A couple in Rohini pay a substantial franchise fee for a café brand, spend more on the fit-out, and open to find that the brand’s own delivery kitchen two kilometres away takes most of the online orders. A franchisee in Noida discovers, when he wants to exit, that he cannot sell the outlet, must remove every sign within a week, and owes royalty for the rest of the year. A retired officer pays a “registration fee” for the franchise of a famous brand and never hears from anyone again. In a country with a franchise law, some of this would have been disclosed or regulated. In India, only the agreement — and what you checked before signing it — stands between you and each of these outcomes.
A franchisee does not buy goods, the way a distributor does, or act for the brand, the way an agent does. Our distribution and agency guides deal with those relationships. A franchisee buys something less tangible: the right to run a business that looks, works and is recognised as the franchisor’s, while owning it, financing it and bearing its losses himself.
What is licensed is a bundle. At its centre is the trademark — the name, logo and trade dress customers recognise. Around it is the system: recipes, processes, layouts, software, pricing, suppliers, training and the operations manual that tells the franchisee how to do everything the brand’s way. And binding it together is the continuing relationship: the franchisor’s support, marketing and control, paid for by a royalty that runs for as long as the franchise does.
That structure explains both the attraction and the risk. For a franchisee, the attraction is a tested business with a known brand, which should fail less often than an independent start. For a franchisor, it is growth funded by other people’s capital. The risk is that the franchisee carries all the investment and all the losses while the franchisor holds all the control — over the brand, the supplies, the standards and, in the end, whether the business can continue at all.
A good franchise agreement balances that. It gives the franchisor enough control to protect the brand, and the franchisee enough security to recover the investment. A bad one — and many of the agreements in circulation in India are one-sided drafts copied from abroad — gives the franchisor control without obligation. The rest of this page is about telling the two apart.
In the United States, a franchisor must give a prospective franchisee a detailed disclosure document before any money is paid, covering the franchisor’s history, litigation, fees, the number of outlets opened and closed, and its financial statements. Australia has a mandatory code with a cooling-off period. Several other countries have registration or disclosure rules. The purpose is the same everywhere: to reduce the imbalance of information between a brand that knows how its outlets really perform and an investor who does not.
India has no equivalent. There is no franchise statute, no compulsory disclosure document, no register of franchisors and no statutory cooling-off period. Franchising is regulated only by the general law, and the general law assumes that two parties to a contract can look after themselves.
Three consequences follow. First, the franchisee must do his own disclosure: ask the questions a disclosure document would have answered, in writing, and treat unanswered questions as answers. Second, everything that matters must be in the agreement, because no statute will fill the gaps in the franchisee’s favour. Third, the general protections that do exist — against misrepresentation, fraud, unfair restraint of trade, and anti-competitive agreements — are real, but they are remedies after the fact, and litigation is slow and expensive.
For a franchisor, the absence of a franchise law is not a licence to draft carelessly. Agreements that are wholly one-sided invite disputes, and a franchisor that made loose promises to sell the franchise may find those promises used against it. A clear, fair agreement is the franchisor’s protection too.
Since nobody is obliged to tell you, you have to ask. The questions below are the ones a disclosure law would have answered. Ask them in writing, and keep the answers.
Talking to existing franchisees is the single most useful step, and a franchisor that refuses to allow it, or offers only hand-picked names, has told you something. Visit outlets at different times, and ask franchisees what they would negotiate differently if they were signing again.
Check the franchisor company’s filings with the Registrar of Companies, its GST registration, and a search of court records in its name. None of this is expensive, and together it replaces much of what a disclosure document would have given you.
Everything in a franchise rests on the brand, and the brand rests on the trademark. It is therefore surprising how often franchisees in India pay substantial fees without checking whether the franchisor owns what it is licensing.
The first check is the registry. The trademark office’s public search shows each application’s number, class, status and proprietor. A mark that is registered in the right class — restaurant services, retail, education, whatever the business is — is the base case. A mark that is only applied for, or has been objected to or is opposed, may never be registered; a franchise built on it is built on sand. A mark registered in the founder’s personal name, or in a group company, is not necessarily a problem, but the franchisor company must hold a written assignment or licence that allows it to franchise. See our trademark search service.
Under the Trade Marks Act, 1999, a licensee does not have to be recorded as a registered user for its use to count. Use of a registered mark by a person the proprietor permits, subject to the proprietor’s control, is treated as use by the proprietor, which keeps the registration alive. Recording a registered user remains possible but optional.
