Archive · 8 Oct 2026
India’s Franchise Boom Faces Risks From Premature Expansion
More kinds of businesses in India are trying to grow by opening franchise outlets.
A franchise lets someone run a business using a brand’s name and system.
But a brand may look successful before it has worked out how to help other owners succeed.
Dr. Chackochen Mathai says people should check whether outlets make enough money after paying costs.
They should also ask whether current franchise owners are doing well.
A good logo and a busy-looking shop are not enough.
Brands need reliable training, supplies and support.
Mathai says a business should prove its model before asking other people to invest in it.
Franchising is spreading into categories including salons, preschools, gyms, tea shops and specialised services.
Franchise adviser Dr. Chackochen Mathai warns that being able to sell franchises does not mean a business is ready to franchise.
Prospective buyers should examine outlet sales, margins, costs, break-even customer numbers and whether existing franchisees are profitable.
A scalable franchise requires operational support such as procurement, training, logistics, technology and outlet-performance monitoring.
Mathai says brands should prove their business model and build support systems before using franchisees’ money to fund expansion.
- Who
- Dr. Chackochen Mathai, founder and CEO of Franchising the Right Way and Subject Matter Expert at ArthaVerse, discusses risks for franchisors and prospective franchisees.
- What
- The article warns that some businesses are selling franchises before proving their model or building the systems needed to support franchisees.
- When
- As India’s franchise economy expands.
- Where
- India, with examples involving expansion into North India and overseas markets.
- Why
- Franchise sales can provide upfront income, creating an incentive to expand before outlet economics and support systems are established.
Expansion opportunity
Readiness concerns
Franchising as a growth route
Expansion opportunity
Franchising can help brands enter new markets without funding every outlet themselves, while offering aspiring entrepreneurs a brand and operating model.
Readiness concerns
If a business model is not proven, franchise sales and upfront fees can shift the burden of experimentation onto franchisees.
Rapid rollout versus careful replication
Expansion opportunity
India’s expanding franchise market offers an opportunity to turn fragmented local services into branded, replicable businesses.
Readiness concerns
A successful outlet in one location does not prove that the concept will work elsewhere; local demand, rent, competition and other conditions matter.
Brand appearance versus operating capability
Expansion opportunity
A polished brand and store presentation can help a business attract customers and franchise interest.
Readiness concerns
Appearance alone is not enough: networks need systems for training, supply, support and monitoring as they grow.
- Industry trend
- Franchising is spreading beyond familiar sectors into salons, preschools, gyms, tea shops, cloud kitchens and specialised services.
- Key distinction
- A business able to sell franchises is not necessarily ready to franchise, Mathai argues.
- Investment example
- Mathai notes that ₹3 lakh may appear modest but can be a substantial investment for someone with ₹5 lakh in savings.
- Key questions
- Prospective franchisees should assess sales, margins, rent and staffing costs, break-even customers and existing franchisee profitability.
- Support systems
- A scalable network needs capabilities including procurement, logistics, training, marketing, technology and customer support.
- Expansion experience
- Mathai’s work included helping expand CADD Centre into North India and Naturals into overseas markets.
- Core recommendation
- Prove the business model and build support systems before taking franchisees’ money.