How to Buy Your First Franchise in India in 2027

If you are salaried now and want to start a business, you are not alone. Many people in India want to move from job to ownership. But starting alone is risky. A franchise gives you a ready brand, ready product, and ready system. It makes your first step easy. But it is not a guarantee. You still need money, time, and daily work. In this guide, I will show you how to start a franchise business in india in easy steps. I will share small checks that new buyers often miss.

Quick Answer

How to start a franchise business in India?

First, set your budget. Then pick a work that fits you. Look at 3 to 5 brands. Count full cost - fee, shop setup, and daily running cost. See if your area needs it. Read all fees and royalty. Talk to real shop owners. Get the agreement checked by a lawyer. Arrange money. And finish FSSAI, GST and other papers before you open.

Why Franchising Can Be a Career Transition for Salaried Professionals

Franchising can help salaried professionals become business owners because it gives a tested brand, training and support, but income is not fixed and risk still exists.

A job gives fixed pay on the 1st. Work is clear. Boss decides.

Own business gives freedom. But pay is not fixed. Some months good, some slow.

Franchise sits in the middle. You own the shop. You manage staff and customers. But you follow brand rules.

Why does this suit salaried people? You know how to manage time. You know how to handle people. You may know your city well. And you have savings from your job.

But remember, you are not buying a job. You put money into a business. That shop must earn enough for rent, staff, materials, fees, tax, loan, and your own take-home at the end.

How Does a Franchise Business Work in India?

A franchise business in India works when a brand owner lets you run a shop under its name and system for a fee, while you invest money and run daily work as per the agreement.

Two sides in this model.

The franchisor is the brand owner. They give the brand name, logo, SOPs, training, supplier list, billing software, and ads.

You are the franchisee. You provide money, a shop, staff, and daily effort.

You pay them. They support you. That is the deal.

But all the rules are in one paper- the franchise agreement. In India, contracts come under the Indian Contract Act, 1872, plus trademark and other laws. It is not a brochure. It is a legal paper that says who can do what, for how long, and at what cost.

How to Start a Franchise Business in India: 10 Steps

1. Decide How Much You Can Invest

Decide your budget by adding the franchise fee, setup cost, working capital, deposits, marketing, taxes, and 6 months emergency fund, not just the fee shown in the ad.

Most ads show only the fee. Like "Start in 5 lakhs". That is not the full cost.

Real budget is fee + shop deposit + interior + machines + licence + stock + staff salary + marketing + tax + extra.

Use only 60-70% of your savings. Keep 30% aside. House EMI will still run. Business may take 4 to 8 months to give stable cash.

2. Choose the Right Franchise Category

Pick a category that fits your skills, local demand, budget, and time you can give daily.

Don't pick only because it is trending on Instagram.

Food shop needs you full day. Morning to night.

Education needs trust from parents.

Retail needs you to manage stock.

Beauty needs good staff who know work.

Home service needs boys on field.

Just ask yourself - Do I know this customer? Can I do this work every day? Does my city really need this?

A tea shop can run well in Lucknow. Same shop may not run in a small lane in Kolkata. Place matters.

3. Research Franchise Brands

Check brand age, total stores, how many closed, what support they give, what people say online, and talk to real owners.

Don't trust only the sales PPT.

See how old the brand. How many stores are open now. How many shut in last 2 years. What help they give after you open? What customers say on Google reviews.

Call 3 owners who run it now. Ask them - what is daily sale? What profit left after all cost? Does head office pick phone? Did you get what they promised?

And try to find one owner who left. He will tell you true story. I did this for one client in 2023. Brand was big name. But 4 owners left in same city in one year. Reason was high royalty.

Read : How to Become a successful Franchise Business Owner in India?

4. Calculate the Total Franchise Investment

Total investment is more than the fee and includes rent, interior, equipment, licences, tech, stock, hiring, training, launch marketing, insurance, working capital, and professional fees.*

Make 3 buckets.

One-time: Fee, deposit, interior, machines.

Opening: First stock, hiring, training, licence, launch ads.

