The SAMRIDH Scheme

Limited Liability Partnership (LLP)

An LLP is a hybrid business structure that combines the benefits of a company (limited liability) with the flexibility of a partnership. Some key features include:

• Minimum two partners required
• Liability of partners is limited to their contribution
• No minimum capital requirement
• Fewer compliance requirements than a company
• Separate legal identity from its partners

One Person Company (OPC)

Introduced under the Companies Act, 2013, an OPC allows a single individual to operate a corporate entity. It offers:

• Limited liability
• Separate legal identity
• Easier fundraising compared to a sole proprietorship
• Greater credibility in business dealings

However, OPCs face limitations like:

• Restrictions on fundraising
• Mandatory conversion if turnover exceeds ₹2 crore or capital exceeds ₹50 lakh
• Cannot have more than one member

Conversion of OPC to LLP

OPC conversion to LLP is governed by the Companies Act, 2013 and the Limited Liability Partnership Act, 2008. While direct provisions for OPC-to-LLP conversion are not explicitly provided, companies (including OPCs) can be converted into LLPs under Section 366 of the Companies Act and the Second Schedule of the LLP Act.

Understanding the Legal Provisions for Conversion of OPC to LLP

The legal path for converting an OPC to an LLP involves:

• Section 366 of the Companies Act, 2013 (deals with companies being converted into LLPs)
• Second Schedule of the LLP Act, 2008 (provides the procedure for such conversions)
• Form FiLLiP and Form 18 under the LLP Rules, 2009

Note: Prior approval from the Registrar of Companies (ROC) is mandatory.

Related Read: ROC Compliance Calendar for 2025–2026

Eligibility Conditions and Compliance Steps for Conversion

To be eligible for conversion:

• Before conversion, the OPC must have at least two shareholders (LLPs require a minimum of two partners).
• No active defaults in filing annual returns, income tax, or other statutory dues.
• All secured creditors (if any) must give their consent.
• The company should not have applied for winding up or struck-off status.

Compliance steps include:

1. Holding a Board Meeting and passing a resolution for conversion
2. Increasing the number of members/directors to meet LLP requirements
3. Obtaining name approval through RUN–LLP or FiLLiP form
4. Filing Form FiLLiP and Form 18 with ROC
5. Executing an LLP Agreement within 30 days of incorporation

Looking to switch from OPC to LLP? Get professional help for a smooth and compliant business conversion with Razorpay Rize's LLP Registration Service.

Documents Furnished along with Form 18

Form 18 is the declaration for conversion and must be supported with:

• Board resolution for conversion
• Consent of all shareholders
• Statement of assets and liabilities certified by a CA
• List of creditors and their consent
• Latest income tax return acknowledgement
• Copy of PAN card and Aadhaar of all proposed partners
• Address proof of the registered office of the LLP
• NOC from the property owner (if rented office)

Procedure for Conversion of OPC to LLP

Here’s a step-by-step breakdown:

1. Board Resolution: Approve the conversion plan and authorise directors to file the necessary forms.
   
   
2. Increase Number of Members: Since an LLP requires at least two partners, the OPC must first induct another shareholder.
   
   
3. DIN & DSC: Ensure all partners have a Director Identification Number (DIN) and Digital Signature Certificate (DSC).
   
   
4. Name Approval: Apply for name reservation using RUN–LLP or through FiLLiP.
   
   
5. Form FiLLiP Filing: File FiLLiP with ROC for incorporating the LLP.
   
   
6. Attach Form 18: While filing FiLLiP, attach Form 18 with the required documents.
   
   
7. Certificate of Incorporation: On approval, the ROC will issue a Certificate of Incorporation for the LLP.
   
   
8. Execute LLP Agreement: Draft and file the LLP Agreement within 30 days.
   
   
9. Apply for PAN, TAN & GST: Update statutory registrations with new LLP details.
   
   
10. Close OPC Bank Account & Update Records: Close existing bank accounts of OPC and update stakeholders.

Frequently Asked Questions (FAQs)

