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Author: Aadvik Bagga

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Franchise stories Industry Story

5 Biggest Mistakes First-Time Franchise Investors Make (And How to Avoid Them!)

Thinking of Investing in a Franchise? Read This First!

Franchising is one of the fastest-growing business models, offering investors a proven path to success. According to the Franchise Business Economic Outlook, the F&B franchise industry in India is valued at over ₹5,000 crore and growing at 30-35% annually.

With numbers like these, investing in a franchise might seem like a no-brainer. However, nearly 30% of new franchise businesses struggle or shut down within the first five years due to mistakes that could have been avoided.

Before you sign any franchise agreement, avoid these five costly mistakes!

1. Mistaking Popularity for Profitability

Just because a franchise is trending doesn’t mean it’s a smart investment. Many first-time investors get caught up in the hype of viral brands—a burger chain all over Instagram or a bubble tea shop with long queues—without asking the most important question: Is this business actually profitable?

Rohit Singh, Founder and CEO of BBFT, emphasizes, “A franchise isn’t successful just because it’s popular today. True success comes from a solid business model, not social media buzz. A trending franchise today can vanish tomorrow if it lacks a strong business model.”

How to Avoid This Mistake:

✔ Study the Brand’s Financials: Review the Franchise Disclosure Document (FDD) for revenue, profitability, and expenses.

✔ Talk to Existing Franchisees: Get real feedback on challenges and profitability.

✔ Check Market Demand: Is the product a long-term need or just another short-term trend?

2. Underestimating the True Cost of Ownership

Most franchise brands advertise their franchise fee, which can range from ₹10 lakh to ₹1 crore. However, that’s just the tip of the iceberg. Many investors underestimate the real cost of running a franchise.

Additional Costs That Should Be Taken Into Account:

✅ Real Estate & Rent: A prime location can cost lakhs in monthly rent.

✅ Interior Fit-Outs & Equipment: Custom branding, furniture, and kitchen setup add to expenses.

✅ Marketing & Royalty Fees: Most brands charge 5-10% of revenue as royalties, plus additional advertising costs.

✅ Working Capital: Brands may require 3-6 months of operational funds before turning profitable.

Case Study: Starbucks vs. Local Coffee Brands

A Starbucks franchise in India requires ₹3-5 crore in investment, whereas brands like Tan Coffee or Altogether Experimental need significantly less with a faster break-even period. Picking a franchise that fits your financial capacity is crucial.

How to Avoid This Mistake:

✔ Create a detailed financial plan covering all costs before investing.

3. Picking the Wrong Location

The #1 reason franchises fail? Poor location choices. Even the most popular franchise can struggle in a bad spot.

What Defines a Good Franchise Location?

  • High Footfall Areas: Malls, corporate hubs, and high streets ensure steady traffic.
  • Right Demographics: A premium café won’t work in a price-sensitive neighborhood.
  • Balanced Competition: Too many similar brands nearby can hurt your sales.

Real-Life Example: Domino’s Location Strategy in India

Domino’s India (operated by Jubilant FoodWorks) doesn’t just pick locations based on visibility—they use heatmaps, data analytics, and income-level studies to determine where a new store can thrive. Franchisees benefit from a research-backed location strategy rather than relying on guesswork.

How to Avoid This Mistake:

✔ Use data-backed location research instead of relying on instinct.

4. Chasing Short-Term Hype Instead of Long-Term Growth

Many first-time franchise investors focus only on what’s popular today rather than evaluating whether the brand can sustain long-term success. Just because a franchise is booming now doesn’t mean it will thrive 5-10 years down the line.

Why Long-Term Growth Matters:

✅ Market Saturation: Some brands expand too quickly and struggle to maintain quality.

✅ Scalability: A concept that works in metro cities may fail in smaller towns.

✅ Supply Chain Strength: A weak backend can create operational bottlenecks.

Case Study: The Boom & Slowdown of International QSR Brands in India

Several global QSR chains—like Dunkin’ Donuts—entered India with high expectations but struggled due to poor adaptation to local preferences and an unsustainable expansion pace. By 2018, Dunkin’ shut over 50% of its outlets in India, proving that expansion without a long-term plan can backfire.

