How do you get a franchise licence in India? You don't, because there isn't one. India has no franchise law, no franchise registry and no licence to start franchising. What you need instead is a short list of ordinary registrations. The franchisor needs a business entity, GST registration, a trademark application, TDS systems and a properly stamped franchise agreement. Each franchisee outlet needs its own local and sector licences, such as Shops and Establishments registration, FSSAI for food, a drug licence for a pharmacy, a trade licence and a fire NOC.
This is the practical checklist. For the legal framework behind it (contract, IP, competition, consumer and data law), read our franchise law guide for India.
Quick note: this checklist is general information, not legal or tax advice. The Franchise Insiider (TFI) is a franchise advisory firm, not a law firm or a CA firm. Rules differ by state and city and change often. Have a CA and a lawyer confirm every item for your business.
Take the Franchise Eligibility Test Read the franchise law guide
Why there is no franchise licence in India
A franchise in India is a contract between two businesses. No statute regulates it and no disclosure filing is required before selling one. Registration is not mandatory for the franchise itself. GST registration may be, depending on turnover.
So "franchise registration" really means two lists: what the brand owner needs, and what each franchisee outlet needs. The tables below cover both.
Franchisor checklist
Do these before you sign your first franchisee.
| Item | What to do | Watch out for |
|---|---|---|
| Business entity | Incorporate a company or LLP, or use your existing firm. A company incorporated through the MCA SPICe+ form gets PAN, TAN, EPFO and ESIC registration and a bank account in the same process. | Sign franchise agreements and hold the trademark in the same entity, or put a written licence in place. |
| GST registration | Register on the GST portal. It is compulsory once aggregate turnover crosses ₹20 lakh for services (₹10 lakh in some special category states). You can register voluntarily below that. | Register before you invoice your first franchise fee. You need a separate GSTIN in each state where you have a place of business. |
| GST on fees and royalty | Charge 18 percent on the franchise fee and royalty: CGST plus SGST within a state, IGST across states. The 22 September 2025 rate changes kept this at 18 percent. A 2020 Gujarat advance ruling classified these under SAC 998396 (trademarks and franchises). | SAC 9961 is wholesale trade and does not fit. The same ruling rejected SAC 997336 at 12 percent. Advance rulings bind only the applicant, so your CA should confirm. |
| Trademark | File your brand name and logo in every relevant class before franchising. See our guide on trademark registration before you franchise. | The applicant should be the franchising entity. Use ® only after registration. |
| TDS on royalty | Franchisees usually deduct TDS from royalty under section 393 of the Income-tax Act 2025. Reconcile the credits every quarter. | You receive royalty net of TDS. Chase missing certificates early. |
| Franchise agreement | Have a lawyer draft it, then pay stamp duty in the state where it is signed, usually by e-stamp or franking. | Stamp duty is state-specific. An unstamped agreement is not admissible as evidence until duty and penalty are paid. |
| FEMA (foreign brands only) | Royalty and brand fees paid abroad are on the automatic route. They are remitted through an authorised dealer bank. | If the foreign brand also takes equity in India, FDI rules apply. |
| Your own office and outlets | Register under your state's Shops and Establishments law and take the outlet licences in the next table for any company-owned unit. | Your pilot outlet tests the licence list. |
Each franchisee outlet checklist
The franchisee is a separate business. It takes licences in its own name, for each outlet. Your brand's registrations do not cover it.
| Item | Who needs it | Notes |
|---|---|---|
| Entity, PAN and bank account | Every franchisee | Must match the name on the agreement. |
| GST registration | Franchisees above the turnover threshold, and many below it | A registered franchisee can usually claim input tax credit on the GST charged on your fees. |
| TAN | Franchisees that must deduct TDS on royalty | Needed before the first deduction. |
| Shops and Establishments | Most shops, restaurants and offices | State law. In Gujarat, since December 2025, units with 20 or more workers register and smaller units give intimation. Other states differ. |
| Trade or health licence | Depends on the city | Issued by the municipal body. Delhi's MCD deregulated health trade licences for 67 food business categories in 2026. |
| FSSAI registration or licence | Food, beverage and cloud kitchen outlets | From 1 April 2026: registration up to ₹1.5 crore turnover, State licence up to ₹50 crore, Central licence above that. Apply on FoSCoS. |
| Drug licence | Pharmacy and chemist outlets | From the state drugs licensing authority under the Drugs and Cosmetics Act 1940 and Rules 1945. Needs a registered pharmacist and an inspection. |
| Fire NOC | Depends on the state and building | Depends on state fire rules, building height, floor area and use. Check before signing the lease. |
| Lease registration | Outlets on a lease over one year, or with yearly rent | Compulsory under section 17 of the Registration Act 1908, plus stamp duty. |
| EPF, ESI and professional tax | Outlets with employees | EPF generally from 20 employees and ESI from 10. Professional tax where the state levies it. |
| Signed, stamped franchise agreement | Every franchisee | Keep the original with the stamp paper or franking proof. |
Make each licence a condition before opening day. Some sectors add more, such as a liquor licence or pollution consent.
