Types of Franchise Business and Tips Whi ...

Types of Franchise Business and Tips While Choosing Franchising in India

Dec 12, 2022

Franchising is one of the fastest-growing businesses worldwide. The franchise business model is growing tremendously because it provides a method to own a business apart from thinking about something else that won't fetch you money. Franchising in India businesses has gained much popularity, especially after globalization. Moreover, it is a quick way to extend operations into other locations without bearing a financial burden. The idea of franchising allows one company to operate under Franchisor's name and use their expertise to create a successful business. 

Types of franchise business:

Franchising in India can be of different types. However, to understand its categorization under trademark or intellectual property rights, it can be categorized into


A] Business model franchise: It usually refers to purchasing a company with a well-known brand. In return, the new business owner must regularly pay a royalty fee to the Franchisor in exchange for the assistance provided. 


B] Single-operator franchises or product franchises: Here, the Franchisor allows the franchisee to utilize their name and trademarks.


C] Industrial franchise: These are mainly manufacturing franchises. The Franchisor permits the franchisee to use their brand name and trademark for manufacturing goods. 


5 points to remember while choosing a franchise business

  • Survey the Demand and Market Patterns: The first step is to conduct a study before beginning any new business. The franchise business you invest in must be marketable and well acceptable in the area before planning to start with it. 

  • Clear communication with the Franchisor: Before starting a franchise business, it is important to discuss both parties' commercial and monetary advantages (the Franchisor and the Franchisee). The discussion should be laid down to discuss the financial information, location, and profitability. 

  • Producing Legal Documents: The most important aspect is the legal paperwork. A franchise agreement or other agreements can be executed to establish the rules and rights of both franchisees and franchisors. Both parties must actively decide on pricing and other franchise agreements.

  • Taking necessary permissions and licenses: To establish any business, various permissions and permits are required from the local authorities of that area. The franchisee will need several permissions to open a franchise shop in a public space. 

  • Registering Business: As soon as the franchise agreement gets executed with the Franchisor, you must register your business with the Ministry of Corporate Affairs. Additionally, if the Franchisor stays outside the country, then they must communicate with foreign brokers to complete the registration procedures.


    Summary 

Many franchises are ruling the world currently. They are earning huge profits across the world. Nowadays, Franchising in India business is not only a form of business style but also a status symbol for consumers as well as investors. 


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