If you are looking to enter into restaurant industry investing in a food franchise would be a great and much safer option. However, investing in a franchise is a big decision. You need to carefully decide not just the type of food franchise, the brand, the location etc of franchise as well.
Before we dive into the details let’s first see what a franchise business is.
What is a Food Franchise Business?
A franchise is basically an official permission by the company owners to sell their company’s goods or services in a certain area or location.
The company allows you to sell their products and charge you a flat fees and royalty along with some percentage of profit you earn by selling their products/services.
Now that we know how Franchise Business work, let’s see different Food Franchise models so that you can decide which one works best for you.
Types of Food Franchise in India in 2021
Single unit franchise
This type of franchise allows the franchisee to operate in one single location. It is also known as direct franchising. Its the most common kind of franchise in India. If you have invested in a franchise of such kind you are allowed to set up a franchise in one particular location and appointed as primary operator and manager as well.
Example: Moti Mahal is a big brand in street food, sweet and authentic traditional food in India. Mr. X applied for the franchise and opened a Moti Mahal shop at a single particular location.
Multi unit franchise
A multiple unit food franchise allows the franchisee to set up the franchise in more than one particular location. The franchisee takes up more than one franchise from the franchisor. The franchisee takes up the ownership and responsibilities to grow and maintain the business of these units.
Example: Subway, McDonalds’s etc
Company owned franchise
In this kind of franchise, the franchisor sets up the franchise with its own investments, has complete control of the business. The company is responsible for all aspects such as creating the brand image, quality control, product development etc. It also appoints its own representative for the franchise who will work and represent the brand.
Example: Cafe coffee day, Bikanerwala, Taco Bell etc
In this type of franchise, the franchisor hands down all the responsibilities and control of the franchising activities to its franchisee of one particular area or entity. The franchisee can adapt he activities to its local relevance.
Example: Dominos, KFC, Pizza Hut etc
Joint venture franchise
An international brand typically uses this Joint venture franchise model to tie up with local entity and create a new entity that acts as a Master-franchise. Given the fact that the local entity has deeper knowledge of the market, consumer and country laws the master franchise then takes up the responsibility of running the franchise in the local country. The international brand can actually make their target audiences aware about their brand very quickly with this franchise model.
Example: Burger King & Everstone Capital for Indian markets
Maintaining quality across all the franchise is very difficult not just food quality wise but also in ambiance, management and inventory therefore having a transparent and secure franchise management system is extremely crucial. The process of buying a franchise can be a long process with tones of paperwork. But it is a one time job so make sure to do your diligence for the long run.
Hope this helps you in starting your franchise business. Tell us what worked for you! Your suggestions are welcomed in the comment section below. Follow us on Instagram for more restaurant updates!