How to Choose the Right Supermarket Franchise in India

Supermarket franchise in India are growing at a rapid speed especially after the pandemic, though the market was very slow during the pandemic, it has still grown at a very high pace then expected. 

Supermarket franchise in India business is going to be profitable in India for decades, because the need of basic items at the moment can never be met. 

Even after bringing everything, one or the other thing is missing and again you have to go to the supermarket to bring it. 

This business model helps you in selling more items because all the basic items which are cheap are kept on the counter due to which the customer doesn’t hesitate to grab the product because its cheap. 

Even the people living in tier-2 or tier-3 cities have an opinion about groceries and are more choosy now. A new India is coming which doesn’t hesitate to buy packaged food. 

According to a study 67% of Indians prefer packaged food at supermarkets and it was 26% back in 2010. 

As the packaged food market is growing so rapidly it’s the perfect time to enter in this business and bring an organised retail and supermarket franchise in India as the market has a lot of scope and there’s a lot of space which is yet to be explored. 

Also read: Starting A Supermarket Franchise In India- Tricks to get Optimum Success

Supermarket Franchise in India Model

A supermarket franchise in India model is basically a chain of stores which uses the name and brand value of the parent company. 

This allows the other store owners to work under the brand, trademark which holds the whole trade system and business. 

In exchange to these, the franchisees pay a certain amount of fees based on their sales or a fixed percentage of their sales to the franchisor which is referred to as royalty. 

Basically this model allows the person to stay away from the set up work, legal proceedings to open a brand, and obviously finding the brand name and staff. 

Person gets an established brand so they need to advertise and just run the business. 

Person gets an established brand, enterprise level support system and business operational system and this lets franchisor get best deals in the market and the opportunity to expand their business and take it to new heights as well as maximise their profits. 

Types of Supermarket Franchise in India Models

We are going to provide you with the 4 best ways that are available in the market currently and are running great and are even profitable in india. 

Select one of them and start your business 

1. Franchise Own Franchise Operated FOFO

This model allows franchisors to make decisions at the local level so these stores are generally opened in areas where the brand value is best suited. 

Strategically the location is decided as the brand always maintains their status. 

Localised decisions help the franchisor know the base level problems so accordingly they make their strategies for marketing and sales etc. 

Pros

1. Owner Involvement 

The franchisee is also the co-owner so they have much more concern about the success of the business , this automatically leads to higher motivation and commitment as everyone wants to make profit. 

2. Operational Control

The franchisee can be a bit flexible when it comes to ordering stuff and handling day to day operations as they can always adapt the strategies which are best suited in their local market but within the limit and constraints of the franchise government. 

3. Local Expertise

Franchisees always know about the local market and have that local touch that the customer requires so they automatically make a relation with the customer which brings customer back to their supermarket franchise in India. 

Local person knows exactly what the customer wants so the brand value is also maintained and the customer also goes satisfied. 

4. Scalability 

Franchisees can supposedly take their business to a new level and expand it using the same formula as they will get help from the local people which will result in great success as the brand is already established and is just being helped by local people so both are benefited. 

This support helps the brand to scale at a very high level. 

5. Franchisor Support

The franchisee benefits from the training, marketing and operational systems provided by the franchisors. 

This helps in reducing the risk of failure and also enhances the knowledge about how to run a successful business and even give franchisees. 

Cons

1. Financial Risk

The franchisee bears all the costs such as initial setup , operating cost and every other expense met by the franchisee so all the risk is taken by the supermarket franchise in India. 

In case the business does not work, it can bring a huge problem to the person investing. 

2. Limited Operational Flexibility 

The franchisee has control over the operations but it makes them bounded and they cannot increase their power to think more and just have to follow the rules or the method that has been made by the franchisor.

In the opposite case one can invent ways or do as they want. 

3. Royalty

Owners keep paying the royalty despite their sales reducing or increasing, which might reduce their profits overtime. 

2. Company Owned Company Operated (COCO)

Company owned company operated outlets refers to a business system where the owner of the brand has complete right and will about where to open their stores and outlets in a wide area. 

All the marketing strategies are decided by the brand and according to the circumstances in the market, opportunities are found and then grabbed. 

Pros

1. Complete Control Over Operations

The company has full control over day to day operations which makes it easier for the company to have consistency in the product and maintain higher quality as they can easily adapt to changes in the local market. 

2. Higher Profit Margins

Since no royality is being payed to anyone so the profit margins increase automatically and all the accumulated profit can be kept in the company for growth purposes 

3. Brand Consistency 

The companies have to make sure that all the locations are matching the standards of their brands and other corporate standards. 

Customer service and the operational procedure can be handled by the companies on their own to give a consistency in their service 

4. Fewer Conflicts

Since the company owns all the operations and locations, all the disputes regarding royalty, fees or operational guidelines are figured out by the franchisee

Cons

1. Capital Intensive

Opening and operating company owned locations require significant capital investment. 