The agreement should therefore contain a clear licence of the mark, for the territory and term, and an obligation on the franchisor to maintain and renew the registration and to defend it against infringers and challengers. It should say what happens if the franchisor loses the mark or is forced to rebrand — which is exactly the situation a franchisee has no control over and should not bear alone.
Franchises come in several shapes, and the agreement differs with each.
A unit franchise is the simplest: one franchisee, one outlet, one location. Most individual franchisees in India are in this position, and most of this page is written with them in mind.
A multi-unit or area development franchise gives a franchisee the right — and usually the obligation — to open a number of outlets in a territory to a schedule. The development schedule is the key clause: how many outlets, by when, and what happens if the schedule is missed. Franchisors commonly reserve the right to shrink the territory or end exclusivity for missed targets; franchisees should ask that existing outlets are not affected.
A master franchise gives a franchisee the right to sub-franchise within a region or the whole country, standing in the franchisor’s shoes for the territory. It is the usual route by which foreign brands enter India. The master franchisee takes on franchisor-like obligations to its sub-franchisees while remaining a franchisee of the brand owner. The agreements need to be consistent: a sub-franchisee’s rights cannot outlast the master franchisee’s, and a sub-franchisee should ask what happens to his outlet if the master agreement ends.
Some brands also use management franchise or franchise-owned, company-operated models, in which the investor funds the outlet and the brand runs it for a share of revenue. Those arrangements are closer to a joint venture or revenue sharing agreement, and should be documented as what they are.
Send us the franchisor’s draft — pay after the review
The money in a franchise usually flows in four streams, and the agreement should state each precisely.
The initial franchise fee is paid on signing, for the right to open and for initial training and launch support. The agreement should say what it covers, and whether any part is refundable if the franchisor cannot approve a site, the outlet does not open within a set time, or the franchisor fails to provide training.
The royalty is the continuing fee, usually a percentage of gross sales, paid weekly or monthly for the life of the franchise. Some agreements add a minimum royalty payable whatever the sales, which shifts risk to the franchisee in a slow period and should be negotiated carefully, particularly for the first year.
The marketing or brand fund contribution, also a percentage of sales, pays for brand advertising. Because the franchisee pays but the franchisor spends, the agreement should require the fund to be kept separately and used only for marketing, with an annual statement to franchisees, and should say how much, if any, is spent in the franchisee’s own area.
Other fees — for software, point-of-sale systems, additional training, renewal, transfer and audits — should be listed in a schedule with amounts, rather than left to “charges as applicable”. A franchisee should be able to add up, from the agreement alone, everything payable to the franchisor in a typical month.
Because royalty and marketing contributions are percentages, the definition of gross sales on which they are calculated is one of the most valuable sentences in the agreement.
The questions are specific. Is GST included or excluded? It should be excluded; a royalty on tax the franchisee collects for the government is a royalty on nothing. Are discounts, refunds and complimentary items deducted? Are sales through delivery platforms counted at the price the customer paid, or at the amount the franchisee actually receives after the platform’s commission? Are sales of gift cards counted when sold or when redeemed? Are catering, bulk orders and staff meals included?
The delivery-platform point is the one most likely to matter today. Platform commissions can take a large share of the order value, and a royalty calculated on the menu price rather than on net receipts can turn a marginal outlet into a loss-making one. There is no right answer in law; there is only the definition the parties agree.
The agreement should also cover reporting and audit: the franchisee reports sales from the point-of-sale system, the franchisor has a right to inspect books, and the cost of an audit is borne by the franchisor unless it reveals under-reporting above a threshold. The drafting principles are the same as in a revenue sharing agreement, including a worked example of the calculation.
Franchise fees and royalty are consideration for a supply of services — broadly, the right to use the brand and the system — and attract GST, commonly at eighteen per cent. A franchisor registered under GST charges it on its invoices, and a registered franchisee can usually take input tax credit. The agreement should say whether fees are stated exclusive of GST.
The franchisee also has tax deduction at source obligations on payments of royalty and fees to a resident franchisor, at the rates the income-tax law prescribes for such payments. Income-tax law was re-enacted with effect from April 2026, so section references have changed; the franchisee’s accountant should confirm the current provisions and rates.
