How It Works
What is a Franchise Agreement?
A Franchise Agreement in India is a contract where a business (Franchisor) consents to grant the enterprise name or company processes or the company product to an individual or an entity (the franchisee). The Franchise Agreement lays the terms between both the consenting groups. It defines the
- Remuneration for the franchisee (payment in the way of royalties) for the usage of the business trademark, etc.
- Conditions of the usage of the brand name,
- Terms concerning disciplinary provisions, varying from financial penalty and allowances to withdrawal of the business franchise and the contract
Laws governing the Franchise business arrangement in India
The different laws which govern various aspects of franchising in India are as follows:
- The Indian Contract Act, 1872.
- The Competition Act, 2002
- Income Tax Act, 1961
- Consumer Protection Act, 1986
- Arbitration and Conciliation Act, 1996
- The Foreign Exchange Management Act, 1999
- The Trademarks Act, 1999
- Patent Act, 1970
- Design Act, 2000
- Copyright Act of 1957
Contents of a Franchise Agreement
The Franchise Agreement contains the following:
- The operational relationship between the Franchisor and the Franchisee
- Usage rights and limitations of the Franchisor’s brand name and trademark
- Designates the Territory
- Defines the Royalty payment structure and the payment frequency
- Mentions the Upfront fees to be paid to the Franchisor
- Outlines the validity of the Agreement
- Mentions the Training & Operation support to be provided by the Franchisor
- Outlines the Operation Process & Reporting format
- Termination & Dispute resolution mechanism
Our standard deliverables for every document drafting includes:
- 30 Minutes of Talk-Time with the Lawyer for drafting/reviewing the Agreement
- First draft of the documents will be delivered to you within a maximum of 2 working days
- Post-delivery of the first draft – 2 Iterations per Document to incorporate your suggestions/changes
- Senior Corporate Expert Lawyers: We will get your document drafted/reviewed by Senior Expert Corporate lawyers. You can track the progress of your document on our platform at all times.
- 4.5 Customer Score: Clients are delighted with our service! They have consistently rated us high because of our focus on delivering quality output and providing regular updates.
- Responsible Delivery: Our team of experienced business advisors are just a phone call away. Our team will ensure that your interaction with the expert lawyer is smooth and seamless and the document draft is delivered to you within the committed timeline.
Frequently Asked Question
What is the difference between a Franchisor and a Franchisee?
A Franchisor is a business, which is the parent company that owns the brand name and the product/technology knowhow. The parent company loans these principles, product and brand to another entity known as the Franchisee. While the Franchise is independently owned, operated and managed, but the entire process of the usage or brand and sales of the product is overseen by the larger parent company.
Does India have specific laws for franchise businesses?
No, India does not have separate laws that deal explicitly with franchise business models. India does not have any particular law that deals specifically with the franchise agreement, its termination, the setting of clauses, and non-disclosure. But several enactments help control and regulate the functioning of franchise business in India.
Should Franchise Agreement be stamped?
Yes, Franchise Agreement must be stamped according to relevant Stamp Duty Act, as applicable to your state.
What is the difference between Franchising and Licensing?
The difference between licensing and franchising is that licensing is a legal relationship that is limited in scope and relates only to the use of a trademark or technology, whereas franchising involves a relationship that goes beyond the grant of a license and includes a relationship of control where the underlying business is required to operate in accordance with designated systems and procedures.
What our users have to say
I was planning to buy a plot in Nagpur. Before buying the land, I wanted to get all the documents verified and ensure it is free of fraud and forgery. LegalKart undertook every step carefully and their team was very responsive. I am impressed by their professionalism and would highly recommend their service.
Kishore Kamble, Pune
I had purchased a flat in Bangalore. The builder had delayed possession from the committed date. I was paying a high EMI and rent which increased my monthly cash outflow and this left me with no money at the end of the month. I was very stressed and didn’t know what to do. I came across LegalKart and their Property Expert Lawyer advised me to send a legal notice to the Builder and also appeal to the RERA for the delayed possession. I got compensation from the builder for the delay and finally also got possession of my flat.
B. Sivakumar, Bangalore