How Much Capital Do You Need to Take a Franchise in India
October 17, 2026
How Much Capital Do You Need to Take a Franchise in India? Full Guide (2026)
In India, the total capital required to take a franchise starts from ₹50,000 and can go up to ₹25 lakh or more. But the real question is: not just the franchise fee, but the total investment including setup, working capital and royalty.
Most people only look at the franchise fee and later get stuck in cash-flow problems. This guide will tell you the truth about total costs — without any filler.
One-Line Answer: What Is the Total Cost of a Franchise?
A low-cost franchise (like Amul kiosk or Idli Point) can have a total investment of ₹2–3 lakh. An established QSR or preschool franchise can cost ₹10–25 lakh or more. In between, there are many options in the ₹5–10 lakh range.
Why this matters to you: If you build your budget by looking only at the franchise fee, you are under-budgeting by 30–50%.
The 5 Parts of Franchise Cost (Franchise Cost Breakdown)
A franchise bill is not just one fee. Understand it in 5 parts.
1. Franchise Fee (One-Time Fee)
This is a one-time charge for using the brand. It can range from ₹50,000 to ₹30 lakh. Some brands operate on zero franchise fee — like Idli Point and Amul (Amul has no franchise fee, only setup cost).
For international brands like KFC, the franchise fee alone can be ₹35–38 lakh.
2. Setup and Interior Cost
Shop interior, furniture, equipment, signage — all come under this. For a small kiosk, this can be ₹80,000–₹1.5 lakh, and for a dine-in outlet, it can go up to ₹5–15 lakh.
3. Working Capital (The Most Ignored Cost)
This is the money you need for rent, salary, electricity and stock during the first 3–6 months — until revenue stabilizes. According to industry estimates, this can be ₹3–15 lakh.
In the Idli Point example, working capital is kept at ₹30,000–₹50,000 because the setup is small. For larger outlets, it can be several lakhs.
4. Royalty and Marketing Fee
Royalty is a percentage of sales every month. In F&B, it is usually 4–8%, in retail 4–12%, and in fitness 5–10%. Additionally, a 2–3% national marketing fee may be added.
If your monthly sales are ₹8 lakh and royalty is 6%, then ₹48,000 goes into royalty every month — before rent and salary.
5. Hidden Costs (GST, Deposit, Training)
18% GST is charged on the franchise fee. Add property deposit (2–3 months’ rent), licenses (FSSAI, Shop Act), and training costs. In the Kaati Zone example, on a ₹2 lakh franchise fee, ₹36,000 GST is charged separately.
Why this matters to you: If you are planning a budget of ₹5 lakh, you should actually prepare for ₹7–8 lakh.
Franchise Options by Budget (₹50,000 to ₹25 Lakh)
The table below shows franchise options available at different budgets and their estimated total costs.
| Budget | Franchise Example | Estimated Total Investment | Royalty | Source |
|---|---|---|---|---|
| ₹50,000–₹2 Lakh | Delhivery Partner, Edumilestones, Maa Ki Chai kiosk | ₹50,000–₹2 Lakh | 0% (or minimal) | FranchiseBazar (2026) |
| ₹2–5 Lakh | Amul Kiosk / Railway Parlour, Idli Point, Dr. Lal PathLabs collection centre | ₹2–5 Lakh | 0% (Amul, Idli Point) | FranchiseBazar / Zee News (2026) |
| ₹5–10 Lakh | Kidzee / EuroKids (micro-format), Tumbledry laundry | ₹7–10 Lakh | 4–8% (different in education) | FranchiseBazar (2026) |
| ₹10–25 Lakh | Mid-tier QSR, preschool (full format), salon | ₹10–25 Lakh | 5–8% | Franchise India / FranchiseBazar (2026) |
Why this matters to you: In the ₹2–5 lakh budget, you can find zero-royalty brands, which saves money in the long run. At ₹10 lakh+, the royalty burden increases.
Cost Difference by City (Tier 1 vs Tier 2 vs Tier 3)
The same franchise can open in Mumbai for ₹15 lakh and in Patna for ₹6 lakh. The difference is in rent, deposit and labour cost.
| City | Rent (200–400 sq ft) | Estimated Setup Cost | Estimated Break-Even |
|---|---|---|---|
| Mumbai | ₹60,000–₹2,60,000/month | ₹8–15 Lakh | 12–18 months |
| Indore | ₹20,000–₹80,000/month | ₹4–8 Lakh | 8–12 months |
| Jaipur | ₹20,000–₹80,000/month | ₹4–8 Lakh | 9–14 months |
| Patna | ₹15,000–₹50,000/month | ₹3–6 Lakh | 7–11 months |
Source: Industry estimates based on FranchiseBazar and local commercial rent data (2025–2026).
