Franchise Agreement in India
Secure Your Franchise Deal with Tax Pal Solutions
At Tax Pal Solutions, we draft and review legally compliant Franchise Agreements that safeguard the rights of both franchisors and franchisees. Our agreements are designed to ensure business clarity, compliance, and long-term growth, giving you the confidence to expand your business under a trusted framework.
What is a Franchise Agreement?
A Franchise Agreement is a legally binding contract between the franchisor (brand/business owner) and the franchisee (individual/entity acquiring rights).
It allows the franchisee to operate a business using the franchisor’s brand name, trademark, systems, and business model, in exchange for fees and royalties.
This agreement ensures uniformity, brand protection, and mutual benefit.
Key Benefits of a Franchise Agreement
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For Franchisors:
- Rapid expansion with lower investment
- Brand consistency across outlets
- Increased market presence and revenue
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For Franchisees:
- Access to an established brand name
- Proven business model with reduced risks
- Training, support, and marketing assistance
Types of Franchise Agreements in India
| Type | Description | Suitable For |
|---|---|---|
| Individual Franchise | Rights for a single unit | Small-scale investors |
| Multi-Unit Franchise | Rights to run multiple outlets in a region | Growth-focused entrepreneurs |
| Area Development Agreement | Franchisee commits to open a set number of outlets in an area | Large businesses |
| Master Franchise Agreement | Franchisee can sub-franchise to others in a country/region | International expansion |
| Conversion Franchise | An existing business converts into a franchise outlet | Independent business owners |
| Brand License Agreement | Purely brand licensing with limited controls | Specialized collaborations |
Legal Framework Governing Franchise Agreements
Franchising in India is not governed by a single law but covered under multiple acts:
- Indian Contract Act, 1872 – Defines the validity of agreements.
- Trademarks Act, 1999 – Protects brand names, logos, and IP rights.
- Copyright Act, 1957 & Patents Act, 1970 – Safeguards manuals, processes, and inventions.
- Competition Act, 2002 – Ensures fair trade practices.
- Consumer Protection Act, 2019 – Protects end customers.
- FEMA, 1999 – Regulates cross-border franchising and royalty payments.
Common Provisions in a Franchise Agreement
A well-drafted Franchise Agreement by Tax Pal Solutions includes:
- Grant of Rights – Use of brand, logo, systems
- Franchise Fee & Royalties – Initial fee + 4–12% ongoing royalties
- Territory Rights – Exclusive or shared business area
- Training & Support – Initial and ongoing assistance
- Operational Standards – Rules for quality, services, and customer experience
- Intellectual Property Protection – Proper use of brand and trade secrets
- Marketing & Advertising – National and local promotions
- Term & Renewal – Duration and extension rules
- Default & Termination – Conditions leading to exit
- Dispute Resolution – Arbitration/mediation under Indian law
Documents Required
| Category | Examples |
|---|---|
| Franchisor’s Documents | Incorporation Certificate, PAN, GST, Trademark registration |
| Franchisee’s KYC | PAN, Aadhaar, Address proof, Company documents |
| Financials | Bank statements, ITR, audited financials |
| IP Documents | Trademark, Copyright, Patent (if applicable) |
| Property Documents | Lease deed, NOC from landlord, ownership proof |
Royalty & Fees Structure
| Expense Type | Typical Range in India |
|---|---|
| Initial Franchise Fee | ₹2–25 Lakhs (depending on brand) |
| Royalty | 4% – 12% of gross sales |
| Marketing Fee | 1% – 3% of gross sales |
| Renewal Fee | As per brand policy |
Why Choose Tax Pal Solutions?
- Expertly customized agreements for your business model
- 100% compliance with Indian laws
- End-to-end legal drafting, vetting, and advisory
- Transparent pricing with no hidden charges
- Trusted by entrepreneurs, SMEs, and global brands
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