How to Get A Restaurant Franchise in India?

on Jun 04, 2024 | 5465 views

Written By: Resham Daswani

Did you know the best way to start a restaurant in India? Well, you can choose the franchising business model to get started.  Well, that’s right.  One tried and true way to get into the restaurant industry is through a franchise.

You can get the right to use another restaurant's name and logo in exchange for a royalty charge at a franchise restaurant. 'Franchisor' refers to the business that offers you the privilege of using its brand name.

A "franchisee" is someone like you who has purchased the right to use a restaurant's name and logo. The franchisee is usually granted permission to utilise the brand name for a certain location. The term "franchise" describes the business model of the restaurant.

So if you are one of those enthusiastic entrepreneurs considering starting a restaurant franchise in India, this blog is for you.  Here we will discuss in detail how to get a restaurant franchise in India. Also, the pros and cons of starting a restaurant, and the costs and permissions involved will be listed out.

Steps on How To Get A Restaurant Franchise in India 2024

Choosing the right franchise model is the first thing you need to do when starting a restaurant franchise in India.

Here are some examples of restaurant models:

  • A Master Franchise Business Model: The owner of the restaurant transfers authority over all franchising operations in a certain area to another business (the master franchisee) under this model. Afterwards, the franchisee assumes the role of franchisor for that specific area.
  • Single Unit Or Direct Franchising Business Model: In this setup, known as the "owner-operator model," you not only run the show, but you're also the boss of the restaurant. When it comes to franchise models, this one is widely used in India.
  • Multi-Unit Franchise Business Model: The franchisee in this arrangement purchases several franchises from the parent company. The franchisee is responsible for overseeing daily operations and ensuring the expansion of all these units.
  • Company-Owned Franchise Business Model: Here, a local branch of the parent company's brand is set up. The company then assists the franchisee in developing the brand, attracting clients, and launching the business.
  • Area Development Franchise Business Model: Similar to multi-unit franchising, this approach is a kind of franchising. The main distinction is the scale, with a greater number of units distributed over a wider area, and the franchisee's potential for rapid brand recognition.

So, once you have decided on which franchise business model would suit your interest and investment range, now it is time to take the process further.  Knowing your budget, return on investment, and break-even and profit points times is the next stage in establishing a restaurant franchise.

Make sure to account for the following in your budget:

  • Start-up costs: Included in this sum is the expense of leasing or purchasing real estate that satisfies the franchisor's requirements, as well as the cost of acquiring necessary equipment and paying any applicable fees or taxes.
  • Initial franchising fees: The franchisee must pay this fee to the franchisor to use the franchisor's brand in their business operations.
  • Royalty Payments: The franchisee is required to pay the franchisor a set amount each month from their earnings. This charge usually ranges from four to six per cent of the monthly income.
  • Any other financial expenses: Also known as miscellaneous expenses, operating expenses, salaries, advertising fund contributions, etc., go under this category.

To sum up, researching the industry and settling on a franchise model that works for you is the last stage in opening a restaurant. Think about the neighbourhood’s competitors, economy, geography, and cuisine preferences.

You should also think about how involved the franchisor is and whether or not your goals and beliefs are congruent with theirs.

Once you have accounted for the financial part, now is the time to procure the required licenses and permissions.  Therefore, before you can start your restaurant, you must receive the following licences and permissions:

  • Business must be registered: Forming a limited liability company or partnership is required for your business. Among other things, you must do financial audits and submit annual returns.
  • Food Safety and Standards Authority of India [FSSAI]: In India, the FSSAI is the regulatory body that issues licences for the establishment and operation of food businesses. The permission charge is proportional to the company's size.
  • GSTIN Number: A GSTIN number and GST registration are necessities for restaurants. Having restaurants in more than one state will necessitate separate registration in each of those states because this registration is state-specific.
  • Professional Tax License: A business needs a professional tax licence to hire employees. Every month, workers who bring in more than Rs 10,000 are obligated to pay professional tax.

Remember, the documents and permissions usually remain the same, but there may be some additions which may vary from state to state. Also, additional permits and approvals, including those for fire safety and environmental control, will be required.