Rohit Singh, Founder and CEO of BBFT, advises, “The best franchise investments aren’t the ones making the most noise today—they’re the ones quietly building a foundation for the next decade.”

How to Avoid This Mistake:

✅ Assess the Brand’s Expansion Roadmap – Does it have a clear, sustainable plan?

✅ Analyze Industry Trends – Is demand increasing or just a short-term fad?

✅ Look at Financial Performance – Is revenue stable, or does it fluctuate?

5. Not Understanding the Franchise Agreement

The franchise agreement is legally binding, but most first-time investors don’t read the fine print. This can lead to unexpected restrictions and financial losses.

Key Clauses to Watch Out For:

✅ Territorial Rights: Does the brand allow another franchisee near your location?

✅ Exit Clauses: What happens if you want to sell your outlet?

✅ Renewal & Royalty Fees: Some brands increase fees every few years.

Case Study: KFC Franchise Agreements in India

Several franchisees of KFC India found themselves facing unexpected royalty hikes and operational constraints after signing agreements. Some struggled with rising supply costs dictated by the brand, making profitability challenging. Without proper legal review, these issues became long-term financial burdens.

How to Avoid This Mistake:

✔Hire a franchise lawyer to review the agreement before signing.

Final Thoughts: Be a Smart Franchise Investor!

Franchising can be a highly profitable investment, but only if done the right way. Avoiding these five mistakes can save you lakhs in losses and set you up for long-term success.

Quick Recap:

✅ Research Beyond the Hype – Trends fade, solid brands stay.

✅ Calculate Total Costs – Factor in hidden expenses.

✅ Choose the Right Location – Footfall, demographics, and competition matter.

✅ Focus on Long-Term Growth – Look at scalability and market sustainability.

✅ Read the Agreement Carefully – Know your rights and obligations.

Looking for the Right Franchise Opportunity?

Want to invest in a franchise with confidence? BBFT helps investors like you find the most profitable opportunities.

Contact us today to start your franchising journey the right way!

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Brand Stories Industry Story

The Rise of Third Wave Coffee: How It Conquered India’s Cafe Industry

For years, India’s coffee culture was defined by instant mixes and mass-market cappuccinos. But in the last decade, a quiet revolution has reshaped the landscape. A new generation of coffee drinkers, primarily young professionals and urban dwellers, are demanding more than just caffeine—they want quality, craftsmanship, and an experience that goes beyond a quick espresso shot.

This shift in consumer behavior has paved the way for brands like Third Wave Coffee, which launched in 2016 with a mission to bring artisanal, ethically sourced coffee to India. In a market dominated by Café Coffee Day and Starbucks, Third Wave Coffee positioned itself as the go-to brand for specialty coffee lovers. But how did a relatively young company carve out such a strong niche in India’s competitive café industry?

This case study explores the strategy, product differentiation, and disruptive growth of Third Wave Coffee.

The Indian Coffee Boom: An Industry Ripe for Disruption

India’s coffee market is experiencing rapid growth, expected to reach $2.31 billion by 2024, with a compound annual growth rate (CAGR) of 8.9%. While instant coffee remains widely popular, there has been a surge in demand for premium coffee experiences, driven by rising disposable incomes, urbanization, and increased awareness of coffee origins and brewing methods. The Coffee Board of India estimates that the specialty coffee segment alone will grow at a CAGR of 12.6% over the next five years.

This demand for high-quality coffee has given rise to a new café culture, where people are no longer just looking for a place to grab a quick cup of coffee but are seeking “third spaces”—cafés that double as work hubs, social gathering spots, and experiential destinations. With this shift in consumer preferences, Third Wave Coffee saw an opportunity to redefine India’s coffee experience.

The Founding Story: A Vision for Better Coffee

The brand was founded by Sushant Goel, Ayush Bathwal, and Anirudh Sharma, three friends who were introduced to the third wave coffee movement while studying abroad. Unlike the first and second waves of coffee, which focused on mass production and branding, third wave coffee treats coffee as an artisanal product, emphasizing quality, sustainability, and transparency.

