10 Most Profitable Franchises in India in 2023

In the year 2019, before the emergence of Covid-19, India had almost 200,000 franchise outlets managed by just about 170,000 franchisees. The franchising sector in India is expected to reach USD 100 billion by 2024, rising at a rate of 30-35 percent each year. With over 4,600 active franchisors and approximately 200,000 units operated by nearly 1.7 lakh franchisees, India is already the world's second-largest franchise market after the United States.

One of the biggest reasons why people in India are willing to undertake a franchise and begin their business in that is because franchises aid people to develop their business and expand it exponentially. Also, franchise contributes to the economic development of the country while creating new job opportunities, which is why it is welcomed by the government as well. 

The Indian franchise market, on the other hand, is still at its dawn, accounting for only about 2% of the country's GDP.

What is a Franchise?

A franchise is a form of license that the business owners or franchisors grant to a third party. This license allows the franchisee or the buyer to operate the business using the name, logo, and products of the company along with the business strategy among other things. The franchisor is the owner of the bigger corporation who sells the license of operating their business to other individuals while the franchisee is a third-party who conducts that business on a different site.

The deal is regulated by a contract known as a "franchise agreement," and it's vital to note that the franchisee is bound to an association for a set amount of time, usually five to twenty years. In most cases, the contract can be extended. Moreover, in order to preserve the brand’s solidity, the franchisee must adhere to specific business principles and rules decided by the franchisor. 

Furthermore, a franchisee is required to pay regular royalties to the franchisor in addition to the original franchise cost in order to receive the essential services, for instance, training, support, and marketing assistance to operate the business effortlessly and efficiently.

Many people choose to start a business by purchasing a franchise because they believe it would ensure their success. This isn't always the case, though. For both franchisees and franchisors, franchising has numerous benefits as well as drawbacks. This is why it is critical that you examine all of the benefits as well as any potential risks to ensure that you are making the right choice while deciding whether or not to join a franchise.

Advantages of Owning a Franchise

Given below are the benefits of owning a franchise:

1. Low Risk of Failure

When a franchisee invests in a franchise, they're purchasing a proven business model. Franchisees are joining a strong brand as well as business connections that will provide them with assistance and advice, reducing the likelihood of them going out of business. Statistics suggest that independent start-up enterprises have a substantially lower chance of success than franchises due to the fact that it is already established business. 

2. Entreprenurial Support

One of the biggest advantages of franchising is that the franchisor provides business help to the franchisee. When you purchase a franchise, you will be provided with all of the necessary tools and training to get your business up and running. Many franchisees may not offer everything, but they all offer the franchisor's expertise and understanding. This information is crucial for maintaining a successful business and makes it far easier than starting one from the ground up. 

3. Higher Returns on Investment

Franchises, on average, make more money than enterprises that operate independently. As we all know, finding consumers is one of the most difficult tasks for any new business. On the other hand, franchises have brand name and their own targeted audience.  As a result of their popularity, they make more money. Moreover, even franchises with significantly higher franchise prices have a stronger chance of generating a high return on investment.

Disadvantages of Owning a Franchise

Here are the top three disadvantages of starting a franchising business:

1. Rules and Regulations

The biggest downside of purchasing a franchise is that you are bound by the franchisor's regulations and restrictions. Some franchisors have a level of influence over their franchisees and decisions taken by the franchisee due to which you may feel oppressive.

2. Conflict of Interest

While the business network is an advantage that comes with owning a franchise, it comes with the risk of conflict as well. Every business carries the possibility of the connecting parties not getting along, especially when power is imbalanced and the franchisor is influencing the business.

3. Primary Investment

Investing in a franchise can be expensive for you, especially if you tend to purchase a popular brand that is in a lot of demand. While this generally correlates to higher profitability, it can be difficult for an individual to pay the primary investment in the first place.

 

10 Most Profitable Franchises to Own in India

1. McDonald’s

Industry: Fast-Food Industry

Founded Year: 1940

Investment Required: A total investment of Rs. 6.6 crore to Rs. 14 crores and a franchise fee of around INR 30 lakh is required.

Franchise Units: Till 2020, McDonald’s has administered and franchised over 39 thousand outlets in over 119 markets all around the world.

About Franchise: McDonald's is without a doubt the most popular fast food restaurant in the world and has expanded its outlets’ units in the market, with a brand worth of around 129.32 billion dollars.

Eligibility: You are required to have 40% of the launch expenditures to pay to the owner and for other non-borrowed resources, with a minimum of Rs 5 crore in liquid capital.

2. Dunkin’ Donuts

Industry: Food & Beverage Industry

Founded Year: 1950

Investment Required: To open a franchise of Dunkin’ Donuts in India, one would require a minimum investment of 1 crore rupees as well as a franchise fee of around 20-70 lakh rupees.

Franchise Units: As of 2020, Dunkin’ Donuts has managed to run 9,630 outlets in the United States and over twelve thousand units across the world.

About Franchise: Apart from coffee and donuts, the firm distributes a variety of other food items throughout India and makes a healthy profit. The brand made 1370 million dollars in revenue in 2019, thus you can see how valuable the brand worth is.

Pros: Dunkin’ has a stronghold in the coffee and donut industry.

Cons: There is a monetary impediment to the entrance.

3. KFC

Industry: Fast-Food Industry

Founded Year: 1930

Investment Required: In order to open a KFC franchise in India, you'll need to invest between 1 and 2 crores and have a commercial area of 1,000 to 1,500 square feet that fit their requirements. In addition, a royal commission of 4% to 5% will be applied to actual sales.

