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Franchise Agreement

Franchise Agreement

Franchise Agreement is an agreement signed between a Franchisor and a franchisee when the latter wants to work with a particular franchise.

In India, a draft of a Franchise Agreement is created first after considering all the laws related to franchising in the country such as Taxation laws, Consumer Protection Act, etc. Therefore, a good lawyer who has an experience of working with the franchise business earlier should be hired to draft a template that includes all the terms and conditions, financial arrangements such as Franchise fee, royalty fee, marketing fee, etc. after going through the laws for the franchise business.

The following considerations should be taken into account by Indian investors -:

 

  • Brand Name -: Investigate about the brands presence in the market. Check its credibility and whether the brand has an established business model or not. It is the investor’s responsibility to study all the financial reports and all the terms of proposed business.  If it is an international brand it would be wise to evaluate the brands strategy to invest in India.
  • Competition –: A successful businessman is always more aware of his competitors. The key to stay ahead in any business is being aware of your competition and staying one step ahead of them. You should be aware of the similar businesses in your area who might have an impact on the market share. Play it safe, play it smart.
  • Advertising -: Usually the franchisor requires you to fill out a form for an advertising fund. The franchisors use the advertising fund the advertise the brand as a whole and not a single outlet. But it is always helpful. Some advertising campaigns can be region specific with focus on outlets in a particular state or a city but generally campaigns at are held at a national level.
  • Master Franchise Support-: Investing in a master franchise is a serious investment. It involves handing over the control of a franchise in a particular region or a specified territory to a specific person. Franchisor has to pays the Master Franchisees the royalties and franchise fees earned within the territory. It is always considered a lucrative option by franchisees.
  • Expert Advice -: Seeking an expert in terms of an agreement is certainly for the best. Hire a lawyer who has experience in such a territory and knows about franchise agreements. You can fill out our free advice form as well to seek any sort of advice for venturing into the franchise business. Fill out our Franchisee Sign Up form for complete assistance in opening a franchise.