In short, these are the crucial steps to get a restaurant franchise in India.  Other steps would include the specifications of the franchisor and the brand you choose to invest in.

Benefits To Get A Restaurant Franchise in India

Wondering if starting a restaurant franchise is profitable and has a long-term growth future in India? 

Remember, you are running the business of another person when you own a restaurant franchise. In terms of day-to-day operations, you do not get any discretion. You are legally obligated to follow the brand guidelines and operational processes are already set.

Franchise restaurants are famous for their stringent management of daily operations. Nevertheless, when it comes to staff training, supplies, and other similar matters, franchise restaurants receive assistance and direction from the franchisor.

Running a franchise restaurant still calls for dedication, perseverance, and managerial prowess. The brand expects you to continuously provide excellent outcomes. To further guarantee compliance with all regulations and upkeep of the brand's reputation, the owner of the brand performs audits frequently.

Well here are some advantages which will clear all your doubts.

  • Easier to manage, particularly for those without much expertise in the restaurant industry.
  • Less uncertainty as the business plan supports the franchise, an existing clientele, and a prosperous brand.
  • In terms of marketing, supplies, equipment, and employee training, the franchisor provides assistance.

Is getting a restaurant franchise profitable in India?

Like any other business venture, franchising a restaurant can be profitable but it also depends on various factors. 

So if you want to maximize the profit of your restaurant franchise, here are some key aspects to keep in mind.

  1. A well-known food brand.
    1. You can get your money's worth faster by franchising. Moreover, this is an already popular company. Therefore you can capitalise on the popularity of the brand and the loyalty of its customers.
    2. To help bring in consumers and boost revenue, franchisors frequently run extensive advertising efforts on a nationwide scale.
  2. Has an established franchise business model.
    1. In order to assist franchisees in managing the many moving parts of a restaurant, franchisors offer extensive training and operational support.
    2. Franchises provide standardised procedures for managing the business, serving customers, and preparing food, which can improve consistency and efficiency.
  3. Scalable economies:
    1. The ability of the franchisor to buy supplies and ingredients in bulk usually means lower prices for the franchisee.
    2. Franchising businesses that have been around for a while sometimes have better deals and terms since the franchisor has already negotiated with suppliers and vendors.
  4. Growing Indian market.
    1. Restaurants in India have reaped the benefits of rising disposable incomes. As a result of more customers opting to dine out.
    2. The desire for convenient and various dining options and by urbanisation as well as changing lifestyles, has made restaurant franchises an attractive option.

Here are some useful tips you can use to maximize profits on your restaurant franchise.

  • Choose the right franchise brand: Before investing in a franchise, be sure the brand is well-known and respected among your target audience.  Also, ensure the franchise idea is good for the local market by researching the demographics and tastes of the area.
  • Selecting an appropriate location to start the unit: Get your spot in a busy area, such a retail centre, a commercial zone, or a street where a lot of people walk. To increase the number of consumers who frequent the restaurant, it is essential to make sure that it is conveniently accessible and visible.
  • Keeping track of your finances: Keep in mind that there will be a franchise fee, startup costs, and royalty fees. Analyse the franchisor's financial performance statistics and market research to determine the anticipated earnings.
  • Adhering to the SOPs by the franchisor: Upholding the franchise's reputation for great cuisine, service, and cleanliness is essential. To run smoothly, franchisees must adhere strictly to the franchisor's rules and procedures.
  • Choosing a locally adaptable business model: Think about changing the menu to fit local preferences. This is while keeping the basic brand concept. Using regional advertising and promotions to draw in and keep consumers.

So, here we come to an end on our blog about how to get a restaurant franchise in India.  With careful consideration of the franchise and competent management, opening a restaurant franchise in India has the potential to yield substantial profits.

To Conclude,

Entrepreneurs find franchising to be an appealing alternative. This is because of the well-known brand, the proven business strategy, and the substantial support provided by the franchisor.

Nevertheless, becoming successful necessitates meticulous preparation, familiarity with the market, and compliance with franchisor regulations. Franchisees have the best chance of succeeding in the cutthroat Indian restaurant industry if they take these things into account and follow industry standards. 

Reach out to us at FranchiseBazar to stay updated with the latest restaurant franchise opportunities available to start right away.

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.

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