Where the franchisor is abroad, three further points arise. Royalty and fees paid to a foreign franchisor are current account remittances made through the franchisee’s bank, which will want the agreement, invoices and tax documents. Tax must usually be withheld at source, at the rate in the income-tax law or the lower rate in a tax treaty if the franchisor provides the documents the treaty requires. And GST on services imported from abroad is generally payable by the Indian franchisee under reverse charge. These are for the franchisee’s chartered accountant; the agreement should say which party bears the withholding tax, because “gross-up” clauses can increase the real royalty substantially.
Territory used to be simple: the franchisor would not open another outlet within a certain distance. The growth of online ordering has made it one of the most contested clauses in food and retail franchising.
The agreement should first define the territory precisely — a radius from the outlet, a list of pin codes, a named market or a marked map — and say whether it is exclusive (no other outlet of the brand, franchised or company-owned) or merely protected (no new franchisee, but the franchisor may operate itself).
It should then deal with the channels that bypass a physical outlet. Can the franchisor, or another franchisee, run a delivery-only kitchen within the territory? Do orders placed through the brand’s own app or website for delivery into the territory go to the local franchisee? Can the brand sell packaged products through supermarkets or marketplaces in the territory? A territorial clause that mentions only “outlets” may protect a franchisee from a new shop down the road while leaving him exposed to a cloud kitchen that takes his delivery orders.
Territorial exclusivity is ordinary commercial practice, and the Competition Act assesses such vertical restrictions case by case for their effect on competition, as our distribution guide explains. For a franchisee, the commercial question is simpler: whether the territory described is enough to recover the investment.
Almost every franchise requires the franchisee to buy certain things — ingredients, equipment, packaging, uniforms, merchandise — from the franchisor or from approved suppliers. The justification is consistency: a brand’s coffee must taste the same everywhere. The risk is that supply becomes a second, hidden royalty.
The agreement should distinguish between items that genuinely define the brand, which the franchisor may reasonably control, and generic items the franchisee can buy anywhere to the brand’s specification. It should say how supply prices are set and changed — at cost plus a stated margin, or at a published price list with notice of increases — and whether the franchisor or its affiliates earn rebates from approved suppliers. It should also allow the franchisee to propose an alternative supplier for approval, with approval not unreasonably withheld.
Compulsory purchase from a particular source is, in competition terms, a tie-in, which the Competition Act lists among vertical agreements examined for an appreciable adverse effect on competition. Most franchise supply requirements that protect quality pass that test, but the franchisee’s practical protection is contractual: transparent pricing, and supply obligations on the franchisor too — delivery times, and what happens if it cannot supply.
Most of what a franchisee must actually do is not in the agreement at all. It is in the operations manual, which the agreement incorporates by reference and which the franchisor can usually change at will.
That power is necessary — a brand must be able to update recipes, processes and standards — but it is also a route by which obligations and costs can be added without negotiation. A franchisee should ask to see the manual, or at least its contents and the costly sections, before signing, and should ask for a clause that changes to the manual cannot contradict the agreement and that major changes requiring capital expenditure — a full refit, new equipment — are limited in frequency or cost.
Standards and audits are the franchisor’s tool for protecting the brand: inspections, mystery shoppers, customer-rating thresholds, and a scoring system linked to default. The agreement should say how audits are conducted, how the franchisee is told of failures, and how long he has to cure them before a failure becomes a ground for termination.
The manual is also the franchisor’s most valuable confidential material. The agreement will require the franchisee to keep it confidential and return it at the end, and those obligations are generally enforceable, as our NDA guide explains.
Food and beverage is the largest franchise sector in India, and it has its own recurring issues that a general-purpose agreement often misses.
Food safety is regulated at the outlet. The franchisee holds the food safety registration or licence for its premises and is answerable to the food safety officer for hygiene, storage, labelling and the food served, whatever the franchisor’s recipes and supplies. The agreement should require the franchisor to supply ingredients that comply with food safety standards, with batch documentation, and to indemnify the franchisee if a mandated ingredient turns out to be non-compliant.
Menu and pricing are usually controlled by the franchisor, but the franchisee bears local costs — rent, wages, electricity — that differ widely between, say, a mall food court and a neighbourhood high street. The agreement should say whether the franchisee may set local prices within a range, and how the franchisor’s price recommendations interact with competition law, which our distribution guide discusses. Mandatory promotions and discount days funded entirely by the franchisee are a common source of complaint; the agreement should cap them or share their cost.
