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How to Be Successful in Franchise Business?

Check out the steps one needs to undertake to successfully sign the franchise agreement pertaining to all legalities.

Running any franchise business might look very easy on the forefront, but a lot goes into making it a successful venture. Franchising, in general, involves a business owner or franchisor licensing to a 3rd party or the franchise. The franchisor is given the right to operate the business or distribute the services and goods while using the brand of the franchisor for a stipulated timeline. Here are the steps for “How to Be Successful in Franchise Business?”

How to Be Successful in Franchise Business?

  • Reach Out To The Chosen Franchisor

It should be evident in the back of your mind that all franchisors today have different terms and conditions, requirements, documentation, business arrangement, and fees.

There might be other information you do not know about, even if all the details are provided on the website. You have to connect with the franchisor directly, and they will help you with all the information that you need.

  • Prepare and Arrange The Required Documents

It is a crucial step that you need to take. The requirements you would be asked to provide dictate in case if the franchisor end up approving the application of franchisor or not, so you need to give a proper application detail. The majority of franchisors have a predefined set of requirements.

It includes the franchise agreement form, which must be completed in total, and you can find it on the company’s franchising website. You can also connect with the company and get the same if the form is unavailable.

A letter of intent is also important because it states why you apply for the franchise. You need to map the proposed business site. You can easily do it with the help of maps and attach pictures of the actual website. Don’t forget to attach you are updated profile or resume.

You should have at least 2 valid government I.D.s. The lease contract or the return agreement with the lessor is essential if you are renting the space. It would help if you had the bank statements updated recently and your taxpayer identification number.

  • Connect With The Franchisor Directly

One of the most important steps is to meet the franchisor. Here the franchise assesses the application and also approves or rejects it. The franchisors will assess if you are suitable for their business or not. If the franchisor rejects your application, you must revise and submit it again.

For the hassle free experience of drafting Business Franchise Agreement Click here:
  • Sign The Franchise Agreement

It would be best if you did not get too excited because here, you must focus on and review the franchise agreement before signing it. It would help if you focused on necessary details like the franchise, renewal, and expenses for the same.

Check the cost and expenses like the franchise fee and the royalty. Check the inclusions and exclusions of your franchise package. Once all the steps are cleared, you can become the franchise.

Do you aware of the Must Read Topic: Know About Franchise Law in India

Tips To Make Your Franchise Profitable

The only thing that matters at the back of your mind is how you will make your franchise business profitable, and it is a crucial step too. After all, you’ve invested in the franchise and are waiting for maximum rewards. Several factors play a crucial role here.

  • Check The Industry Type

There are various industries out there, and some business franchises include the home-based one, which does not require too many expenses and could be profitable quickly compared to the retail business. The retail business requires you to have a good amount of stock all the time and requires heavy investment for starting your venture.

( We can take KFC Franchise in India and Bata Franchise India for reference )

  • Financing The Franchise Business


There are different options for financing your franchise. Whenever you are looking forward to buying a franchise, you can consider the extra costs because they might come along. Besides the principal cost, you also have to pay interest on loans if you apply for a loan, and it might take longer for you to get to a break-even point and start making profits.

  • Consider The Bottom Line

Most franchise owners who are just starting the franchise business believe that profits from the franchise business can be turned into personal income in no time. This is not the truth because there are several taxes that you have to pay on the loan repayment business profit and also on the recurring capital expenses that you have to pay before the owner can pay himself. Once this is cleared, the franchising business owner can get their income from the franchise business.

  • Understand The Business Goals

A quick profit is not the right business goal you must go after. Your equity would grow with time in a franchise. If the objective is to sell the franchise, then you have to look at the profit switch might not be as rewarding as you would consider. You have to consider the net worth of your franchise, and it would be a great indicator of how soon and how much you would make the profits. With different variables available, it is impossible to get a quick idea of when you would get into the Green Zone from the red one.

  • Tax Requirements

Whenever you receive any royalties service fees or tax needs, do you have to pay it under the Income Tax Act? Certain income like interest and loyalty are likely to be deemed and accrue in India under specific circumstances as per section 9 of the Income Tax Act. Business taxes are around 30% when you are running a franchise. You must pay 30% of the business profits from the franchise business. That is also a withholding of tax on the fees for some technical services, and the rate is around 10%.

But it is subject to the relief provided under any applicable tax treaty.

Hence is all you need to know about starting a franchise business in India. The legal requirements are mandatory, so don’t ignore them!! These steps will help you “How to Be Successful in Franchise Business?”


Setting up a franchise deal might be hard, but what is harder is to set a proper agreement in place. This is where the role of expert’s chimes into the picture. Vakilsearch and team makes sure to provide the most authentic and high-quality services at affordable prices. Vakilsearch makes signing your franchise agreement easy!

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