Can I Create a Franchise Agreement Online?

Table Of Content

• What is a Franchise Agreement?
• What are the Key Features of a Franchise Agreement?
• What are the three types of Franchise Agreements?
• Which Law Governs Franchise Agreement in India?
• Do I need any documents to Create a Franchise Agreement online?
• How to Create Franchise Agreements online?
• Do I need Stamp Paper for Franchise Agreement?
• What should be considered before Signing a Franchise Agreement?
• What is Franchise Law in India?
• Conclusion

Franchise law in India refers to the set of rules governing agreements between franchisors and franchisees. Some key aspects include intellectual property rights as stipulated by statutes such as Trade Marks Act, 1999 while regulatory framework for consumer protection and competition laws ensure fairness in trade among others. Franchise law is intended to safeguard both parties’ interests, maintain quality levels on the part of franchisors and allow ease for expansion on the part of franchisees.

What is a Franchise Agreement?

In India, franchise agreements are primarily governed by the Indian Contract Act, 1872, which sets out the general principles of contract law, including the formation, rights, and obligations of parties entering into agreements. Additionally, specific aspects of franchise agreements such as intellectual property rights, consumer protection, and competition law are regulated by relevant statutes like the Trade Marks Act, 1999, Consumer Protection Act, 2019, and the Competition Act, 2002. These laws collectively ensure that franchise agreements adhere to legal standards, protect the interests of both franchisors and franchisees, and maintain fair competition within the market.

What are the Key Features of a Franchise Agreement?

1. Grant of Rights: Defines the franchisor’s rights to the brand and its usage by the franchisee.
2. Fee and Royalties: Details about the initial franchise fee, ongoing royalties, and other financial terms.
3. Training and Support: Outlines the franchisor’s obligations regarding operational training and marketing support.
4. Quality Control: Ensures uniformity and adherence to brand standards.
5. Duration and Termination: Specifies the term of the agreement and conditions for renewal or termination.

What are the three types of Franchise Agreements?

There are various types of franchise agreement in India, and some of the major types are;

• Single Unit Franchise: Single Unit Franchise is one of the most common form of franchising. In this form, franchisor grants to an entity the right and obligation to establish and operate the franchise. The Franchises have to invest their own capital and apply their own management skills.
• Multi Unit Franchise: In this form, Franchisor grants to an entity the right and obligation to establish and operate more than one franchised unit. The multi Unit Franchise agrees up front to open a specific number of locations during a defined period of time.
• Area Development Franchise: This franchise type is similar to Multi Unit franchise where franchisor grants to an entity the right and obligation to establish and operate more than one franchise. In this franchise, developer agrees on opening a specific number of unit during a define period within a defined area.
• Master Franchise: Master franchise is one of the most popular franchise business model in which master franchiser grants the franchisee to someone a specific area where master franchisee has the right not only to open franchise unit but they can grant sub-franchise to third parties.

Which Law Governs Franchise Agreement in India?

In India, franchise agreements find their basis primarily from Indian Contract Act, 1872 which is a collection of laws on contracts including formation elements rights and liabilities. Similarly other aspects of this agreement like intellectual property rights are guided by relevant statutes such as Trade Marks Act, 1999; consumer protection legislation that is Consumer Protection Act, 2019; Competition laws that are Competition Act, 2002. All these laws also ensure that various provisions in these contracts adhere to legal standards so that both sides can be protected and fair competition between them can be maintained.

Do I need any documents to Create a Franchise Agreement online?

To create a Franchise Agreement online, you typically need:

1. Franchisor History: Detailed information about the franchisor and franchisees.
2. Fee Structure: List of franchise fees, royalties, and operational standards.
3. Intellectual Property Rights: A clear understanding of trademarks and rights to use them.
4. Term & Termination: Duration of the agreement and situations that may lead to its termination.
5. Law Compliance: Conformance with local laws and regulations.
6. Legal Review: Checking for legal differences in the country where the business will be situated or getting legal advice from a lawyer if necessary.
7. Signatories: Both sides representatives’ authorization.

How to Create Franchise Agreements Online?

To create a Franchise Agreement online, you need to follow these simple steps:

1. Visit our website edrafter.in and click on ‘Request for Customized Document’ in ‘Legal Documents’ Section in the main menu.
2. Now, you will be redirected to the ‘Custom Drafting’ page where you need to fill the form to provide us with some required details.
3. Now, we will schedule a call with our Advocate for you and will share the call details on your email.
4. During the call, An advocate will ask your requirements for the Agreement. After the call, he will prepare the draft and share the same with you in your mail for your approval.
5. Now, you can check the draft and if required, you can ask the advocate to make any required changes.
6. Now, the advocate will make the changes and will share it again for your approval.
7. Once you approve the draft, we will prepare the hard copy of your agreement at your doorstep.

Do I need Stamp Paper for Franchise Agreement?

In India, franchise agreements typically do not require stamp paper. They can be executed on plain paper as per the Indian Stamp Act, which mandates stamp duty only for certain specified documents. However, it’s advisable to consult a legal expert to ensure compliance with local regulations and requirements.

What should be considered before Signing a Franchise Agreement?

Before signing a franchise agreement, consider the following key points:

1. Investigation on Franchisor’s Record: Probe into the establishment’s reputation, past activities, as well as triumph rates.
2. Financial Commitments: Grasp all payments, percentages or investments demanded at initial stages.
3. Support System at Workplace: Look through the learning process provided by the firm; marketing strategies used etc.
4. Legal Review & Consultation with Attorney Familiar with Franchise Law: Another solution is to give it to a lawyer who is knowledgeable in franchising laws for their go ahead.
5. Exclusive Territorial: This can be explained as whether the franchise has some exclusive territory rights over others or not.
6. Exit Clause: Also assess terms for termination and renewal as well as reselling options in this opportunity prototype.

What is Franchise Law in India?

Franchise law in India is the name given to the set of legal principles and regulations that govern the relationship between franchisors, which are owners of business concepts or brands, and franchisees who are individuals or entities granted the right to operate under a franchisor’s brand. It embraces issues such as contract law under Indian Contract Act 1872; protection of intellectual property rights under legislations like Trade Marks Act 1999; consumer protection laws; competition law under Competition Act 2002. The goals of franchise law are ensuring fair dealings, protecting franchisees against exploitation, enforcing franchisor standards and maintaining market competition while fostering growth and expansion of franchised businesses within Indian legal framework.

Conclusion

Franchise law in India serves to regulate and uphold the contractual relationships between franchisors and franchisees, governed primarily by the Indian Contract Act, 1872, and supported by statutes covering intellectual property, consumer protection, and competition. It ensures fairness, protects both parties’ interests, and promotes compliance with legal standards. Before entering into a franchise agreement, thorough consideration of financial commitments, operational support, legal implications, and exit strategies is crucial. This ensures alignment with business objectives and minimizes risks. Overall, franchise law facilitates a structured approach to franchising, fostering growth and maintaining equilibrium in the marketplace under Indian legal guidelines.