Franchise Agreement

What is a Franchise Agreement? Who are the parties to the Franchise

agreement?

Franchise Agreement is a contractual relationship between the franchisor and the

franchisee in which the franchisor provides know-how, training to the franchisee or
its employees, and allows the franchisee operates under a common trademark,
format or procedure owned or controlled by the franchisor, under which the
franchisee has, or will make a substantial capital investment in his business from his
own resources. The franchise agreement is popular in the first food restaurants, pubs,
convenience stores, motor vehicle dealers, etc. This agreement can be used by the
franchisor providing certain standard terms and conditions, identifying the scope of
work, the costs of services rendered, and other terms. The agreement can be modified
as per the requirement of the parties.

What is the relationship between the parties?

The nature of the relationship between a franchisor and franchisee is an independent
contractual relationship, wherein the franchisor creates a business system and
grants franchisee a right to establish their own franchise location. The franchisor
owns the trademark for the business and grants a license to earn from such a
trademark through the franchise agreement.

Why do you need a Franchise Agreement?

The first importance of the Franchise agreement is that it is a legally binding
document that outlines the franchisor’s terms and conditions for the franchise. It also
outlines the obligations of the franchisor and the franchisee. The agreement also
outlines certain important aspects like the duration of the franchise, fee, business
operations, locations, training, and support to the staff, etc. It is an important
document to protect the intellectual property rights of the franchisor. Franchise
agreement defines what is licensed to the franchisee, how a franchisee can use the
intellectual properties of the brand and the rights of the franchisor to evolve the
system. To put it in simpler words, the franchise agreement governs the relationship
between the parties and it stands to protect the parties in an event of a dispute.

What sectors are heavily involved in the franchise business?

The franchise business can be broadly categorized into five heads viz. business
franchise, investment franchise, conversion franchise, product or distribution
franchise, and job franchise. There are around 120 sectors that are involved in the

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 franchise business. Some of which are food and restaurants, cafes, footwear, clothing,
luxury hotels, retail sector, etc. We all know some of the common franchises which
derive from FDI and our lives are incomplete without these. For example, many
multinational companies have started their operations, through franchising, and are
also expanding very aggressively. Some of the notable names include – McDonald’s,
Pizza Hut, KFC, Pizza Corner, Domino Pizza, Shell, Reebok, Levis, Lee, Adidas, Pepsi,
Coke, Blue Dart, DTDC, Safexpress, United Parcel Service (UPS), The Sheraton and
Ramada Inn, etc.

FRANCHISE AGREEMENT

THIS FRANCHISE AGREEMENT is made at [insert place] on this day of

…………..2014
BETWEEN

[⚫], an entity established as a [company/partnership/LLP] and having its

registered office at [⚫] and having registration number [⚫] and being represented by
its Authorised Signatory/Director [●], hereinafter referred to as the ‘Franchisor’ (unless
repugnant to the context, this expression shall mean and include successors-in- interest/office
and assigns) of the First Part;

And

[⚫], an entity established as a [company/partnership/LLP] and having its

registered office at [⚫] and having registration number [⚫] and being represented by
its Authorised Signatory/Director [●], hereinafter referred to as the ‘Franchisee’ (unless
repugnant to the context, this expression shall mean and include successors-in- interest/office
and assigns) of the Second Part;

(Parties of the First Part and Parties of the Second Part are hereafter collectively
referred to as the ‘Parties’ and individually as ‘Party’)

WHEREAS

A. The Franchisor designed, developed, and owns the business and assets of
[specify business] known as [trading name] and trading as [⚫] (“the Cafe”).
The Cafe’s image is very strong and distinct. It is well known in [⚫] and the
Franchisor has established a significant reputation in respect of the Cafe,
it’s business and activities.

B. The Franchisor wishes to expand it’s business and reputation. The

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 Franchisee wishes to set up and carry on at the Franchisee’s own risk a
franchised business in [place or country] (“the Territory”). Accordingly, the
Franchisee wishes to be granted relevant rights by the Franchisor to carry
on the trade of a Franchisor franchised business from [specify party]. The
Franchisee having taken professional advice wishes to enter into this
franchise agreement in respect of the franchised business.

C. For the above-mentioned purpose both the Parties are desirous of

forming a Franchise Agreement, hereinafter referred to as the ‘said
Agreement’ by execution of this Agreement for the purposes set forth
herein and are desirous of fixing and defining between themselves their
respective responsibilities, interests, and liabilities in connection with the
said Agreement.

