The first step in starting a franchise in India is deciding on the city where it will be launched. It is advisable to start off with locations such as Mumbai, Bangalore, and New Delhi that are in better economic positions.
The infrastructure of these cities is better and the clients have higher levels of dispensable income. The disadvantage of opening a franchise in these cities is that they have saturated markets and the premium payment is bigger compared to a second-tier city.
Steps required to be taken to open a franchise
Determining the niche
The entrepreneurs should have a clear idea of where they will like to start their operations. Normally in India restaurants, after sales computer services, consumer goods outlets, and printing and documentation services are regarded as the best options for starting a franchise.
It is better to operate in a field where the owners have some experience. Otherwise, they can also hire experienced employees or managers. It is advisable to go for established names such as Filta Environmental Kitchen Solutions or Subway Restaurants while opening a franchise if the entrepreneur does not have sufficient financial resources.
Completing the formalities
Anybody opening a franchise in India needs to register themselves with the Ministry of Corporate Affairs after the initial agreement with the franchise provider. If the franchise is from outside India, they can get in touch with international brokers such as Franchise International Inc. They can seek assistance from international brokers in the following business-related paperwork, on the basis of the franchise’s size and kind:
- Ownership
- Licencing
- Registration
International businessmen looking to start a franchise in India will be better off without starting operations if they are unwilling to stay here or at least, visit it on a regular basis.
Human resource requirements
It is important for a new franchisee to understand the number of employees that will be required at various stages of operation. The owners also need to know the exact roles of their employees. They can also enlist the services of consulting services or employment agencies for recruiting the right people for different positions.
Paying Taxes
It is important for a franchise owner to pay his taxes on a regular basis and fulfill other mandatory reporting commitments on definite intervals. If it is an international owner then he will also have to comply with similar regulations in his country of residence.
In case the franchise owner is based in the US, he will need to look up IRS publications on a regular basis so that he can get the latest information on the cutoff level applicable for businessmen operating outside the country.
In case they hold shares in a franchise in India they will need to comply with these requirements as well. They can also employ the services of professional accountants who have sufficient knowledge and experience in such areas.
Managing currency risks
This is applicable for international businessmen running Franchise Business Company in India. Their first investment is normally done in international currency while the initial earnings are in INR. There is a risk in these cases that the INR might lose value with respect to an international currency.
They can adopt some protection against these risks by short selling futures valued in INR or investing small amounts in the futures markets of their respective countries. However, in the case of currencies that are worth more than the INR, such protection is not always required.
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