OYO Franchise Cost in India: Model, ROI, Eligibility Criteria & Steps to Apply

OYO Hotels & Homes (Oravel Stays Pvt. Ltd.) is one of India’s largest hospitality brands with over 60,000 rooms across 3,000+ hotels—as of FY2024, the company had turned profitable with a ₹229 crore net profit. OYO has shifted almost entirely to a franchise model, with hotels standardized, tech-enabled, and centrally supported. For property owners—especially those with underutilized assets—partnering with OYO can offer revenue predictability, digital distribution, and brand equity.

💰 Investment & Cost Overview

📊 Summary Investment Table

Component	Details
Property size required	300–3,000 sq.ft (3000–5000 sq.ft for Townhouse)
Franchise Fee & Setup	₹2–5 lakh initial model; ₹1–2 crore for Townhouse
Infrastructure & Renovation	₹10–30 lakh (budget hotel); >₹1 crore for Townhouse
Revenue Share / Commission	OYO keeps ~10–25% of room revenue
Estimated ROI	~18–25% annual
Expected Break-even	12–18 months (budget); <12 for high-end Townhouse
Agreement Tenure	5 years renewable

🏗 OYO Franchise Models

1. Budget Hotel or Existing Rooms

• Space: 300–1,000 sq.ft, usually existing guest houses or rooms.
• Investment: ₹2.5–5 lakh for integration, branding, minimal fit-out.
• Revenue Share: OYO retains ~10% (brand premium, tech, bookings).
• ROI: Potential for positive cash flow within first year, break-even within 12 months.

2. OYO Townhouse / Upscale Properties

• Space: ~3,000–5,000 sq.ft boutique or townhouse format.
• Investment: ₹1–2 crore, including renovation, standard equipment, interiors, licensing.
• Revenue Share: OYO takes ~22–25% of revenue, depending on scale.
• ROI: Townhouse partners expect ~40% ROI by 7th month, median break-even within 12–18 months.

📈 Financial Outlook & Profitability

Example Scenario: Existing Budget Property

• Suppose your property has ₹5 lakh/month revenue. OYO retains 10%, i.e. ₹50,000.
• Operating costs (staff, utilities, maintenance): ~₹2 lakh.
• Net Profit: ₹2.5 lakh/month → ₹30 lakh annually → ROI of ~30% on a ₹10 lakh investment.

Higher-End Example: Townhouse Property

• With ₹20 lakh/mo revenue and OYO share ₹4 lakh:
• After ₹8 lakh expenses, net profit ~₹8 lakh/month → ₹96 lakh yearly.
• On ₹1 crore investment, ROI approaches ~96%, though actual numbers vary by location.

Most OYO franchisees report annual ROI in range 15‑25% for standard properties and up to 40%+ for townhouse setups.

✅ Eligibility & Ideal Candidate Profile

Requirements

1. Property Readiness:
   • Budget model: minimum 12–15 rooms in a 3–4 storey building.
   • Townhouse: 3,000–5,000 sq.ft modern space.
2. Legal Clearance: Title clear, no disputes, valid licenses (e.g. fire safety, trade, GST).
3. Capital: ₹2–5 lakh for standard models; ₹50 lakh–₹2 crore for Townhouse/flagship.
4. Operational Willingness: Staffing, compliance, quality, OYO training participation.
5. Age / Background: 21+ years, basic business acumen; hospitality background helpful but not mandatory.
6. Agreement Term: Standard 5-year franchise tenure, renewable on renewal terms.

📝 Step‑by‑Step: How to Apply

1. Submit Inquiry: Visit OYO’s official site, fill the partner application form.
2. Initial Screening: OYO reviews property details, ownership and location.
3. Site Inspection: Infrastructure, room count, title validation.
4. Renovation Plan & Investment Estimate: OYO estimates required capex and upgrades.
5. Franchise Agreement & Training: Sign 5-year agreement, attend training, onboard systems (ORBIS app).
6. Standardization & Launch: Carry out renovations, furnish rooms, launch under OYO brand.
7. Monitoring & Support: Access tech dashboards, field visits, marketing support and performance incentives.

⚖️ Pros & Cons of OYO Franchise

✅ Advantages

• Strong brand recognition and booking distribution in India and internationally.
• Low-entry cost for the budget model; scalable into higher-end formats.
• Tech-driven operations, revenue management, pricing optimization via ORBIS.
• Support in operations, marketing, training and quality audits.

❌ Challenges & Risks

• Quality control issues: Reddit users flag inconsistencies, fake reviews, guest complaints, non-compliance at partner properties.
• Payment delays: Historical reports of delayed payouts to property partners and vendors.
• Brand stigma: OYO still associated with budget stays and unclean properties for many customers.
• High revenue share in Townhouse models (20–25%) cuts into margins significantly.

💡 Expert Recommendations for Prospective Investors

• Visit multiple OYO properties, across both budget and Townhouse categories—to assess service quality, client experience and upkeep.
• Connect with existing OYO hotel franchisees to get candid feedback on payment timelines, support, and operational challenges.
• Review the franchise agreement carefully, especially clauses related to exit, renewal, penalties, and minimum standards.
• Build financial buffer for 6–12 months during ramp-up and unexpected delays.
• Invest in qualitative staff training and facilities upgrades, as the chain is audit-driven and guest reviews impact visible ranking.
• Optimize for digital visibility: ensure high ratings on OYO app, Booking.com, and local channels to maximize occupancy.

🧾 Franchisee Quick Reference Table

Feature	Details
Property Size	300–3000 sq.ft (budget), 3000–5000 sq.ft (Townhouse)
Investment	₹2–5 lakh (budget), ₹50 lakh–₹2 Cr (Townhouse)
Revenue Share (OYO)	10–25%
Net Profit Margin	~20–30% (budget); up to ~40% (Townhouse)
Break-even / ROI Timeline	12–18 months (budget); <12 months (Townhouse)
Agreement Term	5 years (renewable)
Requirements	Title-clear property, staff, licenses, capital
Support Provided	Tech, training, branding, marketing, revenue management

🎯 Final Verdict

An OYO franchise is an accessible way to transition a hotel or property into a branded hospitality income stream, especially for budget lodgings. With minimal upfront integration costs (~₹2–5 lakh), third-party property owners can tap into OYO’s distribution, tech, and operational leverage. For investors able to establish or renovate upscale Townhouse or Collection O properties, potential ROI can reach 35–40%+ within a year.

That said, success depends heavily on operational discipline, quality control, cash flow management, and location advantage. OYO’s reputation remains mixed due to service inconsistencies and past partner payment issues. Rigorous due diligence—site visits, peer interviews, contract review—is essential before investing.