Components of NIDHI Scheme

The key components of NIDHI are:

1. NIDHI-GCC

Grand Challenges and Competitions for scouting innovations;

2. NIDHI-PRomotion and Acceleration of Young and Aspiring technology entrepreneurs (NIDHI-PRAYAS)

Support from Idea to Prototype

3. NIDHI- Entrepreneur In Residence (NIDHI-EIR)

Support system to reduce risk

4. Startup-NIDHI through Innovation and Entrepreneurship Development Centres (IEDCs)

To encourage students to promote start-ups in Institutions

5. Start-up Centre in collaboration with MHRD

To drive entrepreneurship and innovation in National Institutions of Higher Learning

6. NIDHI-Technology Business Incubator (TBI)

To help convert Innovations into startups

7. NIDHI-Accelerator

Fast-tracking a start-up through focused intervention

8. NIDHI-Seed Support System (NIDHI-SSS)

To provide early-stage investment

9. NIDHI Centres of Excellence (NIDHI-CoE)

A World-class facility to help startups go global

Focus Areas of NIDHI-SSS

Technology-based product proposals in sectors such as agriculture, healthcare, manufacturing, engineering, IoT, biotechnology, medical devices, water, waste management, energy, climate tech, fintech etc.

Eligibility of NIDHI-SSS

• Must be a registered company in India with a minimum of three months of residency at the Science and Technology Entrepreneurs' Park (STEP) / Technology Business Incubators (TBIs).
• Must be an Indian start-up.
• Must have Indian promoters holding the shares of at least 51% in the incubated startup.

Please note: This assistance is not intended for Indian subsidiaries of multinational corporations or foreign companies. However, individuals holding Overseas Citizens of India (OCI) or Persons of Indian Origin (PIO) status will be treated as Indian citizens under this scheme.

Application procedure for Startups

• Website and newspaper ads are posted to signal the availability of seed support at specific incubator organizations.
• Social media posts announce the call for applications.
• Applicants are shortlisted based on eligibility criteria.
• The NIDHI-SSMC makes decisions regarding the shortlisted applicants.
• Selected applicants are chosen for funding.

Benefits of NIDHI-SSS

Seed support of up to INR 100 Lakhs with average financial seed funding ranging from INR 25 Lakhs.

Other assistance areas include:

• Product development
• Testing and trials
• Test Marketing
• Mentoring
• Professional Consultancy
• IPR issues
• Manpower for day-to-day operations

Frequently Asked Questions

What Is The Meaning of Franchising a Business?

Franchising is a business model where a franchisor grants the rights to an individual (franchisee) to operate under its brand, using its products, services, and business processes. The franchisee pays a fee and agrees to operate under the franchisor’s guidelines in exchange for brand licensing, training, operational support, and marketing assistance.

The franchising model benefits both parties:

• Franchisor Benefits: Rapid expansion, increased brand reach, and revenue from franchise fees.
  
• Franchisee Benefits: Access to a recognised brand, reduced startup risk, and operational guidance.
  

Key aspects of franchising include:

• Brand Licensing: The franchisee gets permission to use the franchisor's brand name and trademarks.
  
• Operational Support: Training, marketing, and business strategy support are provided.
  
• Profit-sharing Agreements: Franchisees pay royalties or a percentage of revenue to the franchisor.
  

Types of Franchises

Franchises can be categorised based on their structure and operational model:

Product Distribution Franchise:

• Franchisee sells the franchisor’s products under its brand.
  
• Examples: Automobile dealerships (Maruti Suzuki), and soft drink bottlers (Coca-Cola).
  

Business Format Franchise:

• Franchisee adopts the entire business model, including operations, branding, and marketing.
  
• Examples: McDonald’s, Domino’s, KFC.
  

Manufacturing Franchise:

• Franchisee manufactures and sells the franchisor’s products under its brand name.
  
• Example: Food and beverage brands allowing third-party bottlers.
  