Delivery platforms raise three questions beyond territory: whose name the listing is in, who negotiates the commission, and whether the franchisor’s national deals with platforms bind the franchisee. Equipment — coffee machines, ovens, fryers — is often supplied or specified by the franchisor; the agreement should say who owns it, who maintains it, and whether it can be sold on exit.
Not every franchise sells food or goods. A large share of Indian franchising is in services — coaching and pre-schools, salons and spas, diagnostic collection centres, courier and logistics outlets, and property or travel agencies. The same agreement structure applies, but the risks sit in different places.
In a service franchise the brand promise is delivered by people, not products. Training, qualifications of staff, and service standards therefore carry more weight than supplies, and the agreement should say what training the franchisor gives for new staff after the launch, not only at the start. Where the service is regulated — a clinic, a diagnostic centre, a school — the franchisee must hold the relevant registrations in its own name, and the franchisor’s system must be consistent with them; a brand’s manual cannot override a regulator’s rules.
Customer money is a special risk in education and courier franchises. Fees collected in advance for a course, or cash collected on delivery, belong to customers or to the franchisor until the service is delivered or the money is remitted. The agreement should say how customer money is held, when it is remitted, and who bears refunds if an outlet closes mid-session. Franchisees who treat advance fees as their own working capital, and franchisors that do not monitor it, both end up facing complaints from customers who have paid for something they did not receive.
Franchise agreements drafted by franchisors are often long on the franchisee’s obligations and short on the franchisor’s. Yet the royalty is paid, month after month, for something — and the agreement should say what.
The usual franchisor obligations are: approving the site and the layout; providing initial training for the franchisee and staff, with the number of days and people stated; supporting the launch; supplying the operations manual and updates; providing the point-of-sale and ordering systems; running brand marketing from the marketing fund; giving ongoing field support through visits or an assigned manager; and protecting the trademark. Each can be stated with some precision, and each should be.
What the franchisee should resist is a clause that describes all franchisor support as “discretionary” or “as the franchisor deems fit”, because a support obligation that can be reduced to nothing gives the franchisee no remedy when it is. A franchisee should also ask what happens if the franchisor is acquired, changes its system or exits the market — events that have left Indian franchisees of some brands with outlets and no franchisor.
Where the franchisor fails in a substantial obligation, the agreement should give the franchisee a remedy short of litigation — a right to withhold or reduce royalty after notice, or to terminate without penalty. Without it, the franchisee’s only option may be to keep paying while arguing.
Most franchises depend on a physical site, and the site is usually leased by the franchisee from a third party landlord. That creates a three-way relationship which the franchise agreement and the lease have to manage together.
The franchisor will want to approve the site and the layout, specify the fit-out and equipment, and sometimes use its own contractors. The franchisee should know the full fit-out cost before signing, and whether the franchisor’s approval of the site carries any responsibility if the site turns out to be poor.
The lease should be co-terminous with the franchise as far as possible, so that the franchisee is not left with a lease and no franchise, or a franchise and no premises. Franchisors often ask for a right to step into the lease if the franchise ends, so that they can keep a good location; that requires the landlord’s consent, and the lease must allow assignment or subletting to the franchisor, which — as our lease agreement guide explains — the Transfer of Property Act permits by default unless the lease forbids it.
The lease must also permit the use: a café, a clinic, a coaching centre. If the franchisee cannot get the licences the business needs at that address, the franchise and the lease both fail together, which is why the lease should be conditional on those licences where possible.
The business licences that an outlet needs are almost always in the franchisee’s name, because the franchisee is the business operator at that location. For a food outlet, that means food safety registration or licence, an eating house or health trade licence from the municipal body, a fire safety certificate above certain thresholds, and a shops and establishments registration. Other businesses have their own. Our business licences guide sets out how these fit together.
The franchise agreement should say who is responsible for obtaining and renewing each licence, and what support the franchisor gives. It should also recognise that the franchisee, as the licensed operator, bears regulatory liability for the outlet — including for food safety and consumer complaints — and that the franchisor’s standards and supplies should help, not hinder, compliance.
Two points recur. The franchisee is usually the “seller” to the consumer for the purposes of consumer protection and product liability law, even where the product is the franchisor’s recipe or comes from the franchisor’s supply chain; the agreement should allocate that risk, with the franchisor indemnifying the franchisee for defects in supplies it mandated. And the franchisee’s GST registration and invoicing are its own, in its own name, even though the outlet trades under the brand.
