Know About Key Franchising Laws in India

India is one of the biggest markets as far as franchising is concerned. Franchising is regarded as a successful business module for local companies in India within various sectors. Now looking at the prospect of Indian market, foreign companies and brands are exploring the Indian market via the route of franchising.

There are many countries such as the UK, the USA, Japan etc have got comprehensive legislation to cover franchising opportunities in their respective countries. However, there are no laws enacted solely for the purpose of regulating the growing franchising business in India. A healthy legal environment is of great importance for franchising business where provisions for all critical franchising areas are covered. Here regulations related to commercial law, laws relating to contracts, intellectual property law for protection of trademarks and so on are covered.

Franchise arrangements are subject to an array of laws and regulations that need to be understood properly for smooth functioning of franchise opportunities. As there are no specific laws governing franchising in India, one must give due consideration to a franchise agreement. By a franchise agreement it means a legal contract between the franchisor and the franchisee.

In India Contract Act 1872 and the Specific Relief Act, 1963 provides regulations related to enforcement of covenants in a contract and remedies in the form of damages for breach of contract. If any of the party subject to the franchise agreement commits a breach of contract, the aggrieved party can approach the Indian courts for justice. The court considering the balance of convenience and the interests of justice will offer justice. An order granting or rejecting an injunction may be appealed by an aggrieved party.

In India there are various laws relating to taxation, property laws, insurance law and labour laws which are applicable to franchise transactions. Additionally, laws and regulations applying to specific sectors of goods and services are also applicable depending on the franchise businesses.

However, the Central Government in India is currently considering a franchise law aimed at fast resolution of disputes and these franchise laws will be great help to anyone involved with franchise businesses.