The company must always bear the full cost of real estate, construction, staffing and operations; this can limit the pace of expansion and financial flexibility. 

2. Operational Complexity 

Managing a large number of staff and company owned locations can be logistically complex and resource intensive. 

It requires a lot of infrastructure and money as well as a strong management team to handle overseas operations across multiple sites. 

3. Limited Scalability 

Coco refers to relying on the company resources in order to figure out new locations for the business, this limits the speed at which business could be expanded. 

Franchising allows the brand to expand quickly by leveraging franchisees capital. 

4. Financial Risk

 The company bears all the expenses for each location including operational cost, potential losses and liabilities. 

If the location does not do well it really affects the company’s financials and hits on the bottom line. 

3. Company Owned Franchise Operated COFO

Company owned franchise operated business model refers to a model where the franchisor owns a store but in order to release their burden they appoint a franchise to handle the business operations and maintain the decorum amongst their staff. 

All control is under franchisor and he is the decision maker but he has a franchise to do all the things that he appoints them for. 

Franchise takes care of all the things at the ground level. 

Pros

1. Dual Revenue

The company generates income not only through the royalties but also through leasing the properties to the franchisees itself. 

Later on a major income could be generated from this method as the leasing keeps on increasing and the person earns through the sales as well. 

2. Local Market Expertise

Franchisees get complete knowledge of the local area and the preferences of the people living nearby. 

A team properly looks at the problems and they work on the solution so that it could be resolved as soon as possible. 

This brings more tailored operations and marketing strategies, improving the chances of success at particular locations. 

3. Brand Control with Some Flexibility 

The parent company owns the property so they sometimes give the flexibility to enforce brands standards and operational consistency. 

The franchisee has the right to make decisions at the local level so they automatically lead to some local adjustments and innovation. 

4. Long Term Asset Appreciation 

The company owns the real estate which can give upto 100x returns in years because the work is going to continue and the lease is just going to extend so in future it can give maximum appreciation. 

This offers long term financial benefits beyond immediate operational revenue especially in posh locations or locations where growth is visible. 

Cons

1. Less Operational Control 

As the company doesn’t manage the business, they know very less about the things happening at the ground level. 

The company doesn’t have any immediate excess at the ground level nor do they have any control over the customer experience, employee quality and operational efficiency. 

2. Franchise Dependency

Hit or Flop what it would be only depends on the location and also on the franchisee ability to effectively run the business. 

Even if the real estate is company owned, no risks can be taken , all of these things negatively affect the brand which the brand can’t let happen. 

3. Lower Margins on Operational Income

Since all the profits are just from one source and that is royalties , the profit margins will always vary in different locations. 

Whereas in the COCO model we can see that the company holds all the profits so they gain more money. 

4. Brand Exposure 

If a franchisee performs negatively or shows poor results, it will automatically affect the brand value and the reputation of that brand. 

Managing such kinds of risks requires experienced people which the brand provides and they have a proactive approach to franchisee relations.  

4. Franchise Owned Company Operated FOCO

Franchise owned company operated business model is a model in which the franchisee owns the location, but the parent company manages and operates the day to day business. 

All the operations are handled by the franchisor whereas the franchisee holds ownership over the location (asset). 

Pros

1. Control Over Operations

The parent company takes full control over the operations of each location ensuring that the staff is trained and everyone is maintaining the brand standards, customer experience and operational procedures across all units. 

This allows better quality control than in any other franchise models. 

2. Increased Brand Consistency 

Since the company handles and manages all the staff it is very easy to convey any new law or promotion strategy which can fulfil the franchisor’s vision for service, product quality  and customer experience. 

3. Standardisation Across Locations

With the company running all the operations, it is easier to convey and implement standard operating procedures , training programs and marketing strategies. 

This can lead to a great customer experience and a customer base for later. 

Cons

1. Less Incentive

Since the supermarket franchise in India is not fully invested, so they do not take care of the day to day operations and everything has to be controlled by the owner, there are chances of missing things. 

This can automatically lead to reduced motivation and potentially low performance in different locations. 

2. Higher OPC (Operational Cost)

The franchisor takes in hand all the responsibilities of handling all the day to day activities of business such as managing the business including staffing, training, marketing and other operational costs. 

This can only decrease profits and increase expenses and reduce profits margins compared to a totally franchise operated model where they handle all the day to day operations. 

Check out this: Investing In Supermarket Franchise: A Smart Move

Final Words

Here are all the supermarket franchise In India models that are readily available in the market today and you can choose from any of them whenever you feel like according to your calculations and budgeting you can decide which one of them to choose from if you want to enter the franchising sector. 

This sector has a great scope and you can expand in any way you want so one must give it a try.