Franchises are sold, and selling involves promises: “an outlet like this does ₹X a month”, “payback in eighteen months”, “we have a hundred outlets”. When the promised numbers do not arrive, the franchisee’s question is whether anything can be done.
The Indian Contract Act gives the answer in principle. Under Sections 17 and 18, a contract obtained by fraud — a false statement made knowingly or recklessly — or by misrepresentation — a false statement of fact, made innocently but inducing the contract — is voidable at the option of the party misled, under Section 19, and in the case of fraud damages may also be claimed. A statement that the brand has a hundred outlets when it has forty is a false statement of fact. A projection of future profits, honestly made, is usually treated as an opinion or estimate, not a guarantee, unless it was presented as based on facts that were untrue.
Franchisors counter with an entire agreement clause and a statement that the franchisee has not relied on any representation. Such clauses carry weight, but they do not generally protect a party from its own fraud. The franchisee’s practical protection is evidence: keep every brochure, pitch deck, email, WhatsApp message and financial projection, and if a figure matters to your decision, ask for it to be written into the agreement or a signed side letter.
For the franchisor, the lesson is the reverse. Keep sales material factual, base any figures on actual outlet data with the basis stated, and train the sales team not to promise what the agreement does not.
A distinct and growing problem in India is not a bad franchise but a fake one. Fraudsters set up websites and social-media advertisements offering franchises or dealerships of well-known brands — dairy, courier, pharmacy, fuel, fast food — and collect “registration”, “approval” or “security” fees, often in several rounds, before disappearing. Several brands publish public warnings about exactly this.
The warning signs are consistent. The offer comes through a website or number that is not the brand’s official one. Payment is asked for before any site visit, meeting or agreement, and into an individual’s account rather than the company’s. There is urgency — “only two territories left”. The “agreement” is a PDF with the brand’s logo but no verifiable company details. And the fees keep coming: approval, then NOC, then stock, then training.
The protection is simple. Find the brand’s franchise process on its official website, reached by typing the address rather than clicking an advertisement; contact the company through its registered office or official customer channel; confirm the franchisor company’s identity on the Registrar of Companies’ records; and never pay into a personal account.
If you have already paid, act quickly: report it on the national cyber crime portal or helpline, inform your bank, and preserve every message and payment record. Our online financial fraud complaint service prepares the complaint and the documents.
Most franchisees fund the initial fee, fit-out and working capital with savings, family money or a bank loan, and the franchise agreement affects all three.
Banks lending to franchisees usually want to see the franchise agreement, and they look at its term against the loan tenure, its termination clauses, and whether the franchisor will step in or buy back assets if the franchisee fails. A franchise that can be terminated at will on short notice is a weak basis for a five-year loan. Some brands have arrangements with lenders for their franchisees; the terms of those should be read as carefully as the franchise itself.
Franchisors frequently ask for a personal guarantee from the individuals behind a corporate or partnership franchisee, covering royalty and other dues. A guarantee is a separate contract under the Contract Act, and the guarantor’s liability is coextensive with the franchisee’s unless it is limited. A franchisee should ask for the guarantee to be capped, limited in time, and released on a permitted transfer of the outlet, so that a family member who signed years ago is not answerable for a business that has changed hands.
Security deposits held by franchisors should be stated with their refund date and the deductions permitted, on the same principles as a lease deposit. And the total investment — initial fee, fit-out, deposits, equipment, first stock and at least several months of working capital — should be written down before signing, because under-capitalisation is one of the commonest reasons franchised outlets close in their first year.
The term of a franchise should be long enough for the franchisee to recover the investment and earn a return — commonly five to ten years for an outlet with a significant fit-out — and should match the premises lease.
Renewal is where franchisees are often disappointed. A clause that allows renewal “at the franchisor’s discretion” is not a renewal right. A franchisee should ask for a right to renew if not in material default, on stated terms, with any renewal fee and any required refit stated in advance. Without that, the franchisor can refuse renewal and take the site, or renew only on much worse terms, at exactly the moment the franchisee has built the business.
Transfer of the franchise — selling the outlet as a going concern — is almost always subject to the franchisor’s consent, and often to a right of first refusal, a transfer fee and approval and training of the buyer. The franchisee should ask that consent not be unreasonably withheld, that the franchisor decide within a fixed period, and that the transfer fee be stated. A franchise that cannot be sold has little value at the end.
