TL;DR: A food franchise agreement in India is a long-term commercial contract, usually five years or more, and most of the disputes we hear about come from things that were never asked at signing: what the royalty is charged on, whether the territory is really exclusive, what the supply-chain markup is, and how you get out. Take the 12 questions below into every franchisor meeting, get the answers in writing, and have a lawyer read the agreement before you pay a rupee. See how we answer them → Mughlai Magic franchise
Before the questions: how franchising works in India
India has no dedicated franchise law. Agreements are governed by the Indian Contract Act, along with trademark, competition and consumer law. That means the agreement itself is the only protection you have. There is no mandatory disclosure document, so the burden of asking is on you.
The 12 questions
1. What exactly does the franchise fee buy, and what does the royalty apply to?
Separate the one-time franchise fee from the recurring royalty. Then ask whether royalty is a percentage of gross sales, net sales after aggregator commission, or a fixed monthly amount. A royalty on gross sales when most of your orders come through Swiggy and Zomato at a heavy commission can be painful. Ask whether there is a minimum monthly royalty even in a slow month.
2. Is my territory exclusive, and how is it defined?
"Exclusive territory" means little unless it is defined by pin codes, a radius in kilometres or named localities, and unless the agreement says the franchisor will not open or license another outlet inside it. Ask specifically about cloud kitchens and delivery radius, which can overlap a dine-in territory without anyone opening a shop next door.
3. What must I buy from the franchisor, and at what markup?
Most food franchises require you to buy spice blends, marinades, packaging or key ingredients centrally. That is often the whole point, because it keeps the product consistent. The question is price. Ask for the current supply price list, how often it can be revised, how much notice you get, and whether you can source non-proprietary items (rice, vegetables, oil) locally.
4. What does training actually consist of?
Ask for the number of days, where it happens, who attends (owner only, or your cooks too), and whether there is a second round at your outlet before opening. Ask what happens when a trained cook leaves in month four. Good franchisors have a retraining process; weak ones have a phone number.
5. Is there a marketing fund, and what do I get for it?
Many agreements collect a marketing contribution on top of royalty. Ask what it is spent on, whether you receive an annual statement, and whether any of it is spent in your city. Ask separately what the franchisor does for your launch: aggregator listing setup, launch offers, local promotion.
6. What is the term, and what does renewal cost?
Five years is common. Ask whether renewal is automatic if you are compliant, whether a fresh franchise fee is payable, and whether the franchisor can change the terms at renewal. Also ask whether you must refurbish the outlet as a condition of renewal, and roughly what that costs.
7. How do I exit, and what does it cost me?
Ask what happens if you want to close in year two. Is there a termination fee? Do you owe the remaining royalty? Can you sell the outlet to another operator, and does the franchisor have a right of first refusal or a transfer fee? Read the non-compete clause: how long it lasts after exit and what radius it covers.
8. What happens if the brand itself fails or defaults?
This is the question almost nobody asks. If the franchisor stops supplying, stops supporting, or shuts down, what are your rights? Can you continue operating under a different name using the equipment you paid for? Is there any refund of the franchise fee? Ask for it in writing; a franchisor who is confident in the business will not object.
9. Will you show me a unit-level P&L from an existing outlet?
City-wide averages and "typical payback" ranges are useful only if they are backed by at least one real outlet's numbers in a locality like yours: monthly sales, aggregator share, food cost, rent, staff, royalty, net. If the franchisor will not share any unit's numbers, even anonymised, treat the projections as marketing.
10. Can I speak to two existing franchisees I choose?
Not two the franchisor picks. Ask for the full list of outlets and call two yourself. Ask them about supply pricing, response times when equipment breaks, and whether they would open a second unit.
11. Who owns the customer data and the online listings?
Your Swiggy and Zomato listings, your Google Business Profile and your customer phone numbers are valuable. Ask whether they are created in your name or the franchisor's, and what happens to them on exit.
12. What are the performance conditions, and what happens if I miss them?
Some agreements let the franchisor terminate if you miss a sales target, fail an audit, or change a recipe. Ask what the targets are, how audits work, how many warnings you get, and whether there is a cure period.
A quick comparison of common fee structures
| Structure | How it works | Watch for |
|---|---|---|
| Fixed monthly royalty | Same amount every month | Painful in slow months and the launch period |
| Percentage of gross sales | Royalty on every rupee billed, before aggregator commission | High effective rate if delivery-heavy |
| Percentage of net sales | Royalty after commissions and discounts | Check how "net" is defined in the agreement |
| Supply-margin only | No royalty; franchisor earns on supplies | Supply prices can rise without notice unless capped |
None of these is inherently better. What matters is that the structure is written clearly and that you have modelled it against your expected sales mix.
How Mughlai Magic answers these questions
We would rather you ask us all 12 than sign and find out later.
- Models and investment are published: Cloud Kitchen from ₹15 lakh, Express or QSR from ₹35 lakh, Flagship from ₹65 lakh, with payback typically 12 to 36 months depending on locality and format.
- Territory is defined and written into the agreement before you sign.
- Recipes, spice blends and base marinades come from our central kitchen with a published price list; commodity items are sourced locally.
- Training covers the owner and the kitchen team, with a 90-day launch plan and support at your outlet before opening.
- Menu pricing is standardised, so your unit economics are known in advance: chicken biryani ₹299, mutton ₹399, veg ₹249.
- We share real outlet numbers with serious applicants at the discovery-call stage, and we will connect you to existing operators.
Before you sign
Get the full agreement, not a summary. Have a lawyer with franchise or commercial-contract experience read it. Model the fee structure against three sales scenarios: slow, expected and strong. And visit an existing outlet unannounced at lunch time.
WhatsApp the franchise desk at +91 8600867860, call +91 9049392092, or email hello@mughlaimagic.com to start the conversation.