NOW THIS AGREEMENT WITNESSETH AND IT IS HEREBY MUTUALLY AGREED

AND DECLARED BY AND BETWEEN THE PARTIES HERETO AS UNDER:

1. SCOPE

1.1. The Franchisor appoints the Franchisee its franchisee for a period of
[indicate period] commencing on the date of this Agreement and
continuing until the appointment is terminated by either party giving to
the other at least [⚫] months’ written notice or otherwise in accordance
with the provisions of this Agreement and subject to the terms and
conditions of this Contract the right to:

a. carry on the business of [insert details] as a franchise business

using the concept and image of the Cafe (“the Business”);
b. carry on the Business from the premises at [address] (“the
Property”);
c. use the rights as set out in this Contract (“the Rights”); and
d. carry on the Business in accordance with the methods of
operating the Cafe using the know-how and systems for
operating the Cafe contained and detailed in the operations
manual (“the Manual”);
e. carry on the Business as otherwise required in writing from time
to time by the Franchisor

in accordance with this Contract..

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 [Comment: At the very outset, the franchise agreement should set out certain
important aspects of the agreement like the nature of the business, or project
that the parties have in mind, the geographical scope, the subject matter, and
the term of the franchise. The subject matter should be clearly mentioned in
this clause. For example, in the above clause, it is made clear that the
agreement is being entered for the establishment of a cafe. Based on the
subject matter the entire agreement can be tailored. Scope clause is analogous
to a preamble, it gives you the central idea of the entire agreement. This clause
should be written in a clear and unambiguous language as it can be referred
from time to time for interpretation of the other clauses. The intentions of the
parties could be deduced from the scope of the agreement].

2. FRANCHISOR’S RESPONSIBILITIES

During the term of this Contract, the Franchisor will undertake the following:

2.1. Support the Franchisee in the Business as reasonably requested or

required pursuant to the terms of this Contract including the provision
of timely responses to enquiries from the Franchisee.
2.2. To provide the required training.
2.3. To provide a copy of the Manual.
2.4. To review and audit the Business from time to time for quality control
purposes.
2.5. Provide the Franchisee with reasonable marketing and sales
information when available.

[Comment: The parties negotiate on the responsibilities of the franchisor to

act in a certain manner during the term of the agreement and thereby impose
some obligations. These obligations should enlist under the above clause.
Such responsibilities could include details about the finalization of locations,
provision of operations manual, education, and training, the exclusivity of the
franchise, regulatory or legal approvals, ongoing support, promotions,
advertising, etc. This will help the franchisee to bind the franchisor to abide by
the responsibilities.]

3. FRANCHISEE’S RESPONSIBILITIES

During the term of this Contract, the Franchisee shall diligently and faithfully
serve Franchisor as its Franchisee and undertake as follows:

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 3.1. To use all Rights, the Manual, the Intellectual Property (as defined in
clause 6) and all trademarks solely for the operation of the Business and
in accordance with the provisions of this Contract.
3.2. To maintain high standards in the Business.
3.3. To fit out the Property in accordance with the Manual and the
Franchisor’s requirements from time to time.
3.4. To obtain and maintain a valid liquor licence and a public entertainment
licence together with any other permits or licences as required for the
Business and at all times comply with all the licensing conditions and
regulations.
3.5. To insure with a reputable insurance company in accordance with the
requirements and for the relevant cover set out in the Manual.
3.6. To operate the Business properly and strictly in accordance with the
Manual.
3.7. To only use the name [specify name] during the Term and at no time
afterward.To carry out the Business from the Property only.
3.8. Not to be directly or indirectly engaged, concerned, or interested in the
business similar to the Business where it would compete with the
Franchisor or its other franchisees during the Term.
3.9. To keep the Franchisor fully informed including in relation to complaints
supplying a copy of all complaints received by the Business.
3.10. To comply with all statutory and local legislation including compliance
with environmental laws and health and safety rules.
3.11. Not to carry on the Business in any way that may adversely affect the
reputation of the Cafe, other franchisees and the Rights.
3.12. To maintain at all times during the Term a VAT registration.
3.13. At all times to ensure that all employees of its business conduct
themselves in such a manner as not to prejudice the Rights or adversely
affect the reputation of the Cafe or its franchised network.
3.14. To conduct all dealings with customers as Franchisee and principal but
without authority to bind the Franchisor or pledge its credit.
3.15. To obtain the prior written consent of Franchisor in the event of any
proposed special arrangements, prices, or prior to departing from any
specified requirements or obligations.
3.16. To use its best endeavours to develop the Business.
3.17. Not to disclose at any time during the Term of this Contract and after its
termination, any confidential information (whether technical or
otherwise) made available to the Franchisee by the Franchisor. The
Franchisee acknowledges that, as a result of this Contract, the
Franchisee may receive and/or have access to information of a