Franchise Units: Up till 2021, KFC has had almost 25,000 restaurants in 145 countries and territories.

About Franchise: KFC is unquestionably a profitable business and one of the biggest fast-food restaurants in over 412 locations in over 100 cities across India.

Procedure: To apply for a KFC franchise, go to the company's official website. There, you must fill up an application form that the firm will provide and if the application form is accepted, the franchisor will contact you to discuss the next steps.

4. Lenskart

Industry: Eyewear Industry

Founded Year: 2010

Investment Required: A potential investor must invest between Rs. 25 and Rs. 30 lakhs along with a brand fee of around INR 2,000,000.

Franchise Units: Lenskart is operating 500+ profitable franchise stores in 120+ cities all across India.

About Franchise: Lenskart operates on a B2C, sales-driven business model. Customers can purchase their products directly from them at a low cost. They have a wide assortment of frames in the Rs.345 to Rs.30,000 price range.

Eligibility

• The franchisee is required to have entrepreneurial abilities.

• The franchisee should have the financial capability to invest in the store requirements.

5. Domino’s Pizza

Industry: Fast-Food Industry

Founded Year: 1960

Investment Required: To open a franchise of Domino's Pizza, an individual will need to invest INR 50 lacs.

Franchise Units: Domino's claims to have over 350,000 franchise outlets all across the world.

About Franchise: A monthly profit margin of around 1-3 lakhs can be envisaged based on the outlet site and ease of delivery.

Things You Should Know: The biggest advantage of launching a Domino's franchise is that it is one of the most well-known pizza brands in the world.

6. Subway

Industry: Fast-Food Industry

Founded Year: 1965

Investment Required: According to Subway, the amount invested might be anywhere between Rs. 6,098,000 and Rs. 11,979,400. This cost also includes the cost of first franchise i.e. INR 650,000. Furthermore, the franchise partner will be required to pay a weekly fee of 12.5%, which is inclusive of franchise royalties and advertising; 8% and 4.5% respectively.

Franchise Units: As of 2021, Subway has around 37,500 outlets all over the world.

About Franchise: A Subway franchise is a wonderful choice since it comes with a unique idea of customizing every meal as per the customers’ preferences.

Things You Should Know: The annual revenues of the Subway franchise system are estimated to be over USD 11 billion. Each franchise unit generates an average of $422,000 in annual sales. According to statistics, most franchises profit at roughly 7.5% of annual sales, or $31,000.

7. Giani’s

Industry: Food Industry

Founded Year: 1956

Investment Required: To operate a Giani’s ice cream franchise, you'll need at least 250 square feet of covered space and a budget of Rs. 15-20 lakhs and is determined by a variety of criteria such as location, outlet type, and so on.

Franchise Units: Giani’s has established over 40 franchises in the Delhi/NCR area alone and over 200 outlets all over India.

About Franchise: If you look at the ice cream menu, you'll notice that there are over 70 different flavors to choose from so there's no need to go elsewhere. Shakes, faluda, fat-free ice creams, fudge, and rabri are among the other items available.

Procedure: Giani’s website incorporates a franchise application form. You can go to their franchise area and fill out a form to inquire about becoming a franchisee.

8. FabIndia

Industry: Textiles, Home Furnishing, Jewellery Industry

Founded Year: 1960

Investment Required: The franchisee would be required to invest between 30 and 50 lakhs in total, including merchandise, and can select the type of store he or she wishes to open.

Franchise Units: Up till 2020, FabIndia had operated 327 outlets in India and 14 outlets abroad.

About Franchise: The FabIndia business concept is based on providing value to customers by allowing them access to rural India's rich legacy of ethnic handicrafts. FabIndia not only tries to generate money for itself, but it also tries to help its 55000 artisans and their families make a living.

Things You Should Know: FabIndia aims to preserve the tradition of India and connecting the skill sets of over 55,000 rural artisans to urban markets while promoting sustainable rural development. FabIndia manufactures its clothes from handwoven and hand-printed fabrics.

9. FirstCry

Industry: Retail Industry (E-commerce)

Founded Year: 2010

Investment Required: A total investment of between Rs.20,00,000 and Rs.30,00,000 is required to open a FirstCry franchise store. Its entire built-up area varies between 1000 and 2000 square feet.

Franchise Units: FirstCry has had over 380 outlets all over India, in 2020.

About Franchise: FirstCry bills itself as Asia's leading online retailer of baby and children's supplies. The revenue of FirstCry in 2019 was $73.59 million (INR 535 crore) which increased to $122.07 million (INR 887.5 crore) in 2020, seeing a growth of 65.8%.

Things You Should Know: The company follows a mixed business approach. It can be found both online and offline. The brand is aimed at parents between the ages of 25 and 40. For parents looking for high-quality supplies for their children, FirstCry serves as a one-stop shop.

10. Starbucks

Industry: Beverage Industry (Coffee Shop)

Founded Year: 1971

Investment Required: The investment amount varies from area to area because Starbucks is a rent-based franchise that operates on a minimum guarantee strategy. It also relies on the size of the store and the number of people who walk through the door.

Franchise Units: Starbucks, the world's most well-known coffeehouse brand, had 33,833 coffee shops in 2021. 

About Franchise: Starbucks' annual income in India is over 3 crores. According to a survey by Kotak Institutional Equities, on average each Starbucks outlet in India generates a little more than INR 93,000 every day, bringing its monthly earnings to roughly INR 30,000.

Things You Should Know: Starbucks doesn’t allow an individual to open its franchise. In India, however, you can put in an application for a license in the chosen areas.