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Oct, 01 2008

Franchisor, franchisee entities

If the franchisor and franchisee are based in India, are they considered to be separate entities or a single entity? As per law, if the franchise is wholly based in India, then the franchisor and franchisee are to be treated as separate entities, indep


What are the legal issues arising out of termination?

Right to carry on and conduct the business of the franchisor’s brand, Intellectual Property Laws, Jurisdictions/Forums for settling legal disputes and conflict of laws are vital legal issues to be considered when one talks of termination of a franchise agreement. As the agreement is terminated, the franchiser needs to take steps to protect his trademarks, patents and other intellectual property rights and licensing rights given to the franchisee. One needs to be very clear on the abovementioned core issues before getting into franchisee arrangements and the issues arising out of terminations of franchisee agreement. In spite of there being no specific statutory law for franchising specifically, there are various acts like the Indian Contract Act, the Arbitration Act, the Indian Companies Act and the Intellectual Property Laws which look into the governing principles of franchising.

Franchising mediums

What are the mediums of international franchising?

There are different types of ways for getting into international franchising:

  • By getting into direct franchising i.e. where the franchisor grants franchisees to individual franchisees in the foreign country through the execution of a joint international contract with the franchisees.
  • Through the franchisor’s subsidiary or branch offices.
  • Master franchise agreements: In such agreements the franchisor grants a person in another country, the sub-franchiser, the exclusive right within a certain territory to open franchise outlets or grant franchises to sub- franchisees. In such a case there are two separate contract/agreements which are incorporated i.e. Joint Ventures. In case of joint ventures, the franchisor and a local partner create a joint venture. This joint venture would then enter into a master franchise agreement with the franchiser, and proceed to open franchise outlets and grant sub-franchises.
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