Franchising & Licensing

India does not have a specific franchising law. The franchise model in India is governed under various laws including contract law, competition law, consumer protection law, intellectual property, employment laws, tax laws, foreign exchange laws and other allied laws.

In view of large consumer base, purchasing capacity, brand awareness and demand, efficient and affordable infrastructure and resources, and affable legal and regulatory environment, India has become an attractive market for international companies. Further, the government’s favourable foreign investment policies have helped promote investments in various sectors. One of the most common and flourishing business models is franchising.

We have been consistently and extensively assisting clients on their franchise structures and arrangements in India in varied sectors. We advise clients on all aspects of franchising, right from carrying out a thorough check on the chosen Indian franchisee, preparing the appropriate documentation, management of franchise, and termination.

One of the most important aspects of a franchise arrangement is the parties contractual obligations. For instance, the agreement must specify the franchisee’s obligation to obtain and comply with all the registration requirements, license, permit, governmental approval, etc., necessary for the purchase, distribution and/or resale of products, ordering, export/import, shipment, processing, sale, delivery, or re delivery of products within the territory, etc. The agreement must be carefully drafted to clarify the relationship between the parties, to avoid co-employment liabilities, and to avoid creation of foreign company’s permanent establishment in India which may trigger additional tax liability under Indian taxation law. Considering the nature of the products / services, the agreement should include appropriate provisions to identify and protect the client’s intellectual property rights in India.

Besides the legal requirements and intricacies, we provide practical guidance to the client’s franchise transaction with the Indian entity considering the Indian legal and sectoral landscape to suit the client’s best interests.