Monthly: Rent, salary, restock, royalty, marketing fee, light bill, loan EMI.

Most people forget the monthly bucket. That is why shops shut in 6 months.

5. Evaluate the Location and Market

Check the location by seeing footfall, customer type, competition, visibility, parking, rent, and future growth before you sign the rent deed.

A good brand can fail in a bad spot.

Go to spot at 10 am, 2pm, 6pm, 9pm. Count the crowd. Who walks? Students, office staff, families? Check 3 rivals. What price do they charge? Can people see your board from road? Is parking easy? If rent is more than 12% of expected sales, it is risky.

A model that works in Mumbai mall may not work on the main road in Patna.

6. Understand Franchise Fees and Royalties

Read every fee type, when it is due, and how it is calculated, so you know fixed monthly outgoings.

You may see an initial fee - one-time for rights. Royalty - monthly 4% to 10% of sales. Marketing fee - 1% to 3% for ads. Plus tech fee, renewal fee, supply margin.

Ask one line - How much money leaves my business every month? Even if sales are zero, you still pay. Some brands take royalty on MRP, not profit. Know this.

7. Conduct Franchise Due Diligence

Due diligence means checking the brand's legal, financial, and operational claims and talking to franchisees before you invest, with proof in writing.

It just means checking before you pay.

Ask for company papers, trademark certificate, full fee list, closure list, supplier rules, training plan.

Check if sales they show are from their own stores or franchise stores. Own stores often do better. Never trust "you will earn 2 lakh per month easily". Ask - show 10 franchise stores P&L with GST returns.

8. Review the Franchise Agreement

Get the agreement checked by a qualified lawyer to check tenure, territory, fees, supply rules, targets, termination, refund, transfer, and exit clauses before you sign.*

This is the most important step. Many people sign without reading.

Check years, renewal, is area exclusive, all fees, where to buy stock, sales targets, how they can end the contract, refund, whether you can sell later, and how disputes will be resolved.

Startup India shares a model franchise agreement. Use it to compare. Pay a lawyer 5k-10k now. It can save lakhs later.

9. Arrange Funding and Working Capital

Arrange funding for setup and at least 6 to 9 months' running costs from savings, bank loans, or eligible schemes.

Don't count only opening cost.

Banks can fund a franchise. They ask for a business plan, cash flow, brand details, your CIBIL, and docs. Some brands have bank tie-ups.

Keep working capital separate. Don't mix with house money. Rule I use: If monthly cost is 1.5 lakh, keep at least 9 lakh buffer before launch.

10. Complete Registrations and Launch

Complete licences like FSSAI for food, GST, Shop Act, trade licence, and Udyam for MSME benefits before launch, as per city and industry.

Each city asks for different papers.

Food needs an FSSAI licence as per FSSAI rules. Retail needs Shop and Establishment. Service needs trade licence. GST depends on turnover and type - goods vs. services have different limits as per CBIC.

Udyam registration is free on the official portal for eligible MSMEs. It helps for loans.

Open only after licences are done.

How Much Does It Cost to Start a Franchise in India?

There is no one fixed price. Small work like tuition or home service can start in 2 to 5 lakhs. Some go 3 to 10 lakhs.

Small food kiosk in Tier 2 city - 10 to 25 lakhs.

Big shop like full restaurant or gym in metro - 40 lakhs to 2 crores or more.

What makes cost go up? Brand fee. City rent. Shop size. Interior. Machines. Staff. First stock. And some extra cash in hand.

So always ask brand - give me full cost in writing for my city. And keep 15% extra. Cost always goes up a bit.

How to Choose the Right Franchise as a First-Time Entrepreneur?

Pick one that fits you. Your budget. Your skills. What your area needs. How much time you can give. And how much risk you can take.

Don't pick only because name is famous. Famous does not mean profit for you.

Ask: Do I know my customer? Can I run this daily, even on Sunday? Is demand strong in my area? What is the monthly cost? What sale needed for break-even? How many months' buffer needed? What help does brand give after opening? Can I talk to 3 owners? What if I want to exit?

