Are you a business owner looking to register your franchise in India? Yes, you heard that right. It is a simple process that business owners can follow for franchise registration in India.
How can I register a franchise in India?
After signing the initial contract with the franchise provider, anyone launching a franchise in India must register with the Ministry of Corporate Affairs. Franchisees from countries other than India might contact foreign brokers like Franchise International Inc.
Legal Framework of Franchise Registration in India
Read below to understand the legal framework which revolves around franchise registration in India.
- Registration of the Franchise – The franchisor is not required by Indian law to be registered with any professional or regulatory authority before agreeing for this reason. The Indian Trademark Act, on the other hand, makes it simpler to document a trademark’s registered user.
- Agreements towards Franchise Business in India – The provisions of the Indian Contract Act of 1872 is followed in franchise agreements. Franchisees are permitted to include disclosure requirements in the agreement, subject to this clause. Due to the franchisor’s misrepresentation, it is now simpler for the franchisee to file both a criminal complaint for making false representations of fact and a criminal breach of trust, as well as a civil case for damages.
- Disclosure Guidelines – Franchisers are to provide franchisees with the essential information before the signing of any contracts under disclosure requirements that some countries adhere to. The implementation of pre-disclosure obligations in India is on the aforementioned franchise agreement, which encapsulates precise disclosure requirements. Readers may be aware of the “consensus ad idem” clauses from the Contract Act of 1857 that apply in this situation.
Indian laws which regulate the offer and sale of franchises in India
Both parties – Franchisor and Franchisee, are part of the franchise agreement, and need to have cognisance of the laws in India. This will be beneficial in the case of Franchise Registrations in India.
The laws are as shown below.
India is amongst the easiest countries in the world to start franchising your business or buying a franchise business. Registration of Franchise agreements in India is simple. Therefore, you can start franchising by a simple proprietorship firm which you can start within 3 working days.
If you are looking at a partnership firm, you can finalize a partnership deed and apply for a PAN number from the income tax office. This can get you on pace in a couple of days. Hence you could buy a franchise or start your franchise company within 7 days in India. Does it get easier anywhere else?
Existing business owners need not go in for additional formalities to get their franchise registration in India done. They can start franchising from the existing firm.
However, they will need to take a strategic decision, as franchising could bring in its complications and liabilities and you may want to delink the franchise business with your ongoing business and go in for a new company altogether.
You could take the franchise quiz linked above to get a score on how ready you are to start franchising your business.
There are certain state policies also which may apply to certain businesses. You may want to target specific cities for franchise expansion. Generally, your franchise consultant will be able to guide you on this and recommend a few test cities.
Understanding the limitations, your target customer profile, and easy market acceptability are the first few factors that come to play while choosing your initial locations.
Building an elaborate franchise marketing plan and allocating the budget for this activity. This is along with the franchise registration in India activity hand in hand.
Ministry of Corporate Affairs is the government body for businesses for a public register of franchise agreements.
Hence, the business needs to be registered under MCA before franchising. Pvt Limited and Public Limited companies, will have to follow the regulations set for them on how to register franchise agreements.
If the franchisor is from outside India, they can get in touch with international franchise consultants. We at Sparkleminds have helped several international companies to register themselves in India. Registering an International Franchise in India, especially with the restrictions on foreign currency transfers and repatriation challenges is very daunting.
Having an experienced franchise consultancy firm that could help you with all the Licensing, registrations, agreements, etc is very important.
The franchisor should know regional tax policies. Also, if the franchisee is a shareholding company they need to comply with the regulations. Professional accountants will be able to assist the franchisor on this subject.
Managing Currency risk is another important area. This is because the initial investments will be a foreign currency but the earnings will be in local currency. Certain protection is essential for managing currency risks.
International insurers provide policies that can minimize cross-border risks. Your International Franchise Consultancy will be able to help you with all of the above.
There are several laws guiding the franchising legal framework in India. This includes the Indian Contracts Act 1872, Transfer of Property Act 1882, Foreign Exchange Management Act 1999, Etc. 15 other acts govern businesses in India. Thus, you may want to be aware of all of them while you go about your Franchise Registration in India.
Get in touch with our experts who can assist you with any business-related queries. You can trust our services as we have serviced over 500+ clients and the list doesn’t stop there.