In auto, every car has a buyer. In apparel, 30% of what you stock might never sell at full price. The entire franchise economics comes down to one question: who eats the loss on unsold clothes?
Three ways to play
Outright
You buy it. You own it. You sell it — or eat it.
You purchase stock at 55-65% of MRP. Everything that sells at full price is yours to keep. Everything that doesn't — markdowns, dead stock, end-of-season clearance — comes out of your margin. The brand has already been paid.
The brand ships stock to your store but retains ownership. You sell it and keep 25-35% of every sale. Whatever doesn't sell goes back. You never pay for a garment that didn't find a customer.
25-35%
Commission
0%
Stock Risk
Peter EnglandAureliaSoch
Brand bears risk
FOCO
Your money. Their store. Their decisions.
You invest in the property and fit-out. The brand runs everything — staffing, stock, pricing, markdowns. You earn a revenue share. Zero operational control, but also zero operational headache.
Sell-through rate — what percentage of your stock sells at full price, before markdowns. A 40% gross margin means nothing if half your stock is cleared at 50% off. These gauges show typical sell-through by category:
International BrandsNIKE · ADIDAS · PUMA · LEVI'S · UNDER ARMOUR · ASICS · SKECHERS · REEBOK
You buy at 50-55% of MRP — the deepest discount of any category. But you also pay 5-10% royalty, and the brand forces mandatory end-of-season sales. You discount on their schedule, not yours. Fit-out costs ₹3,000-5,000/sqft — every shelf, every spotlight dictated. Zero returns on unsold stock.
50-55%
BUY PRICE
5-10%
ROYALTY
18-25%
EFF. MARGIN
MANDATORY
EOSS SALES
NONE
STOCK RETURNS
Domestic Fashion
Raymond, BIBA, W, FabIndia, Aurelia, Soch, Rare Rabbit, Snitch. You buy at 60-70% of MRP — less margin per piece but you control your own markdown calendar. Some brands offer partial buy-back (10-20%) on dead seasonal stock. Lower fit-out costs: ₹1,500-3,000/sqft. The relationship feels more like a partnership than a mandate.
Buy Price60-70%
Royalty0-8%
Eff. Margin25-35%
Buy-back10-20%
Innerwear & Basicsthe quiet compounder
Jockey, Zivame, Nykd by Nykaa. A white vest sells the same in January and July. 90%+ sell-through because basics don't go out of fashion. No mandatory markdowns. Replenishment model — sell a unit, replace it. Jockey charges zero royalty.
This single question determines more of your actual profit than the buy price.
Brand dictates
Nike, Adidas, Puma, Levi's schedule EOSS (end of season sale) dates and discount depths. You markdown when told, at the depth they choose. You absorb the margin loss.
You decide
BIBA, W, Raymond, Rare Rabbit — you choose when to discount, how deep to cut, and whether to hold stock for next season. Your store, your call.
The seasonal trap
More collections per year = more stock turns = more chances for dead inventory. Less collections = slower fashion but lower waste.
4-6
COLLECTIONS / YEAR
Nike, Adidas, Zara-type
High rotation, high waste
2-3
COLLECTIONS / YEAR
Raymond, BIBA, Levi's
Standard, manageable
1
COLLECTION / YEAR
Manyavar, ethnic wear
Event-driven, timeless
0
SEASONAL PRESSURE
Jockey, Zivame
Basics never expire
Where your money goes
Same ₹50L investment, very different allocation depending on brand type.
International
Fit-out40-50%
Inventory deposit30-35%
Franchise fee10-15%
Working capital5-10%
Domestic
Fit-out25-35%
Inventory35-45%
Franchise fee5-10%
Working capital15-20%
Innerwear
Fit-out20-30%
Inventory40-50%
Franchise fee5-10%
Working capital15-20%
The anomaly
Manyavar has never discounted a single garment.
In an industry where 20-40% of stock goes on sale, Vedant Fashions reports dead stock under 3%. Every Manyavar franchisee pays outright — same model as Nike or Levi's. But because ethnic wear is event-driven (weddings, festivals, religious ceremonies), demand is predictable and recurring. There's no "last season's kurta" problem. A sherwani bought in 2024 sells at the same price in 2026.
The result: 73% gross margin, 30% profit after tax, 3-year payback. No franchisee has ever voluntarily left the network.
97%
Sell-through
73%
Gross Margin
30%
PAT
0%
Discounts Ever
Data: Vedant Fashions investor presentations, ABFRL annual reports, FranchiseBazar, FranchiseIndia,
StartupTalky, industry interviews, brand franchise documentation.
If any data is incorrect, write to dataczar@franticc.com