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 confidential nature. The Franchisee further undertakes that such
information will not be utilised in any way detrimental to the Franchisor
and will not be disclosed to any third party whatsoever either during or
after the termination of this Contract.
3.18. Not to, without the prior written consent of the Franchisor, during the
Term of this Contract (and for a period of [one (1)] year after its
termination) in the Territory or any part of the Territory act as a
franchisee, representative, franchisee or distributor for, or otherwise be
directly or indirectly concerned or interested in the development, sale
promotion, and supply of, any products or services that are of a similar
description to or compete with the Cafe or the Business. This restriction
applies to the Franchisee, whether on the Franchisee’s own behalf or on
behalf of any other person, firm, or company whatsoever.
3.19. To bear all the costs incurred by the Franchisee in connection with
performance of the duties and obligations under the Contract.
3.20. To provide the Franchisor with periodic updates and reports of the
marketing and promotional activities carried out by the Franchisee in
the Territory together with an account of all promotional plans.
3.21. To assist the Franchisor as reasonably required in connection with
potential customers.

[Comment: A franchise agreement contains certain activities that each party

must perform or refrain from performing during the term of the agreement.
The responsibilities to be carried out by the franchisee are crucial in nature as
it will determine the business income. Such responsibilities include the
compulsory services to be rendered, infrastructure, and investments,
adhering to the location of the outlet, adhere with the operating manual,
protection of intellectual property rights, and confidential information,
restrictions of suppliers (the franchisor may provide a list of suppliers and
may obligate the franchisee to purchase materials on from such suppliers),
co-operation during the inspection of accounts and inventory audits, good
faith, etc.]

4. FEES, CHARGES AND PAYMENT

The Franchisee agrees to pay on the dates due without deduction or set-off:

4.1. The Initial Franchise Fee on the date of this Contract.

4.2. The Management Fee within [⚫] business days of the end of each
calendar month.

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 4.3. The Service Fee within [⚫] business days of the end of each calendar
month.
4.4. The Marketing Fees within [⚫] business days of the end of each calendar
month, all as set out in the Schedule.
4.5. The Franchisor’s legal costs and expenses incurred in preparation and
implementation of this Agreement.
4.6. The fees and sums due by direct debit or other method specified by the
Franchisor from time to time.
4.7. Interest at the rate of [two per cent (2)%] above the base rate of [specify
bank] from time to time until payment is received, as well before as
after any judgement.

[Comment: The parties should negotiate on royalties or a license fee and any
continuing fee to be paid by the franchisee. This clause should include all the
necessary details concerning types of fees, charges, and payments the
franchisee is supposed to pay. This clause should also be amply clear on the
manner in which and the times at which such payments are to be made must
also be addressed. When such payments are made outside India all the
regulatory and statutory provisions should also be made clear under this
clause. The interest rate in an event of delay should also be negotiated and
must reflect under the same clause. Proper segmentation should be done
with respect to the heads under which the fee is being collected. If possible,
create a schedule. ]

5. PROPERTY

5.1. The Franchisee confirms that it shall enter into the lease of the Property
at the same time as this Agreement.
5.2. The Franchisee agrees to observe and perform the obligations and
undertakings under the lease and will enforce all of the landlord’s
obligations under the lease.
5.3. No variation, surrender, or assignment of the lease shall be entered into
by the Franchisee without the prior unwritten consent of the Franchisor.

[Comment: The entire concept of franchise agreement revolves around

setting up multiple outlets at different locations. The property clause should
be drafted in a way that the franchisee is bound to carry out its business on
the given address. This clause should expressly provide for the release of the
franchisor from any sort of issue, that may arise concerning the property of
the business. This clause protects the franchisor from the unauthorized

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 change in location by the franchisee. The mode of obtaining the property and
the covenants related to it should also be made amply clear under this
clause.]

6. CONFIDENTIALITY AND INTELLECTUAL PROPERTY

6.1. Unless otherwise expressly agreed in writing between the parties, all
right, title, and interest in and to all trade marks, logos, trade names,
literature, copyrights, database rights, patents, designs, and all other
intellectual property rights (“the Intellectual Property”) in and relating to
the Franchisor, the Cafe, or to the Cafe’s website) shall belong to the
Franchisor.
6.2. The Franchisee agrees to maintain secret and confidential all
information (whether technical or otherwise) obtained pursuant to this
Contract.
6.3. This Clause shall survive any termination of this Contract and continue
in force for a period of [⚫] years after any termination.
6.4. The Franchisee shall comply with the Franchisor’s brand guidelines or
instructions (a copy of which has been provided) relating to the form
and context in which the Intellectual Property and literature are used.
6.5. The Franchisee acknowledges that the Franchisee has no rights in or to
the Intellectual Property and undertakes not to do or omit to do
anything by which the goodwill and reputation associated with the
Intellectual Property might be diminished or jeopardised.
6.6. The Franchisee must inform the Franchisor immediately of any
infringement or apparent or threatened infringement of the Intellectual
Property and of any passing off of goods as the Products of which the
Franchisee may become aware. In addition, the Franchisee must on
request assist the Franchisor in dealing with such infringements.