Upon returning to India, they realized that while global coffee chains like Starbucks offered a premium café experience, there was a lack of locally sourced, specialty coffee with a strong focus on craftsmanship. They saw an opportunity to bridge this gap by creating a brand that not only served high-quality coffee but also educated consumers on its origins, brewing techniques, and flavors. As Goel puts it, “It wasn’t just about drinking coffee; it was about understanding where it comes from and how it’s made.”

What Sets Third Wave Coffee Apart?

Third Wave Coffee’s strategy is built around creating a holistic coffee experience, focusing on craftsmanship, ethical sourcing, and digital innovation. Unlike mass-market brands that prioritize convenience, Third Wave Coffee has cultivated a culture of appreciation for specialty coffee, making it more than just a beverage.

Their cafés are designed to encourage customers to linger, featuring minimalist, warm interiors that make them ideal spaces for work or socializing. Unlike Starbucks, which emphasizes its global branding, Third Wave Coffee has localized its approach, ensuring that each café retains an inviting, community-driven atmosphere. The baristas are highly trained, not just in brewing techniques but also in customer engagement, adding a personalized touch to every order.

A key differentiator for the brand is its brewing methods. While most coffee chains rely on quick-service espresso machines, Third Wave Coffee introduces Indian consumers to hand-brewed methods like Aeropress and Pour-Over, which bring out the natural complexities of the coffee beans. This approach aligns with their philosophy that coffee is not just a drink but an experience, much like fine wine, where origin, processing, and roasting techniques all influence flavor.

Beyond brewing, their commitment to ethical sourcing has played a crucial role in shaping the brand’s identity. Third Wave Coffee directly sources beans from local farms in Chikmagalur and Coorg, ensuring traceability and fair pricing for farmers. By cutting out middlemen, they provide customers with fresh, high-quality beans while supporting India’s coffee-growing communities.

How Digital Innovation Fueled Growth

While most coffee brands struggled during the COVID-19 pandemic, Third Wave Coffee leveraged a strong digital-first approach to navigate the crisis. Their mobile app became a game-changer, allowing customers to order online, customize drinks, and subscribe to monthly coffee plans. This move significantly boosted their online revenue, with 30% of total sales now coming from digital orders—a remarkable achievement in India’s café industry.

Beyond delivery, their subscription model has created a loyal customer base that values fresh coffee delivered directly to their homes. By integrating technology with their brand experience, Third Wave Coffee has successfully positioned itself as a forward-thinking company that understands the evolving preferences of modern coffee drinkers.

Competing Against Industry Giants

India’s café industry is highly competitive, with established brands like CCD, Starbucks, and Blue Tokai fighting for market share. While CCD dominates with affordability and mass accessibility, and Starbucks thrives on its global appeal, Third Wave Coffee has crafted a niche by targeting discerning coffee lovers willing to pay ₹300-400 per cup for a premium experience.

Their strategy has paid off. As of June 2024, Third Wave Coffee operates 100 outlets across major cities, including Bengaluru, Mumbai, Delhi, Gurgaon, Pune, Hyderabad, Noida, Coonoor, and Chandigarh, with plans to open over 50 new outlets in the coming year. Their financial performance has also been impressive, with revenue soaring from ₹32 crore in FY22 to ₹144 crore in FY23—a staggering 4.5x growth. This success has attracted significant investment, including a $35 million funding round led by private equity firm Creaegis, signaling strong investor confidence in their expansion potential.

The Future of Third Wave Coffee

As India’s specialty coffee market continues to grow, Third Wave Coffee is well-positioned to lead the charge. The brand plans to expand into tier-2 cities, introduce bottled cold brews, and strengthen its subscription and retail offerings. With an increasing number of Indian consumers embracing artisanal coffee, the brand’s focus on quality, sustainability, and innovation gives it a competitive edge.

Co-founder Goel sums it up best: “The future of coffee in India isn’t just about selling more cups—it’s about creating experiences that people want to be a part of.”

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Brand Stories Industry Story

Bastian: Mumbai’s Hottest Celebrity Restaurant or the Ultimate Status Symbol?

Introduction: Where Dining Becomes a Social Statement

In Mumbai, restaurants come and go. But Bastian? It has become a cultural landmark—where fine dining meets celebrity spectacle. More than a meal, it’s an experience, a flex, and a ticket into high society.

