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WHAT IS FRANCHISE AGREEMENT

Franchising has been one of the profitable business models that involve the domestic players as well as foreign businesses. There are various types of franchising systems are in place, which includes the marketing arrangement, trademark-usage arrangement, product distribution arrangement etc. A franchise agreement India is a contract where a business person consents to grant the enterprise name or company system to an individual or an entity (the franchisee). The franchise agreement format will characterize the foundation of the terms between both the consenting groups, define the remuneration for the franchisee (payment in the way of royalties, for the usage of the business trademark, etc.), mention conditions upon the usage of the brand name, specify the extent of the agreement, mention terms concerning disciplinary provisions (varying from financial penalty and allowances to withdrawal of the business franchise and the contract) and so on.

WHY IS IT NEEDED

Franchise Agreement is needed as being a legally valid document, it binds all the parties binding and requires adherence to the proviso of the agreements, it helps in enforcing the obligations set-out in the agreement in a mutually agreeable way, it offers to enforce the terms of the contract without any misunderstandings that lead to a longstanding relationship between the parties, it also enables to avoid the complex and costly litigations in case of a dispute, and it serves as legally valid evidence, since the terms and conditions are carefully drafted and agreed beforehand. With the wave of globalization and liberalization having hit the Indian markets, franchising seems to be an alluring and attractive option, not only for domestic companies, but even foreign enterprises.

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