Job Franchise:

• A low-cost model where individuals operate small-scale service businesses.
  
• Examples: Cleaning services, travel agencies, real estate consultancy.
  

How Long Does It Take To Franchise a Business?

Franchising a business typically takes between six months to two years, depending on factors like:

• Industry type and regulatory requirements.
  
• Business readiness and operational scalability.
  
• Development of legal and training documents.
  
• Marketing efforts to attract franchisees.
  

How Much Should It Cost To Franchise a Business?

The cost to franchise a business can vary significantly based on factors like industry, business model, and support provided. On average, franchising a business may cost between ₹5 lakh to ₹50 lakh or more in India. Key expenses include:

• Franchise Fee: ₹2 lakh to ₹10 lakh (varies by brand reputation).
  
• Legal and Registration Fees: ₹50,000 to ₹2 lakh.
  
• Training and Support Costs: ₹1 lakh to ₹5 lakh.
  
• Marketing and Branding Expenses: ₹1 lakh to ₹3 lakh.
  
• Infrastructure Setup: Varies depending on the business type.
  

Additional factors like franchise location, infrastructure requirements, and marketing strategy impact the overall investment.

Advantages of Franchising a Business

1. Rapid Expansion: Scale business operations quickly with minimal capital investment.
   
2. Lower Financial Risk: Franchisees fund their business setup, reducing financial burden.
   
3. Brand Recognition: Established branding makes it easier to attract customers.
   
4. Operational Support: Franchisees receive training, marketing, and business guidance.
   
5. Access to Motivated Franchisees: Entrepreneurs invest time and money, ensuring dedication to success.
   

Disadvantages of Franchising a Business

1. Loss of Control: Franchisees operate independently, which can lead to inconsistencies.
   
2. Reputation Risk: Poorly managed franchises can damage brand image.
   
3. Legal & Financial Complexity: Requires detailed agreements and ongoing compliance.
   
4. Ongoing Training & Support: Continuous investment in franchisee development is necessary.
   

Franchise Vs Licensing: What’s The Difference?

How to Start a Franchise Business - 8 Key Steps

Step 1: Determine If Franchising is Right For Your Business

Before diving into franchising, evaluate whether your business is scalable, profitable, and replicable. Ask yourself:

• Is there consistent demand for my product or service?
  
• Can my business model be easily duplicated in different locations
  
• Do I have strong branding and operational processes in place?
  

Not all businesses are fit for franchising. A successful franchise model requires a proven track record, solid profit margins, and strong brand appeal to attract potential franchisees.

Step 2: Protect Your Business’s Intellectual Property

Your brand is one of your most valuable assets. Before offering franchises, secure trademarks, copyrights, and proprietary processes to prevent misuse and ensure brand consistency.

Step 3: Prepare Your Franchise Disclosure Document (FDD)

The Franchise Disclosure Document (FDD) is a legal document that provides prospective franchisees with full transparency about their business. This document must comply with franchise laws and typically includes:

• Franchise fees and ongoing costs
  
• Training and support provided
  
• Franchisor and franchisee responsibilities
  
• Earnings potential (if disclosed)
  
• Legal obligations and dispute resolution process
  

A well-structured FDD builds trust with potential franchisees and helps you stay compliant with franchise laws.

Step 4: Draft a Franchise Agreement

The franchise agreement is a legally binding contract outlining the rights and responsibilities of both the franchisor (you) and the franchisee. Key elements to include:

• Operational guidelines – How franchisees must run the business
  
• Fee structure – Initial franchise fees, royalties, and marketing fund contributions
  
• Territory rights – The defined area where the franchisee can operate
  
• Training and support – What assistance franchisees will receive
  
• Exit clauses – Terms under which a franchise can be sold or terminated
  

This document ensures both parties are aligned and protects your brand from misuse.

Step 5: Register Your Company

Depending on your state and region, you may need to register your franchise with government authorities before selling franchise units. Registration is not mandatory, but it is required to obtain GST registration depending on the turnover.

