Abstract The purpose of this study is to find out the challenges and operational hurdles faced by franchise owners and profitability of any small-scale franchise Module. The goal of this research work is to identify the issues a prospective franchisee must be aware of to successfully manage the operations and be ready to implement innovative strategies for better profitability. The information for this research is gathered from literature, the Internet and by collecting the responses through specially crafted questionnaire, small-scale franchise owners from Pune of Kekiz, MacDonald, Sujata Mastani, Amruttulya Chaha and many more local brands. The empirical data for this study is collected from the representatives by doing a survey in questionnaire form. The outcome of this study indicates mainly the same issues that were expected to be found. These involve propositions concerning allocation of tasks to encounter the prospective challenges and converting the weaknesses into strengths of the outlets, free-riding problems, uniformity of products, transfer of knowledge and local advertising practices. This research concludes that anticipating the challenges and applying innovative promotional strategies to overcome the issues help in improving the profitability of any small-scale franchise outlet. Keywords: Franchisor, Franchisee, Development, Fast-Food Industry, Problem, Economies of Scale To Study the Proftability, Challenges, and Operational Limitations of Small-Scale and Low Budget Franchise Module in Business Management to Understand Innovative Techniques to Implement Gauri Shah*, Rasika Gumaste**, Kiran Shende***, Rina Dongre**** * Associate Professor, AISSMS College of HMCT, Pune, Maharashtra, India. Email: gauristars@gmail.com ** Associate Professor, AISSMS College of HMCT, Pune, Maharashtra, India. *** Associate Professor, AISSMS College of HMCT, Pune, Maharashtra, India. **** Assistant Professor, AISSMS College of HMCT, Pune, Maharashtra, India. INTRODUCTION In today’s world, adopting to newer trends is essential since the world is changing rapidly. One must keep up with the social conditions and changing markets at a constant rate. Newer trends such as franchising are extremely popular in our country, but the 1 st franchise of Nirula foods opened around 1977. Since then, as India was opened to the world in 1991 due to globalization, and foreign companies like McDonalds and Dominos entered the Indian market, increasing the overall competition. The decision making of establishing a good franchising company has a lot of issues. These issues have been well depicted in the movie, The Founder, which gives a particularly good sense of business strategies that are used to dominate the current economy. But after all, everything depends on consumers perception, hence, as we say, the customer knows everything is so true. Now a days, consumers expectations increased, these fast- food chains must keep up with this increasing demand to stay in the business. This competition has emerged a lot of problems and these have been discussed in the report below. Before moving forward to these issues, let us know how exactly the franchising system operates and how people make profts off it. Starting a food business is one step. But building a recognizable brand name that attracts customers everywhere takes years of work. If one Atithya: A Journal of Hospitality 7 (1) 2021, 16-24 http://publishingindia.com/atithya/