Do you have the Legal know-how to turn your business into a Franchise

Are you all set to take your already successful business model and replicate it as a franchise? Here are a few legal considerations.

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As we all are aware that In India there is no specific legislation for regulating franchise agreements, however there are various legislations which impact and regulate the franchise agreements in India. The legislations that govern and impact franchise agreements in India are:

1 The Indian Contract Act, 1872: This legislation governs contracts and include franchise agreements. The said Act defines the essentials required in a contract such as an offer, acceptance, consideration and rights and obligations of parties.

2 The Trade Marks Act, 1999, The Copyright Act, 1957, The Patents Act, 1970, The Designs Act, 2000: These legislations are essential and critical for the franchisors who are relying on intellectual property (“IP”) to run their business as these legislations will help protect the IP rights of the franchisor.

3 The Consumer Protection Act, 1986: This legislation protects the interests of the consumers and remedies are available if there are defects in the goods or services.

4 The Specific Relief Act, 1963: In the event if the franchisor is in violation of the franchise agreement remedies are available under this act which can be valuable to the franchisee such as specific performance and injunctions which are remedies in case of contract breach. Other Acts which affect the terms of franchise agreement and needs to be kept in mind while execution are:

5 The Income Tax Act, 1961: This act impacts the taxes which accrue from the franchisor’s income of their Indian activities which also includes the royalties paid by franchisees.

6 The Foreign Exchange Management Act, 1999: This legislation governs the exchange transactions overseas in India which includes repatriation of cash and the royalties paid to the foreign franchisors.