Franchise Agreement India

Franchise Agreement India

Why Making A Full Proof Franchise Agreement in India Is Critical

Imagine you are making a brand new house and you do not make the right doors and windows nor focus on the security systems to keep it safe. That’s how important it is to make a correct franchise agreement for your business, especially in countries like India, where we do not have a specific franchising law, like in other developed franchise markets of the world.

  • How Do You Start the Preparation Of Your Draft Franchise Agreement?
  • When is the ideal time to have a sample franchise agreement in place?
  • How much does it cost to make a franchise agreement in India?
  • How can you get it customized to suit your business?
  • Should you get the agreement done by your nearby lawyer, an online platform or a specialist franchise agency?
  • Should your business model come first or your franchise agreement?

Suppose you are a business owner looking to convert your business to a franchise model, you will have all of the above questions and probably many more.

Let us help you understand the need for a Solid Franchise Agreement in India before you step into franchising your business in India.  

A franchise agreement is a solitary, mutually agreed-upon legal document between the franchisor and the franchisee. Both of them need to fulfill each other’s legal obligations as a result. The ideal franchise contract contains several clauses, including payment terms, deadlines, and guidelines for using the brand name.

Benefits of a good franchisee agreement include:

  • Franchise contracts are legally enforceable documents that impose requirements on both the franchisor and the franchisee.
  • Because the partnership benefits both the franchisor and the franchisee financially and in other ways, there is little chance of conflict or agreement breach.
  • The franchise agreement’s terms and conditions are mutually agreed upon, so both parties get along well.
  • Before bringing on the franchisee and committing them to a franchise contract, the franchisor may specify standards for the upkeep of quality about many aspects of the industry in a franchise agreement.
  • Once a franchise agreement model is in place, the franchisor may decide how the franchisee will implement the company and branding.
  • The penalties for negligent management or breaches of corporate branding are put in the agreement to preserve the brand name at all times.

What should a Franchise Agreement in India include?

Since Indian franchising is subject to several laws, the basics that needs to be adhered along with compliances of all laws are as follows:

  • Relationship between the franchisor and the franchisee in detail and the binding terms.
  • Validity of franchise agreement. 
  • Details regarding financials and franchise fees and royalty fees.
  • Location to start the franchise – territorial rights.
  • Advertising and marketing conditions.
  • Use of intellectual property rights.
  • Training responsibilities and costs
  • Last but not the least, is the termination clause bearing in mind what can be enforced in India

10 Types of Franchise Agreements In India

Choose a Franchise Agreement Model that suits your business in India. You must undergo a full franchise development program with an experienced franchise consultancy firm to help you choose the perfect agreement draft for your business to ensure that you do not end up making costly mistakes.

  • Franchisee Owned Company Operated (FOCO Agreement Model In India)
  • Franchisee Owned Franchisee Operated Model (FOFO Agreement In India)
  • Company Owned Franchise Operated Model (COFO Agreement In India)
  • Company Owned Company Operated Models (COCO Agreement In India)
  • Single Unit Franchise Agreement
  • Multi-Unit Franchise Agreement
  • Area Development Franchise Agreement
  • Master Franchise Agreement
  • Distributor Franchise Agreement
  • License Agreements India

Have Sparkleminds Prepare your Franchise Agreement in India, Perfectly in 7 Days

Franchise Agreement India

It is extremely important that you understand the nuances of Indian franchising deeply.  India does not have any separate enactment for the franchise business model. There is no requirement to register franchise offerings or to provide franchise disclosure documents in India. 

There is no specific law dealing with franchise agreements and their aspects such as termination, non-disclosure, and other clauses have to be governed by other laws that bind these agreements. This is why it is hard having a standard franchise agreement format in India, as it will leave a lot of loops open. 

As a standard model franchise agreement in India does not exist, it becomes all the more important to safeguard your business interests, it is advisable to get into a solid watertight agreement.

Therefore, from the Franchise Agreement Format to the Contents of the Franchise Agreement, every step plays an important role. Each part of the agreement defines the roles and responsibilities of each party involved.

When and How to Prepare a Franchise Agreement?

Over the last two decades, we have built competitive intelligence and ground-level understanding. There is a high level of leakage, across layers.  We help the franchisor plug these leakages, as the earliest. 

With this knowledge and understanding, we protect our clients and make franchising work for them. We have helped our clients with a wide range of services that cover the entire gamut of franchising. 

Most importantly, we know what you must not do and ensure that we safeguard you from costly mistakes.

Several business owners in a bid to start franchising quickly, provide P&L sheets, ROI Plans, and a basic agreement (done by any lawyer or copied from templates that are available online) to prospective franchisees

They feel that these franchise disclosure documents are sufficient to get started and a simple franchise terms and conditions agreement drafted by any lawyer is sufficient to reduce the franchise agreement cost. 

They recruit a few franchises quickly as their business or brand is attractive. This is where things begin to fail.  It is important to create the right franchise strategy, documentation, training programs, and another support system at the initial stage only to avoid consequences later, with assistance from experts.

Franchising is like the tip of the iceberg, which to most people externally seems beautiful. Internally, you need to have a very strong base, to be able to support the majestic tip on the top.

To Sum Up,

Therefore, do not take any chances on preparing the perfect draft franchise agreement in India. Having witnessed hundreds of legal cases and several successes and failures because of franchise agreements, we are uniquely positioned to use our two decades of franchising in India experience for your benefit. Speak to a sparkleminds consultant and we will use our expertise to help you start correctly.