The franchise industry in India is really taking off, and the FoCo (Franchise Owned, Company Operated) model is becoming a popular pick for both franchisors and franchisees. With the help of this creative approach, franchisees can invest in and own the tangible assets while franchisors retain operational control. As we head into 2025, it’s super important to create a strong and beneficial FoCo model franchise agreement for lasting success.
Let’s take a closer look at the key parts of a FoCo model franchise agreement, specifically designed for the Indian market. This guide is here to help franchisors keep things clear, run operations smoothly, and grow effectively, all while building trust along the way.
Before getting into the crucial elements that you need to include in the FOCO model franchise agreement, for our readers, here’s a brief understanding about the FOCO model in India.

Getting to know the Foco Model
Under the FoCo concept, franchisees put in the initial funding for the company’s physical location, utilities, and machinery. So, the franchisor takes care of the daily operations, using its know-how to keep things consistent and running smoothly.
This model really helps franchisees by reducing their risk since they can lean on the franchisor’s tried-and-true systems. At the same time, it gives franchisors a chance to grow their brand without needing a big upfront investment.
This partnership is built on the franchise agreement, which is a legal document that clearly outlines what each party is responsible for and what they can expect from one another.
Now for the important components that comprise this franchise agreement in India
Eight Important Elements To Include in The FOCO model franchise agreement India 2025
#1. Clearly Outlining Duties and Responsibilities
The FoCo model franchise agreement really needs to clearly outline what the franchisor and franchisee are responsible for:
Franchisor role includes:
- Oversight of all management, staffing, marketing, and operational matters on a daily basis.
- It’s important to regularly check in and keep up with the operational standards.
- Encouraging peak performance through the provision of education, materials, and equipment.
- By making these roles clear, the agreement helps avoid any confusion or disputes, which makes everything run more smoothly.
The Franchisee role includes:
- An investment in the building’s framework, machinery, and other physical assets.
- Making sure we stick to the franchisor’s branding rules and follow all the legal stuff.
- Assisting the franchisor in overcoming local obstacles or opportunities.
#2. Profit-sharing and financial arrangements
The foundation of a successful franchise agreement based on the FoCo concept is the financial structure. It should have:
- Investment Information: Clearly state the franchisee’s investment amount and the scope of it (e.g., equipment, branding, location setup).
- Profit Split: Establish how much of the franchisor’s and franchisee’s total income will go to each party. Investors will be more interested if they see this split as fair and competitive.
- Costs of Operations: Indicate which running costs, like payroll, utilities, and advertising, are covered by the franchisor.
- Payment Plans: Can you share some info about the franchise fees, any royalties involved, and other regular charges that might come up?
- This openness helps both sides have a clear understanding of what to expect financially.
#3. Terms of Renewal and Duration
Establishing confidence depends on the agreement’s terms and renewal provisions:
- Franchise agreements under the FoCo model often have an initial agreement period of five to ten years.
- Procedure for Renewal: Clearly outline the processes for extending the contract, such as performance standards, fee modifications, or renegotiation conditions.
- Conditions for Termination: To protect the franchisor’s brand reputation, specify the conditions under which any party may end the agreement.
- Clear terms help build a solid base for a lasting partnership.
#4. Brand Guidelines and Intellectual Property
The most significant resource for franchisors is their brand. The agreement needs to protect:
- Use of Branding and Trademarks: Indicate the franchisee’s permitted usage of logos, trademarks, and other branding components.
- Compliance Standards: Incorporate provisions guaranteeing that franchisees consistently uphold the franchisor’s branding and operating standards.
- Confidentiality: Use strong confidentiality agreements to safeguard operational know-how, proprietary procedures, and trade secrets.
- This enables franchisees to support the franchisor’s objectives while safeguarding the integrity of the brand.
#5. Support and Training
The franchisor’s operational competence is crucial to the FoCo model’s success. The agreement should really highlight:
- Initial Training: Describe the pre-operations training courses that franchisees and their crews can take.
- Explain the ongoing assistance that is given in areas like supply chain management, technology, marketing, and quality control.
- Let’s make sure we have regular audits in place to keep everything compliant and to give us some useful feedback.
- Having solid training and support in place really helps keep things consistent and boosts the confidence of franchisees.
#6. Alternative Dispute Resolution Process
With the franchise relationship being pretty complex, it’s not uncommon for disagreements to pop up. We should make sure the agreement covers:
- Arbitration Clauses: Let’s go with arbitration as the go-to way to resolve disputes since it’s quicker and usually saves money compared to going to court.
- It’s really important to clearly define where disputes will be resolved, especially for franchisors who operate in different states.
- Consequences and Solutions: Let’s talk about what happens if either party doesn’t stick to the agreement.
- This helps keep any potential conflicts in check while making sure the partnership stays strong.
#7. Adapting to the Market
India’s market is super diverse and dynamic, so it’s really important to localise franchise agreements.
- Regulatory Compliance: Include provisions guaranteeing compliance with Indian laws, such as labour legislation, GST, and industry-specific rules.
- It’s important to recognise the preferences of local customers and the unique aspects of how things operate in different areas.
- Include clauses addressing force majeure, which can affect operations and include unanticipated events like pandemics, natural catastrophes, or political shifts.
- Customising the agreement to fit India’s unique landscape really shows that the franchisor is dedicated to making it a success.
#8. Strategy for Franchisees to Exit
Even though the FoCo model helps franchisees lower their risk, it’s crucial to offer them an exit strategy.
- Franchise Resale: Let franchisees sell their share to a buyer who’s been approved ahead of time, following certain guidelines.
- Franchise Buyback: Make sure to include a provision that grants the franchisor the opportunity to repurchase the franchise before anybody else.
- Exit Fees: Make sure to clearly outline any fees that come with ending or transferring ownership.
- This helps make the transition easy and keeps the franchisor’s interests safe.
In conclusion,
The FoCo model franchise agreement really plays a key role in building a successful partnership in India’s booming franchise scene. Franchisors get a chance to grow their brand without needing to invest a tonne of money, all while keeping a handle on how things run. But, it’s really important to carefully create the agreement so that it considers what both sides want.
If franchisors concentrate on having clear roles, being financially transparent, protecting their brand, and making local adaptations, they can build trust, maintain consistency, and grow their operations successfully in 2025 and beyond.
If you’re already a franchisor or just starting out in the franchising world, having a solid FoCo model franchise agreement is essential for achieving sustainable growth and profitability in India. Meet Sparkleminds experts for assistance in drafting your foco franchise agreement for 2025!