Why this matters to you: Due to lower rent in Tier-2 cities, low-cost franchises can break even in 6–12 months.
Franchise vs Own Business: From an Investment Perspective
In a franchise, you pay more upfront (fee + royalty), but the risk is lower. In your own business, upfront cost can be lower, but building a brand takes both time and money.
| Aspect | Franchise | Own Business |
|---|---|---|
| Franchise Fee | ₹50,000–₹30 Lakh | ₹0 |
| Royalty | 4–8% (F&B) | 0% |
| Working Capital | ₹3–15 Lakh | ₹2–10 Lakh (estimated) |
| Break-Even | 6–18 months | 12–24 months |
| Failure Rate (5 years) | 15–20% | ~90% (startups) |
Source: Launchlify (2026), FranchiseBazar (2026), and DPIIT estimates.
Why this matters to you: If you have ₹2–5 lakh and this is your first business, the lower risk of a franchise works in your favour. If you have ₹10 lakh+ and industry experience, your own business can give higher margins.
How to Fund It? (Mudra Loan and Bank Loan)
Three Tiers of Mudra Loan
Under the Pradhan Mantri Mudra Yojana (PMMY):
- Shishu: Up to ₹50,000
- Kishor: ₹50,001–₹5 Lakh
- Tarun: ₹5–₹10 Lakh
This loan is collateral-free. Women entrepreneurs also get a small interest rate concession.
Bank Franchise Loan
Banks like SBI, HDFC, ICICI give loans for franchise businesses. The approval rate for franchise loans is 60–70%, compared to 30–40% for independent businesses.
Why this matters to you: If you have 30–40% down payment, the rest can be funded through Mudra or bank loans.
Checklist: 7 Questions Before You Invest in a Franchise
- Have I added up the total investment (fee + setup + 3–6 months working capital)?
- Is 18% GST on the franchise fee included in my budget?
- Is the combined royalty and marketing fee less than 10%?
- Is my monthly rent less than 15% of estimated sales?
- Have I spoken to 3–5 existing franchise owners (not just the brochure)?
- Is the exit clause in the franchise agreement clear?
- Do I have a separate 6-month personal runway?
If the answer to any of these is “no”, do not invest yet.
Final Word
Franchise capital can start from ₹50,000, but your preparation should be for the total investment. Looking only at the franchise fee is the biggest mistake.
If you are in the ₹2–5 lakh budget: Look at zero or low royalty brands like Amul, Idli Point, Delhivery.
If you are in the ₹5–10 lakh budget: Consider preschool or laundry franchises.
If you are in the ₹10 lakh+ budget: Carefully read the royalty terms in QSR or retail franchises.
See verified franchise options based on your city and budget:
View franchise list on free-franchise.com →
FAQ
How much money is required to take a franchise in India?
It depends on the brand. Low-cost franchises start from ₹50,000 (Delhivery Partner). An Amul kiosk costs ₹2–6 lakh. An established QSR or preschool can cost ₹10–25 lakh or more. Add franchise fee, setup cost and working capital to get total investment.
Can I get a franchise for ₹2 lakh?
Yes. Options like Delhivery Partner (₹50,000), Maa Ki Chai kiosk (₹1.5–2 lakh), and Edumilestones (₹50,000–2 lakh) exist. You need to add working capital and setup cost separately. A total budget of ₹2–3 lakh is sufficient.
What are the hidden costs in a franchise?
The biggest hidden cost is working capital — rent, salary and stock for the first 3–6 months (₹3–15 lakh). Additionally, 18% GST on the franchise fee, property deposit, training fees, and marketing fees (2–3%) are included.
What is the break-even period for a franchise?
Low-cost franchises can break even in 6–12 months in Tier-2 cities. Established brands may take 12–24 months or more. Rent, footfall and royalty affect this period the most.
Can I take a franchise using a Mudra loan?
Yes. Under the Pradhan Mantri Mudra Yojana, collateral-free loans from ₹50,000 to ₹10 lakh are available. All three tiers — Shishu (up to ₹50,000), Kishor (up to ₹5 lakh), and Tarun (up to ₹10 lakh) — can be used for franchise setup.
Is a zero royalty franchise a good idea?
Zero royalty means you keep more of your sales. But understand the trade-offs: some zero-royalty brands may have lower margins or strict control over the supply chain. Read the agreement terms carefully.