What are the legal requirements for franchising in India?

Franchising in India involves several legal considerations, as there is no specific law dedicated solely to franchising. Key regulations include the Indian Contract Act, 1872, which governs contractual relationships and the Competition Act, 2002, which addresses anti-competitive practices like resale price maintenance​​​. Intellectual property must be protected under the Trademarks Act, 1999, requiring registration to safeguard brand identity​​.

Franchise agreements are critical and must outline rights, obligations, fee structures, territorial rights, intellectual property usage and dispute resolution mechanisms​​. While India does not mandate a Franchise Disclosure Document (FDD) like some countries, comprehensive disclosure is crucial for protecting franchisee interests and fostering transparency.

Foreign franchisors must comply with the Foreign Direct Investment (FDI) Policy, which governs the types of entities that can be established, permissible equity stakes and necessary approvals​​. Adherence to local laws related to employment, taxation and specific industry regulations is also mandatory.

Membership in a national franchise association is optional but can offer additional protection and support​​. To ensure success, franchisors should provide robust training and support, maintain consistent brand standards and establish clear operational guidelines. Consulting with a legal professional is advisable for navigating this complex legal landscape.