Franchise body seeks removal of 5% fee-cap

The Franchise Association of India (FAI) has demanded removal of the 5 per cent cap on franchise fees.

"We want liberalisation in the area of franchisee fee payment 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 here.

He said the cap discouraged foreign franchisers who were eager to introduce their brands in India.

Considering organised retail growth and realty boom, which envisages construction of 350 malls in three years, it was necessary to make the franchise platform frictionless, as most foreign brands would take this route because it was convenient and economical, he added.