Franchise Agreement Online

Franchise Agreement Online in India - Overview

A legal, binding agreement between the Franchisee and the Franchisor is known as a Franchise agreement. The purpose of a franchise development agreement is to provide the franchisee with the right and power to utilize the franchisor’s system and proprietorship brands to operate a franchised business. To make it more clear, it is a legal contract in which a well-established business or brand or company decides to offer its brand, functional model and other needed support to thief or external party and it is named as a franchisee.

The franchisor permits the franchisee to run the same type of business in exchange for a fee amount and share in the profit generated in such of business. This agreement holds all the professional and legal rules and regulations and terms and conditions by which both the business parties will share in their incumbency. 
Franchise agreement online in India helps the franchisee and franchisor to maintain a cordial relationship between them. The agreement has the name of the brand, the time period of the franchise conditions, and details of the amount of the fee, clauses that address with the penal provision, cancellation and compensation of the franchise. The franchising industry is experiencing energetic growth and development in India.

Inclusion of Franchise Agreement Online in India

Franchise Agreement is a legal document that defines the roles and responsibilities, terms and condition between both franchisor and franchisee. It is mandatory to go through the Franchise Disclosure Document (FDD) before contracting the franchise agreement.

FDD is a document which mentions even the exact minute details of the franchise agreement. It describes what one can look from the settlement, states the name of the franchisor and franchisee, the sort of franchise which is being bought, complete details in relation to past performance of the franchisor with any other project, the region, promotional and marketing strategies and the kind of guidance and help that a franchisee may provide to grow and develop the business.

Franchise Agreement acts as legal proof of a broad deal between two different parties. It contains all the needed details such as franchisee’s commitments, judicial proceedings fundamental expenses, income claims and so on. By clearly understanding this document, you can gain a good knowledge of the financial status of that particular brand or business.

Types of a Franchise Agreement in India

• Single Unit Franchise Agreement

  This is the most common and traditional form of franchising. This type of agreement grants the rights and regulations regarding the starting of the franchise. It also describes the complete operations of the franchise. Even though franchisees have to invest their own capital amount and use their business managerial skills and marketing strategies to grow their business.

• Multi-Unit Franchise Agreement

  In this type of franchise disclosure agreement, the franchisor has complete right to grant more than one business unit to the franchisee, in laymen term, this agreement allows the franchisee to operate and establish more than one franchise unit. But it is necessary for the multi-unit franchise to should have smart financial capacity and potential which acts as an important asset for the growth of the business.

• Master Franchise Agreement

  Master Franchise Agreement is an agreement in which franchisor offers the power to a specific region, country or continent, therefore authorizing the master franchisee to grant a full range of services and products of the franchisor. Furthermore, the master franchisee also holds the right to enrol other franchisees. In this method, the master franchisee turns into a franchisor to those franchisees who take the franchise purchase agreement through its master franchise.

Elements of Franchise Agreement in India

• A Draft Of The Relationship

  A Franchise agreement includes the name of the two parties who are involved in the agreement, possession of the intellectual property. The agreement also explains the duties of the franchisee to operates its business under the standards furnished by the franchisor.

• Duration Of The Agreement

  This clause states the time period of the franchisor-franchisee relationship or duration of the deal. Initially, the franchise license fee is required to pay an initial amount of fee legally to become a part of the deal which is followed in future to continue the agreement and to maintain their position.

• Location And Territory

  The Franchise Agreement also includes the details of the location and territory apportioned to its franchise. Even though, the place allocated is not the same in each agreement. Franchise agreement determines two types of territories:

  • Exclusive Territory
  • Non-exclusive Territory

• Exclusive Territory

  Only one franchise is allotted in an exclusive territory and the franchisor does not have the power to operate more than one franchise in that particular location. The territory allotted will remain sole to that particular franchise only.

• Non-Exclusive Territory

  In this type, the franchisor has the power to operate more than one franchise unit in that particular place.

• Use Of Intellectual Property

  Trademarks, manuals and patents are also the part of the agreement and it is offered by the franchisor to their franchisee. The agreement also explains the required use of their trademarks, manuals and patents.

• Advertising

  Franchisors mention clearly about the efforts to be put in for marketing and advertising the brand to the franchisees

• Insurance

  All type of license and franchise requires the franchise to get insurance so that they can address the functions and operations of their business.

• Training

  This part of the agreement explains about the training offered by the franchisor that includes seminars, meetings, and so on and the franchisor will request the franchisee to attend it without fail.