{"id":27464,"date":"2019-12-28T15:34:14","date_gmt":"2019-12-28T10:04:14","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=27464"},"modified":"2023-07-11T11:55:50","modified_gmt":"2023-07-11T06:25:50","slug":"franchise-agreement-and-laws-governing-franchising","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/franchise-agreement-and-laws-governing-franchising\/","title":{"rendered":"Franchise Agreement and Laws Governing Franchising"},"content":{"rendered":"<p>A Franchise Agreement is a legally binding document in which a well-established business (franchisor) approves to provide its brand, operational model and required support to another party (franchisee) for them to run a similar business in exchange for a fee and share in the income generated. This agreement outlines the terms and conditions of the franchisor for a franchisee. Every franchise is governed by these terms, which are generally a written agreement between both parties. The <a href=\"https:\/\/enterslice.com\/franchise-agreement\">franchise agreement<\/a> plays a key role in governing the franchisee-franchisor relationship. In this blog, you will get a clear understanding of various elements of the agreement, and critical laws governing the agreement. This article describes the Franchise Agreement and Laws Governing Franchising.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Elements of a Franchise\nAgreement<\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"519\" height=\"379\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/12\/elements-of-Franchise-Agreements.png\" alt=\"Elements of a Franchise Agreement\" class=\"wp-image-27470\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/12\/elements-of-Franchise-Agreements.png 519w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/12\/elements-of-Franchise-Agreements-300x219.png 300w\" sizes=\"(max-width: 519px) 100vw, 519px\"\/><figcaption class=\"wp-element-caption\"> <br>Elements of a Franchise Agreement <\/figcaption><\/figure><\/div>\n\n\n<p><strong><em>Most of the Franchise Agreements will include the following elements:<\/em><\/strong><\/p>\n\n\n\n<p><strong>An outline of the relationship<\/strong>: A Franchise Agreement and Laws Governing Franchising essentially include the people involved, and ownership of the intellectual <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Property&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Property refers to the legal designation of ownership over valuable items or assets held by an individual or a business. This ownership grants the holder certain legal rights to use, consume,(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/property\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>property<\/a>. The agreement also consists of the franchisee&rsquo;s obligations to operate their business according to the franchisor&rsquo;s standards.<\/p>\n\n\n\n<p><strong>Duration\nof the Agreement<\/strong>:\nThis involves the course of the franchisor-franchisee relationship.<\/p>\n\n\n\n<p>Initial and Continuing Fees:\nGenerally, franchisees pay an initial fee to become a part of the relationship\nfollowed by continuing fees to maintain their position. The Agreement also\nincludes other side fees to be paid by the franchise.<\/p>\n\n\n\n<p><strong>Location\nand Territory<\/strong>: The\nFranchise Agreement includes the territory assigned by the franchisor to its\nfranchise. The territory assigned can differ in each agreement. There are two\ntypes of franchise territories:<\/p>\n\n\n\n<ul>\n<li>Exclusive territory: When a franchise is sold with an exclusive territory, it means the franchisor cannot sell other franchises in that particular area. The territory assigned is exclusive to that franchisee.<\/li>\n\n\n\n<li>Non-exclusive territory: When a franchise is sold in a non-exclusive territory, the franchisor can sell other franchises to people in that territory.<\/li>\n<\/ul>\n\n\n\n<p><strong>Use of Intellectual Property<\/strong>: The agreement also includes trademarks, patents, and manuals that will be offered by the franchisor to the franchisee. The <a href=\"https:\/\/enterslice.com\/shareholders-agreement\"><strong>agreement<\/strong><\/a> shall define the expected use of trademarks, patents, and manuals.<\/p>\n\n\n\n<p><strong>Advertising:<\/strong> Franchisors shall brief\nfranchisees on the efforts to be put in for advertising the brand.<\/p>\n\n\n\n<p><strong>Insurance:<\/strong> All franchise agreements require\nthe franchisee to get insurance to cover its business operations. <\/p>\n\n\n\n<p><strong>Training<\/strong>: This section of the agreement discloses the training offered by the franchisor, including seminars, meetings, etc. that the franchisor will expect the franchisee to attend.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Types of Franchise Agreements and Laws in India<\/h2>\n\n\n\n<p>Franchising offers excellent business opportunities for individuals, companies and investor groups. Following are the different types of franchise agreements:<\/p>\n\n\n\n<p><strong>Single Unit Franchise Agreement<\/strong>: This type of agreement is the most traditional and historically, the most common form of franchising. In this agreement, franchisor grants the right and obligation to establish and operate one franchise to the franchisee. The franchisees have to invest their own capital and apply their management skills to enhance their business.<\/p>\n\n\n\n<p><strong>Multi-Unit\nFranchise Agreement<\/strong>:\nIn this type of agreement the franchisor grants the right and the obligation to\nestablish and operate more than one franchised unit to the franchisee. The\nmulti-unit franchisee should have the financial and managerial capability to\ndevelop multiple units itself.<\/p>\n\n\n\n<p><strong>Master\nFranchise Agreement<\/strong>:\nIn this type of agreement franchisor grants the right for a specific country,\nregion or continent, hence empowering the master franchisee to provide a full\nrange of products and services of the franchisor. Moreover, the master\nfranchisee also has the right to recruit other franchisees. This way the master\nfranchisee becomes a franchisor to those franchisees who joins the system\nthrough its master franchise.