But how did Bastian transform from a high-end seafood spot into Mumbai’s most exclusive dining destination? The secret lies in celebrity influence, luxury branding, and an irresistible aura of exclusivity.

From Seafood Hotspot to Bollywood’s Dining Room

Launched in 2016 by Chef Kelvin Cheung and restaurateur Ritika Khatnani, Bastian quickly gained a following for its modern seafood. But the game changed in 2020 when Bollywood icon Shilpa Shetty and husband Raj Kundra bought in.

Overnight, Bastian became synonymous with glamour, fitness, and high-society dining. A-listers like Katrina Kaif, Ranveer Singh, and Deepika Padukone turned it into Bollywood’s unofficial clubhouse, with paparazzi stationed outside to catch stars in action.

Step Inside: A Dining Experience That Screams VIP

Bastian’s interiors—designed by Minal Chopra—ooze modern opulence. Think cave-like ceilings, floating chandeliers, plush seating, and a warm golden glow that makes everyone look like they belong on a magazine cover.

Despite a 350-seat capacity, demand is so high that Bastian serves up to 700 covers on peak weekends. The ambiance isn’t just luxury—it’s deliberately curated to make every guest feel like a star.

The Menu: Expensive, Indulgent, and Designed to Impress

Bastian’s menu is a psychological masterstroke. Dishes aren’t just plated; they’re crafted for Instagram. Instead of listing ingredients, the menu uses phrases like “artisan-crafted” and “chef’s signature” to elevate perception and justify premium pricing.

  • Average Spend Per Person: ₹3,000
  • Dinner for Two: ₹10,000
  • Mandatory Reservation Deposit: ₹2,000 per head (ensuring only the serious get in)

It’s not just about food—it’s about indulging in a high-status experience.

Marketing Genius: Turning Dining Into a Social Flex

Bastian doesn’t sell food—it sells aspiration.

Its Instagram game fuels the fire, with every celebrity visit turning into viral content. Luxury thrives on demand, and Bastian ensures there’s never enough supply.

Every paparazzi moment turns into an ad—stars walking in and out create the illusion that Bastian is where Mumbai’s power players dine. User-generated content floods Instagram, making even non-celebs feel like VIPs.

For many, the ₹10,000 bill isn’t just a meal—it’s a social milestone.

Conclusion: The Perfect Recipe for Luxury Domination

Bastian isn’t just a restaurant—it’s a high-society experience wrapped in food. By blending celebrity power, aspirational branding, and exclusivity, it has redefined what luxury dining means in Mumbai.

Getting a table here isn’t just a reservation—it’s an achievement.

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Industry Story

The Hidden Costs of Franchising: What Every F&B Investor Must Know

More Than Just the Setup—Why Smart Investors Should Look Beyond the Surface

Franchising is often celebrated as one of the most reliable ways to enter the ever-growing food and beverage (F&B) industry. The appeal is clear: you step into a business backed by an established brand, a proven model, and operational support designed to minimize the risks that come with starting from scratch.

But what many first-time investors overlook is that the initial setup cost is only part of the story. Beyond the visible investment lies a series of ongoing and often underestimated expenses that directly impact profitability. Recognizing and planning for these hidden costs can be the difference between long-term success and constant financial strain.

To paint a clearer picture, here’s a deep dive into the real costs behind launching and running a franchise.

The Franchise Fee: Securing the Brand Advantage

Every franchise journey begins with the franchise fee—a one-time payment for the right to operate under a recognized brand. This fee typically falls between ₹10 lakh and ₹20 lakh, depending on the brand’s market presence, outlet format (whether it’s QSR, café, or fine dining), and location.

This fee grants access to far more than just a name. It covers:

  • Operational frameworks
  • Standardized recipes and sourcing partnerships
  • Staff training protocols
  • Marketing support

In short, it fast-tracks your entry into a market with an existing customer base, allowing you to bypass the costly trial-and-error period that independent ventures face.

Marketing Costs: Driving Local Visibility

A strong brand name might get customers through the door once—but it’s local marketing that keeps them coming back. Many investors are surprised to learn that national-level branding doesn’t replace the need for targeted, ongoing marketing at the outlet level.