The agreement should also deal with death or incapacity of an individual franchisee, and with a change of control of a corporate franchisee. Families are often left with an outlet they neither can run nor are allowed to sell; a clause giving heirs time to either qualify as franchisees or sell to an approved buyer prevents that.
Termination clauses in franchisor-drafted agreements are typically long and one-directional: a list of defaults on which the franchisor may terminate, and none on which the franchisee may.
A fair clause distinguishes between curable defaults — late royalty, a failed audit, a missed report — where the franchisee must be given written notice and a reasonable period to put things right, and incurable ones — fraud, abandonment, a criminal conviction affecting the brand, repeated defaults — where immediate termination may be justified. It should require written notice stating the default in every case. Termination for “any breach”, however small, without a cure period, is the clause most likely to be used opportunistically.
The franchisee should also have a right to terminate: where the franchisor fails in a material obligation after notice, where the franchisor loses or cannot use the trademark, where the franchisor becomes insolvent or exits the market, and, ideally, where the outlet cannot obtain its licences. Some agreements allow the franchisee to exit on long notice after an initial period, subject to a fee, which gives a way out of an outlet that has not worked.
Where the agreement is silent on the franchisee’s rights, the general law of contract still allows a party to treat the contract as ended for a repudiatory breach by the other and to claim damages, but that is a litigated remedy. A clear contractual right is far better.
How a franchise ends is often more expensive than how it began, and the post-termination clauses decide who bears that cost.
De-branding: the franchisee must stop using the brand, remove signage, change the premises’ look and return branded material and the operations manual. The agreement should allow a reasonable period, say who pays, and not require the franchisee to destroy fit-out that has value.
Buy-back: whether the franchisor will buy back stock, branded packaging and equipment, and at what price — cost, depreciated value or a valuation. Branded stock is worthless to anyone but the brand, and a franchisee left holding it after termination has lost it entirely. Many disputes arise because the agreement says nothing.
Premises: whether the franchisor may take over the lease, and on what payment to the franchisee for the fit-out.
Customer data and contact points: the phone numbers, delivery-platform listings, social media pages, reviews and customer databases built during the franchise. The agreement should say who owns each and how they are transferred, consistently with the Digital Personal Data Protection Act, 2023, which governs the use of customers’ personal data. Delivery-platform listings in particular are valuable and often in the franchisee’s name.
Final accounts: royalty and marketing contributions to the termination date, the security deposit if any, and the timeline for settlement.
Franchisors want to prevent a franchisee from learning the system and then opening a competing business next door. Franchisees want to be free to earn a living after the franchise ends. Indian law draws the line in a particular place.
A restriction on competing during the term of the franchise is generally enforceable; it protects the relationship while it lasts. A restriction after the term faces Section 27 of the Indian Contract Act, which makes every agreement by which anyone is restrained from exercising a lawful profession, trade or business void to that extent, subject to a narrow exception for the sale of goodwill. Indian courts have generally declined to enforce post-termination non-competes in commercial and employment contracts, as our NDA guide explains. A franchise agreement is not a sale of goodwill by the franchisee, so that exception does not ordinarily help the franchisor.
What the franchisor can protect, and protect effectively, is its confidential information and intellectual property: the operations manual, recipes, processes, supplier terms and software, and the trademark and trade dress. A former franchisee who opens a similar business using the franchisor’s recipes, look or name can be restrained for breach of confidence and infringement or passing off, irrespective of Section 27. The agreement should therefore concentrate on confidentiality, non-use of know-how and non-solicitation of the franchisor’s staff, rather than on a broad non-compete that may not be enforced.
The Commercial Courts Act, 2015 expressly includes disputes arising out of franchising agreements in its definition of commercial disputes. Where the specified value meets the threshold, a suit goes to the commercial court, and under Section 12A a suit that does not contemplate urgent interim relief cannot be filed without first attempting pre-institution mediation.
In practice most franchise agreements contain an arbitration clause under the Arbitration and Conciliation Act, 1996. A franchisee should read it carefully: the seat of arbitration, which for a national brand is often its head-office city; the number of arbitrators and who appoints them; the language; and costs. A clause that names a distant seat or gives the franchisor sole power to appoint the arbitrator is worth negotiating, and a sole appointment by one party has been held by the Supreme Court to be impermissible where that party is interested in the outcome.
