Start a Franchise Business in India
Updated on Thursday 23rd July 2020
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Having a liberalized economy, India became one of the most developed countries at a global level. The franchising sector in India is expanding and this business model is recommended as a way for starting a company in this country. Those who want to open a company in India should know that a franchise business is established through a franchising contract.
What are the most developed franchising activities in India?
The franchising sector in India is the most developed in the field of food and beverages, representing approximately a third of the total businesses incorporated in this industry. Other important business activities developed through franchises operate in economic sectors such as retail, education, beauty, healthcare and hospitality. Our team of specialists in company formation in India can assist businessmen with advice on the requirements of the franchise agreement, presented below.
What is a franchise agreement in India?
A franchise agreement is the main legal document through which a franchise business can be set up in India. Through this document, a franchise will grant to a franchisee the right to use its business model, its brand and its know-how, with the purpose of expanding the respective company on the local market. Some of the most important aspects that should be included in a franchise agreement are the following:
- the date at which the document will become applicable and the names of the parties that will enter the franchise business;
- the period for which the document will be available and provisions regarding the renewal of the contract;
- the geographical region in which the franchisee can develop the franchise business;
- regulations referring to employment matters, advertising, periodical inspections and others.
Franchisees must use the products or services provided by the franchisors which are usually registered as trademarks in India.
Why invest in the franchising sector in India?
The franchising sector in India has been steadily growing since 2008. At the level of 2017, the franchising sector in India had a total value of USD 13,4 billion, but it is estimated that by 2022, the market will increase at USD 51 billion, as stated by the Franchise Association of India. Our team of consultants can assist on the procedures on how to start a company in India in one of the above mentioned industries.
It is also necessary to know that one of the key players of the Indian franchising industry is represented by the United States of America, most of the sectors chosen by the American investors being the hospitality industry and the food and beverages sector. Businessmen are invited to contact our team of consultants in company registration in India for advice on the legal framework address to foreign direct investments.