A franchise agreement is a legal contract between a franchisor (brand owner) and a franchisee (independent operator) that outlines the terms under which the franchisee can operate a business using the franchisor's brand, systems, and support.
It governs every aspect of the franchise relationship and must be meticulously drafted to ensure compliance, clarity, and legal protection for both parties.
| Clause | Description |
|---|---|
| Grant of Franchise | Defines what rights are being granted including brand and system usage. |
| Territory & Exclusivity | Specifies if franchise is exclusive or restricted to an area. |
| Fees & Payment Terms | Breakdown of all fees, payment schedules, and applicable taxes. |
| Franchise Term & Renewal | Duration and renewal policies. |
| Training & Support | Commitment to operational guidance and initial training. |
| Marketing & Branding | Brand usage, marketing fund contributions. |
| Intellectual Property | Protection and limitations on IP usage. |
| Quality Control & Audit | Inspection mechanisms to maintain brand quality. |
| Termination Clause | Events or conditions for termination with notice periods. |
| Post-Term Obligations | Non-compete, return of proprietary material, and confidentiality. |
| Dispute Resolution | Method of resolving disputes (arbitration, mediation). |
| Force Majeure | Exemptions for natural disasters or uncontrollable events. |
Franchise agreements in India are governed by:
A well-drafted franchise agreement protects both the franchisor’s brand and the franchisee’s investment. It should be tailored to the specific business model, jurisdiction, and regulatory landscape. Seeking legal consultation before finalization is highly recommended.