Franchise body seeks removal of 5% fee cap

The Franchise Association of India (FAI) has asked the government to remove the cap on payment of franchise fees. The association has strongly sought removal of the 5 per cent fee a franchisee pays to the franchiser.

"We want liberalisation of fee paid by the franchisee to the franchiser. This is particularly important in the case of foreign franchisers. At present, there is a cap of 5 per cent on payment of franchise fees. This needs to be done away with," said C Y Pal, national president, FAI, on the sidelines of India Franchise Expo 2007, held here last week. He said the cap discourages foreign franchisers, who are eager to introduce their brands in India.

"Considering organised retail growth and realty boom, which envisages construction of 350 malls in three years, it is necessary to make the franchise platform frictionless," he added.

Pal said the $2.7 billion sector was witnessing a 35 per cent growth a year. "We see 2,000 franchise systems in India in the next four to five year. This means creation of 30,00,000 jobs in the sector," he said.