TDS and FEMA in more detail
TDS
The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026. TDS on payments to residents now sits in section 393(1), which replaced section 194J. For royalty, the rate is 10 percent once payments exceed ₹50,000 in a tax year, and it applies to the whole amount. Only a "specified person" must deduct. Broadly, that is every payer except an individual or HUF whose business turnover was ₹1 crore or less (₹50 lakh for a profession) in the previous tax year. Whether the upfront fee counts as royalty depends on how the agreement is written. See our piece on pricing royalty.
FEMA for foreign franchisors
Since Press Note 8 of 2009, royalty, lump-sum technical fees and trademark or brand name payments do not need government approval. They follow the FEMA (Current Account Transactions) Rules 2000. The Indian franchisee deducts tax at the rates in force under section 393(2), subject to any tax treaty.
Common mistakes
- Paying for a "franchise registration certificate". No government body issues one.
- Invoicing without the GST registration you need. Tax and interest follow.
- Ignoring TDS. Brief franchisees at onboarding.
- Signing on plain paper. Pay the stamp duty before you sign.
- Assuming the brand's FSSAI licence covers outlets. It does not.
- Franchising before filing the trademark. File first.
What TFI does, and when to call a CA or lawyer
The Franchise Insiider was founded in 2014 in Ahmedabad under Clevism Private Limited, led by Founder & MD Dhinal Baxi and Co-Founder Sameer Desai. We build franchise systems. Our DB-FF (DB Franchise Framework), which starts from ₹60,000, sets up the model, unit economics, operations manual and franchisee onboarding plan, including the licence list each outlet needs before opening.
Your CA handles GST, TDS and remittances. Your lawyer drafts the agreement and advises on stamp duty. A trademark attorney files your marks. We work alongside them, not in place of them.
Disclaimer
This article is general information as of September 2026, not legal or tax advice. Thresholds, rates, section numbers and state rules change. Confirm every item with a qualified CA and lawyer before acting.
Get the system ready, then the paperwork
Registrations are the easy part. First read whether your business is ready to franchise and our guide on how to franchise your business in India. Then take the free Franchise Eligibility Test (FET), or talk to us about DB-FF. More guides are in The Almanack.
Start with the FET Explore DB-FF
Franchise registration in India: FAQs
Do I need a licence to start a franchise in India?
No. India has no franchise law and no franchise licence. You need the ordinary registrations any business needs: an entity, GST registration, a trademark application, TDS compliance and a stamped franchise agreement. Each outlet then needs its own local and sector licences, such as Shops and Establishments and FSSAI.
Is there a government franchise registration or registry in India?
No. There is no franchise registry and no mandatory pre-sale disclosure filing. Any franchise registration certificate sold online is a private document, not a government approval. The registrations that matter are GST, trademark, company or LLP, and the outlet licences.
What GST applies to franchise fees and royalty in India?
Generally 18 percent: 9 percent CGST plus 9 percent SGST within a state, or 18 percent IGST across states. A 2020 Gujarat advance ruling classified franchise fees under SAC 998396 (trademarks and franchises) at 18 percent, and the rate for that entry did not change on 22 September 2025. Advance rulings bind only the applicant, so confirm with your CA.
Does the franchisee deduct TDS on royalty?
Usually yes. Under section 393(1) of the Income-tax Act 2025, in force from 1 April 2026, a specified person paying royalty to a resident deducts 10 percent once payments cross ₹50,000 in the tax year. It replaces section 194J. Treatment of the upfront fee depends on the agreement, so confirm with a CA.
Does each franchise outlet need its own FSSAI registration or licence?
Yes. The franchisee runs the food business at the outlet, so it needs its own FSSAI registration or licence. From 1 April 2026, registration covers turnover up to ₹1.5 crore, a State licence up to ₹50 crore and a Central licence above that. Licences and registrations no longer need periodic renewal.
Does a franchise agreement need stamp duty or registration?
It needs stamp duty under the law of the state where it is signed. An unstamped agreement cannot be used as evidence until duty and penalty are paid. The franchise agreement is not usually a document that must be registered, but an outlet lease for more than a year, or reserving yearly rent, must be registered.
Can a foreign franchisor receive royalty from India without government approval?
Yes. Since Press Note 8 of 2009, royalty, lump-sum technical fees and trademark or brand name payments are on the automatic route, subject to the FEMA current account rules. Payments go through an authorised dealer bank, and the Indian payer deducts tax at the applicable rate, subject to any tax treaty.