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Laws Governing Franchising\nin India<\/h2>\n\n\n\n<p><strong>The\nIndian Contract Act, 1872<\/strong>:\nThis Act is the mother law governing the fundamental aspects of the agreement\nbetween the franchisor and the franchisee. The Indian Contract Act decides the\nfundamental principles such as offer and acceptance, consideration, breach of\ncontract and other related activities.<\/p>\n\n\n\n<p><strong>The\nCompetition Act, 2002<\/strong>:\nThis Act prohibits arrangements related to production, supply, distribution,\nacquisition or control of goods that cause or are likely to cause an adverse\neffect on the competition within the country. The Competition Act was launched\nin India to restrict big franchise from creating a monopoly in the <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>market<\/a>.<\/p>\n\n\n\n<p><strong>Consumer Protection Act, 1996<\/strong>: This Act promotes the idea of consumer and consumer interest. Under this Act, the consumer can file a complaint against both the franchisee as well as the franchisor, if there is any defect in the product or deficiency in services. Consumer Protection Act safeguards consumers against unfair trade practices.<\/p>\n\n\n\n<p><strong>The Foreign Exchange Management Act, 1999<\/strong><span id=\"easy-footnote-1-27464\" class=\"easy-footnote-margin-adjust\"><\/span><span class=\"easy-footnote\"><a href=\"https:\/\/enterslice.com\/learning\/franchise-agreement-and-laws-governing-franchising\/#easy-footnote-bottom-1-27464\" title='&lt;a href=\"https:\/\/en.wikipedia.org\/wiki\/Foreign_Exchange_Management_Act\" rel=\"nofollow\"&gt;https:\/\/en.wikipedia.org\/wiki\/Foreign_Exchange_Management_Act&lt;\/a&gt;'><sup>1<\/sup><\/a><\/span>: This Act comes into play when there is the involvement of foreign currency or assets. All international brands like Reebok, KFC, and Nike having their franchise in India are all controlled by this Act. It also controls the payment in foreign currency. The Indian government is working towards simplification of laws so that international brands can open up their franchises in India without much of a hassle.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Typical Franchise Businesses in\nIndia<\/h2>\n\n\n\n<p><strong>Restaurant Franchise in India<\/strong>: India has a long list of Restaurant Franchisees that have been opened over the years. Some of the prominent franchise names in the food industry are Haldiram, Subway, Domino&rsquo;s, Macdonald, etc. <\/p>\n\n\n\n<p><strong>Hotel Franchise in India<\/strong>: The tourism sector has seen exponential growth over the years in India. People are spending money on their travels and booking lavish hotels for vacations. This has led to an increase in the number of Hotel Franchises all over the country. Some of the common examples are Radisson, Marriot International, etc<\/p>\n\n\n\n<p><strong>Gym Franchise in India<\/strong>: over the years, there has been a positive increase in the number of people hitting the gym regularly. People are becoming aware of fitness and its benefits. Various franchises of Gym are operating all over India such as Gold&rsquo;s Gym, Chisel, etc. to fulfill the demands of fitness freaks.<\/p>\n\n\n\n<p><strong>Clinics Franchise in India<\/strong>: There is a number of big players in these sectors who have started franchises all over India. Hospitals such as Fortis, Dr. Batra, Lal Path Labs, etc are some examples.<\/p>\n\n\n\n<p><strong>See Our Recommendation<\/strong>: <a href=\"https:\/\/enterslice.com\/learning\/sample-format-franchisee-agreement\/\">Sample Format Of Franchisee Agreement<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Franchise Agreement is a legally binding document in which a well-established business (franchisor) approves to provide its brand, operational model and required support to another party (franchisee) for them to run a similar business in exchange for a fee and share in the income generated. This agreement outlines the terms and conditions of the [&hellip;]<\/p>\n","protected":false},"author":26,"featured_media":27501,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1527,2226],"tags":[],"acf":{"service_id":"105"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Franchise Agreement and Laws Governing Franchising in India - Enterslice<\/title>\n<meta name=\"description\" content=\"The franchise agreement plays a key role in governing the franchisee-franchisor relationship. franchise agreement, and laws governing the agreement.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/franchise-agreement-and-laws-governing-franchising\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Franchise Agreement and Laws Governing Franchising in India - Enterslice\" \/>\n<meta property=\"og:description\" content=\"The franchise agreement plays a key role in governing the franchisee-franchisor relationship. franchise agreement, and laws governing the agreement.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/franchise-agreement-and-laws-governing-franchising\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-12-28T10:04:14+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-07-11T06:25:50+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/12\/Franchise-Agreement-and-Laws-Governing-Franchising-in-India.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Shubham Chauhan","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/10\/IMG_20191011_160437__01.jpg","authorDescription":"A passionate legal content writer, a nature enthusiast, an avid reader, and a part-time thinker. By means of conducting in-depth research on industry related topics, Shubham often builds flawless and intelligible legal content for populace from all walks of life.","postViews":527,"readingTime":4,"nextPost":{"id":27467,"slug":"new-type-of-prepaid-payment-instruments-ppis-launched-by-rbi"},"prevPost":{"id":27435,"slug":"an-overview-of-forensic-technology-services"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/12\/Franchise-Agreement-and-Laws-Governing-Franchising-in-India.jpg","postTerms":"Legal Agreements","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/27464"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/26"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=27464"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/27464\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/27501"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=27464"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=27464"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=27464"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}