Typically, a franchise requires a contribution of 2–5% of monthly revenue towards a central marketing fund. For an outlet generating ₹15 lakh per month, this amounts to ₹30,000–₹75,000 monthly.

Alongside this, additional local marketing is essential to capture attention in a crowded market:

  • Swiggy/Zomato promotions: ₹20,000–₹50,000 per month
  • Social media ads and influencer tie-ups: ₹50,000–₹1 lakh annually

These costs are critical for boosting footfall, increasing repeat business, and building community engagement around your outlet.

Taxes: Protecting Margins with Smart Planning

Taxation is another area where hidden costs quietly chip away at profits.

For most F&B outlets, the common tax structure includes 5% GST on sales without Input Tax Credit, meaning setup costs like raw materials, rent, and interiors don’t benefit from tax refunds.

Additionally, franchise fees and royalties attract 18% GST. So, if your franchise fee is ₹20 lakh, expect an additional ₹3.6 lakh in GST, bringing your total payment to ₹23.6 lakh.

Ignoring these obligations during financial planning can leave businesses scrambling to cover shortfalls, so accounting for them early is vital.

Licenses and Compliance: The Price of Legitimacy

Legal compliance is non-negotiable in the F&B industry, and securing the right licenses upfront prevents disruptions and penalties down the line.

Here’s what most outlets require:

  • FSSAI License: ₹15,000–₹25,000
  • GST Registration: ₹5,000–₹10,000
  • Fire Safety License: ₹30,000–₹50,000
  • Shop & Establishment License: ₹10,000–₹20,000
  • Municipality and Health Permits: ₹30,000–₹60,000

These licenses safeguard operations and build consumer trust. Skimping on compliance is never worth the risk.

Real Estate Costs: The High Price of Footfall

Ask any franchise owner, and they’ll tell you location is everything. But securing prime real estate comes with hefty upfront costs beyond monthly rent.

For a location with ₹1.5 lakh monthly rent, landlords commonly expect:

  • Security deposit: ₹4.5- 9 lakh (3-6 months of rent)
  • Advance rent: ₹1.5- 3 lakh (1-2 months upfront)

That’s nearly ₹10-12 lakh committed before even opening your doors. Still, these locations often justify the investment with higher traffic, better visibility, and stronger long-term returns.

Technology and Delivery Costs: Running a Modern Operation

With online orders contributing 30–50% of total sales in many concepts today, efficient technology is no longer optional.

Regular tech costs to factor in include:

  • Aggregator commissions: 15–30% per order on platforms like Swiggy and Zomato
  • POS and CRM systems: ₹5,000–₹15,000 per month

A smooth tech stack keeps operations efficient, enhances customer experience, and reduces errors—all crucial to sustaining repeat business in a digital-first market.

Long-Term Success Starts with Full Financial Clarity

Franchising continues to be one of the most rewarding ways to enter the F&B industry, but only for those who prepare with eyes wide open. These hidden costs may seem secondary at first glance, but they play a defining role in operational stability, customer retention, and profit margins.

A successful franchise isn’t just about the setup—it’s about the strategy behind sustaining it. When you budget thoughtfully and plan comprehensively, the path to scale becomes clearer, smoother, and far more profitable.

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Industry Story

Franchising vs Starting from Scratch: Why Franchising is the Smarter Investment for F&B Brands

Introduction: The Million-Dollar Question

If you’ve ever dreamed of owning a restaurant or café, you’ve likely faced this dilemma: Should you build your brand from the ground up or invest in a franchise? The food & beverage (F&B) industry is lucrative but notoriously challenging, with around 60% of new restaurants failing within their first year and 80% shutting down within five years. 

One path leads to the tried-and-true world of franchising, where you can leverage an established brand to grow your business. The other path takes you into uncharted territory, where you build your F&B brand from the ground up.

Both routes invite success, but which one is the better investment? 

Let’s break it down with real data, industry insights, and expert opinions to help you make an informed choice.

Success Rate: The Cold, Hard Facts

The numbers don’t lie. Independent restaurants have a survival rate of only 20% within five years, while franchises have a survival rate of around 85% over the same period. This staggering difference is due to the proven systems and structured support that franchises provide.