Urgent relief — an injunction to stop a franchisee using the brand after termination, or to stop a franchisor terminating unlawfully — can be sought from the court even where there is an arbitration clause. Before any of it, a clear written notice setting out the grievance, with a proposal, resolves many disputes; our legal notice service prepares one. Proceedings are for your advocate, engaged and paid by you directly; our find an advocate page can help.
A couple want to open a café under a regional brand in Rohini. The franchisor sends a forty-page agreement and asks for the initial fee within a week.
Before paying, they check the trademark: registered in the franchisor company’s name in the class for restaurant services. They ask for the list of outlets and speak to four franchisees, two of whom mention that the brand’s delivery kitchen takes a large share of online orders in their areas. They ask for a realistic set-up cost and monthly figures in writing.
In the agreement, they negotiate a territory defined by pin codes, with delivery orders into those pin codes through the brand’s own app routed to them, and no company-owned delivery kitchen in the territory. Gross sales are defined net of GST and of delivery-platform commission. The minimum royalty is waived for the first six months. The marketing fund must be accounted for annually. Supplies of the signature coffee blend are compulsory, but at a published price list with thirty days’ notice of increases; other supplies may be bought from any vendor meeting the specification.
The term is seven years, matching their lease, with a renewal right if not in material default. Termination for curable defaults requires thirty days’ notice to cure. On termination the franchisor buys back unused branded stock at cost and has an option to take over the lease on paying the depreciated fit-out value. The post-term restraint is limited to confidentiality, non-use of the brand and recipes, and non-solicitation of staff. Disputes go to mediation and then arbitration in Delhi before a jointly appointed arbitrator. None of this is unusual; all of it had to be asked for.
A growing Indian brand that wants to franchise needs, before its first franchise agreement, a registered trademark in the company’s name in every relevant class, an operations manual that actually documents the system, a clear fee model that franchisees can afford and that funds real support, and unit economics from its own outlets that it can honestly share.
The agreement should protect the brand — standards, audits, supply of what defines the product, confidentiality, and the right to terminate for real defaults — without being so one-sided that good franchisees are deterred or disputes are invited. Sales material should be factual, because in the absence of a disclosure law, what the sales team says becomes the evidence in any later dispute.
Trademark registration takes time; begin with a trademark search and application well before franchising, and if the mark is in a founder’s name, assign it to the company. A franchisor should also have an NDA signed by prospective franchisees before sharing the manual or financial data.
Franchise agreement drafting or review is ₹900 and ordinarily takes 1 – 2 days. We act for one side — franchisor or franchisee — and draft or review accordingly.
| What is included | Why it matters |
|---|---|
| Trademark status and ownership check | The franchise is only as good as the mark |
| A written due-diligence questionnaire | India has no disclosure law; you have to ask |
| Fees, royalty, gross sales and marketing fund | Where the money actually goes each month |
| Territory including online and delivery | Where most territorial disputes now arise |
| Supply, pricing and approved vendors | So supply does not become a hidden royalty |
| Franchisor support obligations stated | So the royalty buys something |
| Term, renewal, transfer and death or incapacity | So the outlet has value at the end |
| Termination, buy-back, de-branding and data | How the franchise ends decides its real cost |
Stamp duty is at actuals. Nothing is payable in advance. We do not assess whether a particular franchise is a good investment, and we do not give tax advice. Arbitration and court proceedings are for your advocate, whose fee is engaged and paid by you directly; we do not quote, collect or share it.
India has no franchise statute, so nobody is obliged to tell you how many outlets have closed, whether the trademark is registered, or what an outlet really earns. Before you pay the initial fee, send us the franchisor’s draft and what you have been told. We will check the trademark, give you the questions to ask in writing, and mark the clauses — territory, gross sales, supply, renewal, termination and buy-back — that decide whether the franchise can pay you back.
Two doors, both free. Clients search a factual directory of enrolled advocates. Advocates apply to be listed on it — no fee, no commission, nothing paid in either direction.
Search Bar Council enrolled advocates by what your matter is about, by court, or by city. Searching and sending a request are both free.
Enrolled advocates anywhere in India can apply to be listed. Your entry is published only after we verify your enrolment number with your State Bar Council.
This directory carries no ratings, no reviews, no rankings and no fees — only the factual particulars the Bar Council of India permits, published at each advocate's own request. Browse the network · Terms for Advocates