Head over to Razorpay Rize to Register your Company.

Step 6: Compile an Operation Manual

A franchise operations manual is a step-by-step guide that helps franchisees run the business successfully while maintaining brand consistency. It should cover:

• Day-to-day business processes
  
• Hiring and training staff
  
• Customer service guidelines
  
• Marketing and advertising strategies
  
• Financial management and reporting
  

Step 7: File or Register Your FDD

Once your FDD is finalised, keep it securely stored for easy access and updates as needed. While the FDD is a mandatory document, filing requirements vary by state.

Step 8: Set Strategy To Achieve Your Sales Goal

Develop marketing and recruitment strategies to attract the right franchise partners. The strategy should be tailored to your business, community, and growth objectives. Here are some effective ideas to consider:

• Provide a referral incentive for those who bring in qualified franchisee applicants.
  
• Develop a strategic marketing plan from the start to capture attention.
  
• Recruit sales professionals who understand your business and its story.
  

5 Strategies to Help You Succeed at Franchising

1. Maintain Brand Consistency: Implement strict guidelines for uniformity across locations.
   
2. Select the Right Franchisees: Screen candidates for skills, experience, and commitment.
   
3. Provide Ongoing Training & Support: Regularly update franchisees with best practices.
   
4. Implement Effective Marketing Strategies: Invest in advertising and localised promotions.
   
5. Ensure Strong Financial Management: Monitor franchise performance and optimize cost structures.
   

Case Studies of Successful Franchise Businesses

Franchising is a proven business model that allows entrepreneurs to leverage established brands and systems for success. Below are examples of successful franchise businesses, showcasing their revenue, profit margins, and operational highlights.

1. McDonald's

• Industry: Quick-Service Restaurant (QSR)
  
• Investment: ₹6–14 crores
  
• Profit Margin: 50–60%
  
• Break-even Period: 4–5 years
  McDonald’s is one of the most profitable franchises globally due to its standardized operations and strong brand recognition. In India, its franchise model offers high footfall and consistent demand, making it a lucrative investment.
  

2. Baskin Robbins

• Industry: Ice Cream and Dessert
  
• Investment: ₹10–20 lakhs
  
• Profit Margin: 50–60%
  
• Break-even Period: 6–12 months
  With over 800 outlets in India, Baskin Robbins has built a strong presence in the dessert market. Its diverse flavors and year-round demand ensure steady sales and excellent returns for franchisees.
  

3. Haldiram

• Industry: Food and Snacks
  
• Investment: ₹30 lakhs–₹6 crores (depending on store format)
  
• Profit Margin: 50–60%
  
• Break-even Period: 2–3 years
  Haldiram is a trusted name in Indian snacks and sweets. Its franchise model offers multiple formats, including quick-service restaurants and dine-in outlets, ensuring high profitability backed by a loyal customer base.
  

4. Marco’s Pizza

Marco’s Pizza achieved remarkable growth with a revenue increase of 23.5% in one year by opening 113 stores. The brand focuses on strategic revenue-boosting approaches, making it one of the fastest-growing pizza franchises globally.

5. Lenskart

• Industry: Eyewear Retail
  
• Investment: ₹25 lakhs
  
• Profit Margin: Approx. 33%
  Lenskart is India’s largest eyewear brand, offering trendy products such as prescription glasses and sunglasses. With innovative features like "Try Before You Buy," its franchise model generates average monthly sales of ₹9 lakhs, making it ideal for urban markets
  

Final Thoughts

Franchising can be a great way to start a business without building everything from scratch. You get a known brand, a proven business model, and ongoing support but it’s not a shortcut to success. It still takes effort, investment, and commitment to make it work.

The key is choosing the right franchise. Think about what fits your skills, budget, and long-term goals. A great brand in the wrong location or with poor financial planning can still struggle. Do your homework, understand the costs, and be ready to follow the franchisor’s guidelines.

Frequently Asked Questions