Franchise Law Practice
Our IP Licensing & Commercialisation and Trademark practices advise franchisors and franchisees on the structuring, documentation, and enforcement of franchise relationships in India — both for foreign franchisors entering the Indian market and for Indian franchisors expanding domestically or internationally. India has no dedicated franchise statute; the franchise agreement is the sole source of the parties’ rights and obligations.
- A franchise is, at its legal core, a trademark licence with operational and financial obligations layered on top. We draft and review franchise agreements with this characterisation as the primary discipline.
- Post-termination provisions — on brand use, non-compete, de-identification, and return of materials — are where most Indian franchise disputes arise. We draft these with the same rigour as the commercial terms.
- Post-contractual non-competes must be reasonable in geographic scope, duration, and the nature of restricted activity under Section 27 of the Indian Contract Act, 1872.
- Our IP Licensing & Commercialisation and Trademark practices work as a coordinated team across franchise structuring, agreement drafting, trademark management, and dispute resolution.
- For international franchise arrangements, outward royalty remittances are governed by FEMA 1999 and RBI’s regulations. We advise on documentation and remittance mechanics.
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The Legal Character of a Franchise — Our Drafting Approach
We approach every franchise agreement primarily as a trademark licence. Under Section 48 of the Trade Marks Act, 1999, a registered trademark may be licensed by the proprietor to a registered user. We advise franchisors on the additional steps required to ensure the franchisee’s use of the mark inures to the franchisor’s benefit and does not create grounds for cancellation on the basis of deceptive or misleading use.
We draft quality control provisions with the trademark consequences in mind: inspection rights, reporting obligations, permitted deviation standards, and consequences of non-compliance — all specific enough to be enforceable.
Franchise Agreement Drafting — What We Focus On
We draft franchise agreements with the end-of-relationship scenarios as the primary discipline: territorial exclusivity specifying whether it extends to online and delivery channels, linked to minimum performance obligations; fees and royalties defining gross revenue precisely with audit rights; term and renewal provisions specifying whether renewal is a right or franchisor discretion; franchisor obligations drafted as enforceable obligations; and termination provisions specifying grounds for immediate termination separately from notice-and-cure termination.
“Most franchise disputes arise at the termination stage over provisions that were given the least attention when the parties were focused on the commercial opportunity. We draft termination and post-termination provisions with the end of the relationship in mind from day one.”Post-Termination Obligations and Non-Compete Enforceability
We draft post-contractual non-compete clauses within the limits of Section 27 of the Indian Contract Act, 1872. Restrictions must be reasonable in geographic scope, duration, and the nature of restricted activity. Geographically unlimited, indefinite, or all-activity non-competes are routinely struck down by Indian courts. We draft non-competes calibrated to give meaningful commercial protection within these limits.
International Franchise Arrangements — FEMA and Royalty Remittance
We advise on FEMA compliance for international franchise arrangements. Outward royalty remittances are generally permissible under the automatic route subject to conditions we verify against current RBI Master Directions before the arrangement is finalised. Our IP Licensing & Commercialisation, Trademark, Corporate & Commercial Advisory, and IP Litigation practices work as a coordinated team across the full franchise lifecycle from offices in New Delhi, Mumbai, Chennai, Hyderabad, and Bangalore, with trademark and IP experience across 130 countries since 1989.
Frequently Asked Questions
franchise-law-practice-faq
No standalone franchise statute exists in India. Franchise relationships are governed by a combination of contract law under the Indian Contract Act, 1872, trademark licensing principles under the Trade Marks Act, 1999, competition law under the Competition Act, 2002 where exclusivity or territorial restraints are involved, and FEMA 1999 for international arrangements involving royalty remittances. The franchise agreement is therefore the sole source of the parties’ rights and obligations.
In our drafting experience, the post-termination provisions — on brand use cessation, non-compete scope, de-identification of premises, and return of confidential materials — matter most in practice because that is where most disputes arise. Equally critical are the trademark licensing terms, since a franchise is fundamentally a brand licence, and the quality control provisions that determine how much control the franchisor retains over the brand.
Post-contractual non-competes are enforceable in India only to the extent they satisfy the requirements of Section 27 of the Indian Contract Act, 1872. Restrictions must be reasonable in geographic scope, duration, and the nature of the restricted activity. Geographically unlimited, indefinite, or all-activity non-competes are routinely struck down by Indian courts as void. Drafting a non-compete with any practical protective effect requires understanding Section 27 as currently applied by Indian courts.
Outward remittances of royalties and franchise fees from an Indian franchisee to a foreign franchisor are governed by FEMA 1999 and RBI’s regulations on royalty payments. Such payments are generally permissible under the automatic route subject to the conditions specified in the applicable RBI Master Directions. The specific conditions — including documentation requirements and the permissible computation methodology — must be verified against current RBI Master Directions before the arrangement is finalised.
A master franchise structure grants an Indian franchisee (the master franchisee) the right to sub-franchise the franchisor’s system to sub-franchisees within a defined territory. It is used by foreign franchisors entering India who prefer to work through a single experienced local partner rather than managing direct relationships with multiple franchisees. The master franchise agreement must clearly define sub-franchising rights and the sub-franchise agreement template must be approved by the franchisor.