. FranchiseBAZAR or its Directors disclaim any liability or risks arising out of any transactions that may take place due to the information provided in this blog.