Franchise Agreement
A Franchise Agreement governs the relationship between franchisor and franchisee — covering license fees, territory, quality control, IP use, training obligations, and termination. India has no dedicated franchise law, making a robust agreement your primary protection.
What is Franchise Agreement?
A Franchise Agreement is the master document governing the franchisor–franchisee relationship. The franchisor grants the franchisee the right to operate a business using the franchisor's brand, systems, and intellectual property in exchange for a franchise fee and ongoing royalty. In India, franchising is governed by the Indian Contract Act, 1872, IP laws (Trade Marks Act, Copyright Act), and the Competition Act, 2002. There is no specific franchise legislation, making it essential to have a comprehensive agreement that addresses all aspects of the relationship.
What you get
- Comprehensive Franchise Agreement
- Territory grant and exclusivity terms
- Franchise fee and royalty structure
- Brand usage and IP license terms
- Quality standards, audits, and reporting
- Training and operational support obligations
- Renewal, transfer, and right of first refusal
- Termination and post-termination obligations
- Non-compete and non-solicitation
- Word + PDF format
Documents required
- Franchisor entity name, trademark registrations, and GST number
- Franchisee entity name and proposed territory
- Franchise fee (upfront) and royalty structure (% of revenue or fixed)
- Nature of the franchise (food, retail, service, education, etc.)
- Existing operations manual or standard operating procedures
- Training program description
- Duration of the franchise and renewal terms
How it works
Understand the Model
We discuss your franchise model — unit franchise, master franchise, or area development — and the key commercial terms.
Lawyer Drafts
We draft a comprehensive franchise agreement covering all commercial, IP, quality, and exit terms.
Review & Negotiate
The franchisee's counsel reviews the agreement. We assist with negotiating specific terms and redlining.
Execute & Operationalise
Both parties execute on stamp paper. Register trademark license if required. Provide the operations manual separately.
Pricing on Request
Every situation is different — get a custom quote tailored to your exact needs.
Frequently asked questions
Does India have a specific franchise law?
No. India does not have a dedicated Franchising Act. Franchise agreements are governed by the Indian Contract Act, 1872 (for contract terms), the Trade Marks Act, 1999 (for trademark licensing), the Copyright Act, 1957 (for brand assets and manuals), and the Competition Act, 2002 (for exclusivity and territory restrictions). A comprehensive agreement is therefore essential.
Must a trademark license under a franchise agreement be registered?
Under the Trade Marks Act, 1999, a registered user (licensee) agreement should be recorded at the IP India trademark registry. While not strictly mandatory for the license to be valid between the parties, recording provides the franchisee protection and ensures the franchisor's mark is protected against infringement by the franchisee.
What is a master franchise versus a unit franchise?
A unit franchise grants the right to operate one outlet. A master franchise (or area development agreement) grants the right to develop multiple outlets in a territory and sub-franchise to others. Master franchisees typically pay a higher upfront fee but earn sub-franchise fees from their sub-franchisees.
How should royalties be structured?
Royalties can be: (a) a percentage of gross revenue (typically 4–8% for food, 2–5% for retail); (b) a fixed monthly fee; or (c) a per-transaction fee. The choice depends on your model, the franchisee's revenue predictability, and your enforcement ability. We advise on structuring and GST implications of royalties.
What happens if a franchisee breaches quality standards?
The agreement should provide a cure period (typically 30 days) for minor breaches, and immediate termination rights for serious breaches (repeated quality failures, brand damage, criminal conduct). Post-termination obligations — removing signage, destroying materials, and not operating a competing business — must be clearly specified.
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