Franchising in India: Why Due Diligence Matters More Than Ever

Franchising is often viewed as a dream shortcut into the world of entrepreneurship. For aspiring business owners in India, it’s marketed as a plug-and-play system: the brand is already known, the operations are “proven,” and support is supposedly provided throughout the journey. Sounds ideal, right? Unfortunately, the reality can sometimes be quite different.

Across India, franchise opportunities are booming—especially in the food and beverage space. From tea kiosks to burger joints and cloud kitchens, the market is filled with brands eager to expand. And why not? It’s a scalable model for the franchisor and an exciting opportunity for the investor. But not all franchises deliver what they promise. And that’s where the red flags begin.

What Happens When Expectations Don’t Match Reality?

In several reported cases, franchisees have voiced concerns about the gap between what was promised during onboarding and what was actually delivered post-launch. This includes issues like lack of operational support, inaccurate profit projections, inflated marketing claims, and poor after-sales service.

One frequently discussed example in business forums involves Kewal Ahuja, associated with the SGF (Spice Grill Flame) franchise. While the brand saw rapid growth and gained attention from small-town entrepreneurs and foodpreneurs alike, multiple franchisees have raised questions about post-signing support and the fulfillment of business guarantees.

In these discussions, some franchisees allege that the operational help and revenue models pitched in early meetings weren’t replicated in reality. While these are claims still subject to legal and public scrutiny, the volume of such complaints signals a broader issue—investors are not doing enough due diligence before signing legally binding agreements.

Why First-Time Franchisees Are at Risk

The majority of new franchise investors are first-timers—individuals who may be stepping into business for the first time. Many don’t have formal business training or experience reading financial documents or contracts. Instead, they rely on the franchisor’s word, glossy presentations, and verbal assurances.

This lack of preparation leaves them vulnerable.

They might not:

1. Verify claims with existing or past franchisees.
2. Consult legal professionals to review agreements.
3. Investigate the franchisor’s track record, including any pending disputes.
4. Understand local market dynamics well enough to evaluate feasibility.

This overreliance on brand perception—without investigating the backend realities—can lead to significant financial and emotional distress.

How to Protect Yourself Before Investing in a Franchise

To help prospective investors navigate this terrain, here are three essential practices every franchisee should adopt:

📝 1. Insist on Full Transparency

Before signing any document, go over it in detail—with a legal expert if possible. Avoid vague promises like “guaranteed profits” or “assured support.” Ask specific questions about your role, responsibilities, and exit clauses. If something is promised verbally, get it in writing.

🗣️ 2. Talk to Existing Franchisees

The best insights come from those already inside the system. Ask them:

How accurate were the sales and cost projections?

How responsive is the franchisor post-signing?

What unexpected challenges did they face?

These conversations can reveal hidden aspects of the business model.

⚠️ 3. Don’t Be Swayed by Hype

A rapidly expanding franchise is not always a strong one. Sometimes, fast growth is fueled more by signing fees than by sustainable operations. Evaluate whether the brand is prioritizing quality or just aggressively acquiring new investors.

Lessons from the SGF Franchise Discussions

The SGF case highlights the need for caution—not just with this specific franchise but with any franchise model. The presence of repeated investor concerns, whether proven or not, should always prompt deeper questioning. No brand is too big or too small to investigate thoroughly.

This isn't to say all franchises are bad. Many are well-run, transparent, and offer meaningful opportunities. But the line between opportunity and risk is thin, and investors need to be proactive, not reactive.

In Closing

Franchising can still be a smart way to enter business—but only if you treat it with the seriousness it deserves. Remember, you’re not just buying a brand name—you’re entering a partnership. And like any partnership, trust should be earned, not assumed.

The next time a franchise opportunity comes your way, pause before signing. Research, question, verify, and only then—commit. Your financial future may depend on it.