According to a report by the International Franchise Association (IFA), franchised businesses grow at a rate of 1.5x faster than independent businesses, largely due to their access to training, marketing, and operational expertise.

Would you rather reinvent the wheel or drive a car that’s already been fine-tuned for success?

Known vs. Unknown: The Power of an Established Brand

When it comes to F&B, brand recognition is everything. Starting your own brand gives you creative freedom, but it also means building everything from scratch—from the menu and branding to customer acquisition and operational systems. On the other hand, franchising gives you access to a well-established brand name, proven business model, and loyal customer base from day one.

As franchise expert Mark Siebert puts it,

“A strong brand is half the battle won. Franchising allows you to stand on the shoulders of giants. You’re not just buying a business; you’re buying a proven system.”

Let’s take McDonald’s as an example:

When a franchisee opens a McDonald’s, they aren’t just selling burgers; they are leveraging decades of brand equity, global recognition, and trust. In contrast, an independent burger joint would need years and huge investments to build that level of credibility.

Marketing Muscle: Leveraging a Pre- Existing Audience

When starting from scratch, you’ll need to spend heavily on marketing just to get noticed—from digital ads and influencer partnerships to loyalty programs and PR campaigns. Building brand recognition takes several years and a substantial budget.

Franchisees, however, benefit from national and regional marketing efforts funded by the franchisor. Whether it’s a new menu launch, influencer collaborations, or high-budget ad campaigns, franchise brands already have an audience ready to engage.

Example: Starbucks spends over $400 million annually on advertising. A small independent coffee shop could never match that level of exposure. But a Starbucks franchisee? They automatically benefit from it.

Operational Edge: Expert Training and Supply Chain Synergy

One of the biggest advantages of franchising is the comprehensive training and ongoing support provided by the franchisor. Whether it’s standardized recipes, improving customer service, or troubleshooting operational challenges, franchisees benefit from an expert-driven roadmap.

Franchisors offer intensive staff training programs that cover everything from food prep to inventory management. Compare this to an independent owner who has to learn through trial and error—often at the cost of wasted time and money.

Running a restaurant also involves managing suppliers, negotiating deals, and handling logistics—infamously, one of the trickiest parts of the business. Independent owners must navigate these complexities alone, often paying higher prices for ingredients, equipment, and packaging. Franchises, however, leverage their bulk purchasing power to secure better deals.

“The biggest risk in F&B isn’t the idea, but execution,” says Jennifer Patel, a restaurant consultant. “Franchisees get a playbook, while new owners have to figure everything out on their own.”

The Creativity Myth: Franchising Doesn’t Mean Losing Your Spark

One common misconception about franchising is that it stifles creativity. While it’s true that franchisees must follow certain guidelines, there’s still plenty of room for innovation.

Many franchisees add local flavors to their menus or host community events to build customer loyalty.

Franchising gives you a framework, but it’s up to you to bring your personality and passion to the business. 

Franchising strikes the perfect balance between structure and creativity, allowing you to thrive without reinventing the wheel.

Funding & Expansion: The Growth Accelerator

Raising capital is one of the toughest hurdles for any entrepreneur. Banks and investors are often hesitant to fund standalone restaurants due to the industry’s high failure rate. However, franchises are seen as lower-risk investments, making it easier to secure financing.

According to a Franchise Business Review survey, franchise owners are 30% more likely to secure bank loans compared to independent businesses. This advantage extends to expansion as well—successful franchisees often reinvest and open multiple locations within a short time.

A franchisee of a popular coffee chain can expand to 3-4 locations within five years, while an independent restaurant owner might still be struggling with the first outlet.

The Verdict: Why Franchising Takes the Crown

So, which is the better investment? 

For most F&B brands, franchising is the clear winner. It offers lower risk, faster growth, and a proven system for success. That’s not to say starting from scratch doesn’t have its merits—it’s perfect for those who want complete creative control and are willing to take on the challenge.

But let’s face it: In the fast-paced world of F&B, time is money. Franchising gives you a head start, allowing you to focus on what really matters—delivering delicious food and unforgettable experiences.

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