- Currently, one of the most lucrative and popular industries in India is the food industry. Anyone may order food at any time, anywhere, in this digital age.
- People are adopting online food portals to enjoy their meals at their doorstep. Due to the opening of numerous new restaurants over the last few years, the food industry has seen enormous growth. Nowadays, anyone with a new food business idea may open a cloud kitchen/restaurant.
- A party may sell their new food business idea through a Franchise Agreement. It is a legal agreement wherein an existing company agrees to lend its name, operational model, and necessary support to another party so that it may launch and operate a comparable business in return for a fee and a portion of the profits made.
What are the legal requirements for a new business idea to convert into a restaurant?
It is very simple to start a food business by converting a new food business idea, but you must be aware of the legal licensing requirements. It is regarded as among the best businesses to launch. But in order to provide food services and sell food goods, it is essential to adhere to a set of rules before launching a food business. If one doesn’t, they risk encountering needless legal obstacles. The following things should be kept in mind before beginning a food business:
- Decide on the Food Business Type– Choosing your type of food-related business based on your new food business idea is the first step. Before starting any form of business, sufficient homework must be completed. You must search for the legal license or NOC needed once you have your resources and plan of action in place in order to avoid any legal snags.
- Establishment of a business entity– After deciding on your food business type based on your new food business idea. The registration of a legal and business entity is the next step. The Entrepreneur has a variety of options, including registering as:
- One-person businesses,
- Limited Liability Companies,
- Private Limited Companies, and
- Food License– The important step for making your dream of converting the new food business idea into reality is getting a Food License. Every owner of a food business, even a small seller or hawker, must get a food license from the FSSAI. The Food Safety and Standards Authority of India is known by the initials FSSAI.
The three types of FSSAI licenses are Registrar FSSAI, State FSSAI, and License Central FSSAI License. You can apply offline or online for an FSSAI Registration or License. The proprietor of the food business must submit an application to the licensing authority together with the necessary fees in order to acquire the license offline. However, the Food Licensing and Registration System (FLRS) site, which was introduced by the FSSAI, can be utilized for online license and registration.
- Trade License– As an “Eating House,” a food business is typically awarded a trade license in India under the municipal corporation rules of the relevant States. Any owner of a food business converting the new food business idea into reality as a next step after obtaining a food license may apply for a trade license with the relevant municipality. Most trade licenses issued by States are typically good for a year, and they can be renewed by paying yearly fees. If your new food business idea intends to open multiple locations, each location needs to have a current trade license from the relevant municipality.
- Liquor Permit– A liquor license is also necessary if your new food business idea includes serving alcohol along with the meals. Alcohol sales and distribution are forbidden without a current liquor license. The State Excise Department is the place to go if you want permission to sell and distribute alcohol. Depending on whether you’re a star hotel, bar, or pub, selling imported booze, international brands, or Indian Made Foreign Liquor; there are many different sorts of alcohol licenses available. You will require identification documentation, proof of address, & a no objection certificate from the fire department and the municipal corporation, among other documents that the State Department may require, in order to receive the license.
- Department of Fire NOC– A “No objection Certificate” from the Chief Fire Officer is required before opening a restaurant, cafe, hotel, or bakery, according to the fire safety legislation of the majority of Indian States. You must submit architectural drawings, a model of the building, an architect’s certificate, and a questionnaire about compliance with fire safety laws and regulations in order to receive a fire license.
- Shops & Establishment Registration– Each owner of a shop or other commercial institution with more than ten employees are required to register their business with the relevant State Labor Department. Recently, this process has shifted online. Normally, this registration is good for five years before needing to be renewed. Currently, upon payment of renewal fees, certain States are providing Shops and Establishment Registrations with lifelong validity.
- Pollution Clearance- The next step in converting the new food business idea into reality is getting a pollution clearance. Given the smoke emissions from the cooking process and the washing of food waste, the food sector is seen as a polluting industry. As a result, the State Pollution Control Board’s consent to start your business and consent to operate will be required for your food business. The type and size of your business operations will determine the category for which you require a license. Below is a breakdown of hotels/restaurants by category provided by the Central Pollution Control Board.
- Tax Registrations– For converting the new food business idea, the next step in the process is tax registration under various statutes.
- Income Tax Registration– Every new food business idea, i.e., the business, including those in the food industry, must have a PAN and TAN in its own name or, in the event of a sole proprietorship, in the name of the person who will be carrying out the transactions. The Income Tax Department issues two ten-digit alphanumeric identification numbers called PAN and TAN. Anyone who withholds or collects tax at source must apply for a TAN allocation.
- Goods & Service Tax Registration– Tax is due under the GST system if a turnover of Rs. 20 lakhs is reached (Rs. 10 lakhs for North Eastern states and Special Category States). Each and every business that must pay GST must register and get a GSTIN.
Therefore, it can be ascertained from the licenses discussed above that the new food business idea requires a lot of registrations & legal requirements to be fulfilled to reach the stage of a new food business idea to a restaurant.