FRANCHISE AGREEMENT
1. Parties
This Franchise Agreement ("Agreement") is made as of __________________ between __________________, having its registered office at __________________ ("Franchisor"), and __________________, having its registered office at __________________ ("Franchisee").
2. Grant of Franchise
The Franchisor grants the Franchisee a non-transferable, revocable licence to operate a franchise outlet using the brand name, trademarks, trade dress, and business system of "__________________" (the "System"), exclusively within the territory of __________________ (the "Territory"), subject to the terms of this Agreement.
3. Term and Renewal
This Agreement shall commence on __________________ and continue for an initial term of __________________, renewable for a further term of __________________ upon mutual written agreement, subject to the Franchisee's compliance with the System standards and payment of a renewal fee, if any, as agreed at the time of renewal.
4. Fees and Royalty
The Franchisee shall pay the Franchisor a one-time, non-refundable franchise fee of __________________ upon execution of this Agreement, and thereafter an ongoing royalty of __________________ of gross monthly revenue, payable within a period to be specified along with periodic sales reports, in the form and manner prescribed by the Franchisor.
5. Training and Support
The Franchisor shall provide the Franchisee with initial training on the System's operating procedures, and shall provide ongoing operational support, including access to the operations manual, marketing materials, and periodic refresher training, on terms to be mutually agreed.
6. Use of Trademarks and Intellectual Property
The Franchisee shall use the Franchisor's trademarks, trade names, and proprietary materials strictly in accordance with the Franchisor's brand guidelines and solely in connection with the operation of the franchise outlet. The Franchisee shall not register or attempt to register any of the Franchisor's intellectual property in its own name, and all goodwill generated through use of the trademarks shall inure to the benefit of the Franchisor.
7. Operating Standards and Quality Control
The Franchisee shall operate the franchise outlet strictly in accordance with the operations manual and quality, service, and cleanliness standards prescribed by the Franchisor, and shall permit the Franchisor or its representatives to inspect the outlet upon reasonable notice to verify compliance.
8. Sourcing and Supply Chain
The Franchisee shall procure raw materials, ingredients, equipment, and other supplies used in the operation of the franchise outlet only from suppliers approved by the Franchisor, or as otherwise directed in the operations manual, to ensure consistency of the System across all outlets.
9. Marketing and Advertising
The Franchisee shall contribute towards a common marketing/advertising fund, if established by the Franchisor, at a rate to be notified, and shall not undertake independent advertising featuring the Franchisor's trademarks without prior written approval.
10. Non-Compete
During the term of this Agreement and for a reasonable period thereafter, the Franchisee and its promoters shall not, directly or indirectly, own, operate, or be engaged in any business that competes with the System within the Territory or such wider area as may be specified, save with the Franchisor's prior written consent.
11. Termination
The Franchisor may terminate this Agreement upon written notice if the Franchisee commits a material breach of the System standards, fails to pay royalty or fees when due, or becomes insolvent, subject to a cure period to be specified for remediable breaches. Upon termination, the Franchisee shall immediately cease use of the Franchisor's trademarks and System, and return all proprietary materials.
12. Indemnity
The Franchisee shall indemnify and hold harmless the Franchisor against any claims, losses, or liabilities arising from the Franchisee's operation of the outlet, including any negligence, non-compliance with applicable laws, or breach of this Agreement by the Franchisee or its personnel.
13. Dispute Resolution and Governing Law
This Agreement shall be governed by the laws of India. Any dispute shall be resolved by arbitration under the Arbitration and Conciliation Act, 1996, seated at __________________, __________________, and the arbitration award shall be final and binding on the parties.
14. Notices
All notices shall be in writing and delivered by hand, registered post, or email to the addresses of the parties set out above, or as updated by written notice from time to time.
15. Miscellaneous
This Agreement constitutes the entire agreement between the parties and supersedes all prior discussions on the subject matter. The Franchisee shall not assign or sub-franchise its rights under this Agreement without the Franchisor's prior written consent. This Agreement may be executed in counterparts.
Execution / registration notes
- Franchise agreements are commonly executed on stamp paper of a value determined by the state Stamp Act and, in some states, may require registration if they create an interest in immovable property (e.g., a leased outlet).
- If the franchise involves cross-border royalty payments, check FEMA and withholding tax (TDS) implications under the Income Tax Act.
- Consider a separate, detailed Operations Manual referenced by this Agreement rather than embedding operational SOPs directly in the contract.
- Have this draft reviewed against your specific brand standards and territory exclusivity commitments before execution.
General-reference format provided by PNPC Global. Not legal advice. Laws and stamp-duty requirements vary by state and change over time — have this document vetted by a qualified professional before execution.