Retail Store Franchise Agreement in India

By Team Legal Helpline India, September 21, 2020

Download Free Retail Store Franchise Agreement in India

The legal points related to the Retail Store Franchise Agreement in India explained briefly:

A Retail Store Franchise Agreement in India contains the important ingredients of the major important set of laws applicable. The list of such important applicable Acts which regulate and govern the Retail Store Franchise Agreement is given below for reference:

The Indian Contract Act, 1982- to determine the nature of contract being created under the franchise agreement.

The Trademarks Act, 1999- to deal with the aspects of the legal rights and the user rights over the trade mark. A franchise agreement mainly regulates the user aspects of the Trade Mark which is a valuable business asset.

The Designs Act, 2000- determine the righst of the Retail Store Franchise Agreement in India with regard to the design of the product and the legal rights associated with the same.

The Patents Act, 1970- determines the rights of the frenchise parters in a Retail Store Franchise Agreement in India for using the patent of the product and the legal rights arising out of the same.

The Copyright Act, 1957- determines the rights of the parties in the event of any literary or artistic creation. The Agreement should take into consideration all the important aspects of the Copyright Act as well.

The Competition Act, 2002 – it regulates the non competition clause of a Agreement as the frenchise partners are not supposed to compete in the business.

The Foreign Exchange Management Act, 1999- to regulate the flow of funds from abroad as RBI regulates all such money coming to India.

Income Tax Act, 1961- to determine the tax liability of the partners in the Retail Store Franchise Agreement in India as it is mainly based on the sharing of income between the partners.

The Consumer Protection Act, 1986- to determine the liability of the franchise partners in a Franchise Agreement in case of defective goods or services. This is a very important aspect of any franchise agreement.

The Arbitration and Conciliation Act, 1996- mandates and determines the method of resolution of the dispute between the frenchise parters under a Retail Store Franchise Agreement in India.

TIPS ON DRAFTING A RETAIL STORE FRANCHISE AGREEMENT IN INDIA

The Retail Store Franchise Agreement in India is a vital and important document regulating the terms and conditions of both the partners under the franchise agreement. The Agreement must have the following important subheads to make the Franchise Agreement comprehensive and workable under law.

The recital containing the details of both the parties to the frenchise agreement under the Retail Store Franchise Agreement in India.

The Agreement should also contain a specific and unequivocal grant of the franchise by the Franchisee to the Franchiser.

One of the most important and crucial aspects of the Retail Store Franchise Agreement in India is the warranties that the franchisee is able to take on the franchise.

Retail Store Franchise should clearly define and mandate the obligations of the franchisor to the franchisee- both initially and on-going

Fees and payment terms of the franchise should also be clearly spelt out in the Retail Store Agreement.

Rights to renewal is a crucial aspect of the Retail Store Franchise Agreement. It should be clearly mentioned in the agreement.

The issue regarding data Protection and law compliance is also to be clearly spelt out and mentioned in the Retail Store Agreement in India.

Franchisee’s undertakings- the undertaking by the franchisee is very crucial and important as he bound by the same and has to follow the same under all circumstances as written in the agreement.

Transfer terms: including pre-emption rights for the franchisor to acquire the business in the event of any transfer of the business.

Terms relating to the corporate structure of the franchisee are the most important aspects as the nature of the legal entity will determine the future interaction of the Retail Store Franchise. In case of a sole proprietorship, partnership, it is different and in the case of incorporated bodies like a private limited company, public limited company, it is quite different. It also determines the nature and status of the relationship are maintained with the change of the nature of the corporate entity.

Termination clause- is one of the most important clauses under the Retail Store Agreement in India as it determines the choice of the parties to terminate the agreement and to come out of it. 

Insurance– the liability of getting the insurance of the goods, products, raw material, plant, machinery, building etc is to be defined well in the franchise agreement specifically.

Status of subcontractors and sub letting- in a Retail Store Franchise Agreement in India, this is the most important and crucial aspect as most of the businesses are based on the sub contracting and sub letting of various activities of business. This aspect should be dealt specifically in the franchise agreement to avoid any complexity in the future.

Intellectual property rights- Now with the growth of the consciousness about the brand and safeguarding the processes, the protection of intellectual property rights has become a very important aspect. This aspect is to be specifically dealt in Retail Store Franchise in all respects. 

Confidentiality- is a clause related to the information related to the business process, clients, sourcing and all other activities which are also terms as trade secrets. It is very important to deal with the issue of confidentiality in details in the agreement.

Limitation of liability- In any Retail Store Franchise Agreement in India, the important and crucial aspect of limitation and liability is well defined. It includes the determination of the limitation of the parties qua each other thereby determining what can be done by him and what can not be done by him. This regulates the Agreement hence is a very essential ingredient.

Publicity- It is related to the issue of IPR as well as it determines the nature and extent of publicity to be undertaken by the parties. It thus determines the display boards, the banners, the online publicity material and process in details.

Indemnity is an essential ingredient of the Retail Store as it determines the liability of the parties under the franchise agreement.

Dispute resolution- the process of dispute resolution is an important and crucial aspect of the Retail Store Franchise Agreement in India. Most of the parties mention arbitration as the mode of dispute resolution. The appointment of arbitrators, the process and place of arbitration is also determined under the agreement.

Besides the aforesaid important aspects of the Retail Store Franchise Agreement in India, there are several important and crucial legal paragraphs which are required to be incorporated in the agreement based on the nature of business and other aspects between the parties.

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