If you get clear answers, go ahead. If they avoid, step back.

Franchise Due Diligence Checklist

Before buying, check legal entity, trademark, full fees, setup cost, royalty, closure history, supplier rules, location, cash flow, agreement, exit terms, and licences.*

Tick this before you pay:

- ☐ Verify legal entity on MCA

- ☐ Check trademark on Indian Trade Marks Registry

- ☐ Get full fee structure in writing

- ☐ Get setup cost sheet city-wise

- ☐ Check royalty - on sales or profit?

- ☐ Speak to 3 current franchisees

- ☐ Speak to 1 former franchisee

- ☐ Ask for closure data for the last 2 years

- ☐ Check purchase rules

- ☐ Study location with footfall count

- ☐ Make 12 months cash-flow

- ☐ Check break-even logic

- ☐ Get agreement checked by lawyer

- ☐ Check exit, transfer, refund

- ☐ Confirm all licences needed

Common Mistakes First-Time Franchise Buyers Should Avoid

Many new buyers make same mistakes.

They think cost is low. They trust sales talk without proof. They pick a bad spot for shop. And they sign paper without showing it to a lawyer.

Some other mistakes I see often -

• They put all savings in shop. They keep no extra money for later.
• They forget monthly running cost.
• They pick only because brand name is big.
• They do not check nearby shops who sell same thing.
• They do not talk to real owners.
• They do not read renewal and exit rules.
• They think full sale is profit. It is not.
• They leave full shop to new staff from day one.

A franchise still needs your eyes every day. First year needs you more.

Can You Run a Franchise While Working a Salaried Job?

You may run a franchise while salaried, but you must check your job contract, franchise agreement, and the daily time the model needs.

Some models allow manager-run. Like vending, small kiosks, and some education centres. Many food and retail businesses need owner daily.

Check your offer letter for outside business, non-compete, and confidentiality. Some companies do not allow side businesses.

Also check if the franchisor allows an investor model or needs an owner-operator. If the shop needs you 10 hours daily on site, you cannot do both.

Faqs

Is a franchise a safe investment?

No franchise is 100% safe; brand cuts some risk but profit depends on location, costs, competition, management, and demand.

Do I need business experience to buy a franchise?

Not always; many brands provide training, but basic money and people management help.

What is a royalty?

A royalty is a monthly fee you pay to the franchisor as per the agreement, usually a % of sales.

How long does it take to open a franchise?

It can take 45 days to 6 months depending on property, interior, machines, hiring, training, and licences.

Should I buy a franchise or start my own business?

Buy a franchise if you want a ready system and support; start own business if you want full control.

Should I speak to other franchise owners?

Yes, you must speak to current and former owners to know real sale, profit, support, and problems.

Do franchises need GST registration?

Yes, but it depends. It depends on your sale, what you sell, your state rules, and some exceptions. CBIC has rules for this. So check it for your type of business.

Is Udyam registration compulsory for every franchise?

No. Not every franchise needs it. But if your business comes under MSME, you can register for free on the official Udyam site. It helps for loan and some benefits.

From Salary to Business Ownership: What Should You Do Next?

Don't pay first. Research first.

Write down your budget, your skills, your city, and how much time you can give. Then pick 3 to 5 brands. Compare their full cost, fees, support, agreement, and what real owners say. And before you sign, talk to a lawyer and a CA.

Do this next week.

Day 1-2: Write capital, house cost, what work you like, city, hours you can give.

Day 3-5: Shortlist 3 to 5 brands.

Day 6-10: Call them, ask full cost sheet, ask 3 owner numbers, visit 2 stores.

Day 11-15: Make your own cash flow - sale minus all costs.

Day 16-20: Meet lawyer and CA. Get agreement checked.

Only then pay the token. Not before.

Moving from salary to business is a big money decision. Take it slow. A clear plan gives you control and real hope for your first business.

Written By: Gouri Ghosh, Franchisebazar Editorial Team — Updated September 2026

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.