The franchise industry in India is growing by 35% every year with close to 5000 new brands adopting the franchising model. International franchisors prefer to appoint a master franchisee and the local franchisors usually do direct franchising. It is necessary to understand the parties’ rights and obligations carefully while entering into a franchise agreement. Hence if you are a brand looking for a franchise agreement format india, then you must make sure that it is done through the experts and with professional help.
Why is it critical to ensure that you have a strong franchise agreement draft built at the onset of developing your franchise model?
Unlike many other countries India sets a maximum limit for prices; Products cannot be sold above the maximum retail price. The laws governing each state is different. International brands seeking to enter the Indian markets might be unaware of the laws pertaining to competition, pricing, royalties, and so on.
The Contract Act 1872 and the Competition Act 1999 prohibit agreements that can hurt competition within India. The CCI (Competition Commission of India) had admitted petitions against NIIT under competition act. There were also allegations that NIIT increased its share of revenue from 42.67% to 48% between July and April. However this month, the CCI totally dismissed all allegations against NIIT with regard to franchise agreements. The CCI said that “the OP (NIIT) is not the dominant player with presence of large players like Jetking, Aptech etc in the market. In order to improve efficiency in the market and to add value for the consumers, almost all the services including professional training are imparted through online mode rather than through the traditional classroom mode to meet growing requirements of the consumers. This signifies that the OP’s conduct is not contrary to the dynamics of competition in the relevant market.”
It is always advisable to approach attorneys and consultants for reviewing the terms carefully and configuring the right agreement to mitigate the business risks involved in making a franchise agreement.
In addition, ensure that you build your franchise model first and never copy paste any existing draft franchise agreement india sample template which you come across. Each business is governed by its own dynamics and hence your agreement must also have its own uniqueness and protect your brand adequately.