[Comment: A franchise is a brand based business. The franchisor has spent

many tears building its reputation and goodwill in the market. The internal
strategies and the management plans are shared with the franchisees when
they enter into an agreement. The confidentiality clause aims to protect such
confidential information that is unique to the brand. The confidentiality clause
should outline the permissible usage of intellectual property. The clause
should also protect the trade secrets, know-how, business models, and
designs as well as other relevant details. Apart from the above aspects, the
parties must also negotiate to make provisions to protect confidentiality after
the termination of the agreement.]

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 7. LIABILITY

7.1. Except in the case of fraud or wilful default, or in the case of death or
injury for which the Franchisor is liable to the Franchisee in negligence,
the Franchisor shall not be liable to the Franchisee, as a result of breach
of contract or negligence or otherwise, for any loss of profit or business
or other economic or financial loss arising directly or indirectly out of or
in connection with this Contract.
7.2. The Franchisee agrees to indemnify the Franchisor and keep the
Franchisor indemnified against all loss, damage, or liability suffered by
the Franchisor as a result of the Business and the actions of the
Franchisee.

[Comment: A franchising arrangement generally gives rise to several liabilities

concerning defaults, frauds, infringements, negligence, etc. The liability clause
should outline the events under which the franchisee would be held liable.
The clause should also provide adequate provisions for the indemnification of
the parties for any liabilities arising out of the other party’s breach of contract.
The liability clause must protect the party against the malicious act of another
party. Mention specifically the events where the liability clause is capped or
uncapped.]

8. TERMINATION

This Contract may be terminated as follows:

8.1. Immediately, by a mutual agreement in writing between both parties.

8.2. By either party upon at least [⚫] days’ written notice expiring at any time
on or after [⚫] from the signing of the Contract.
8.3. By either party by giving written notice to the Franchisee having
immediate effect if the Franchisee breaches this Contract and fails to
remedy that breach (if capable of remedy) within [⚫] days of being given
a written notice identifying the breach and requiring it to be remedied.
8.4. This Contract shall terminate without notice in the event of the death of
the Franchisee.
8.5. Without prejudice to any remedy which Franchisor may have against the
Franchisee for any antecedent breach or non-performance of this
Contract, the Franchisor may terminate this Contract with immediate
effect on giving written notice to the Franchisee if the Franchisee:

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 8.5.1. suffers or commits an act of bankruptcy;
8.5.2. is convicted of an indictable criminal offence or one involving
dishonesty;
8.5.3. engages in conduct prejudicial to the Rights or the Cafe or
otherwise behaves in any other manner that may damage the
reputation of the Franchisor or the Cafe;
8.5.4. loses the liquor licence or any other required permit for the
Property applicable to the Business;
8.5.5. fails to achieve the targets detailed in this Agreement;
8.5.6. is insolvent or is prevented by infirmity or ill health from
performing his functions under this Contract;
8.5.7. is in persistent breach of the Franchisee’s obligations under this
Agreement;
8.5.8. fails to carry on the Business;
8.5.9. challenges the Franchisee’s intellectual property rights.

8.6. In the event of termination, the following post-termination provisions

will apply and the Franchisee:

8.6.1. shall return all marketing material in-hand to the Franchisor and
shall also return all confidential information supplied by the
Franchisor;
8.6.2. must immediately cease operation of the Business or use the
Rights;
8.6.3. return the Manual immediately;
8.6.4. must take the post-termination steps identified in the Manual or
as required by the Franchisor by written notice;
8.6.5. shall certify that it has complied with the post-termination
obligations and has not disclosed any confidential information, the
Manual or the Rights;
8.6.6. must pay all sums and fees outstanding or due under the terms of
this Agreement or otherwise.

8.7. The Franchisee (for the avoidance of doubt) shall have no right to any
compensation upon termination of this Contract.
8.8. Termination shall not affect the operation of any restrictive covenants,
the Franchisee’s indemnity, liability, confidentiality, and intellectual
property, and any other clauses intended to or capable of surviving
termination of this Contract.

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 8.9. Subject as provided in this Contract and to any rights or obligations
accrued prior to termination, neither party shall have any further
obligation to the other under this Contract.

[Comment: The termination clause usually contains three important

components; i. pre-termination obligation, ii. Termination, and iii. post-
termination obligations. All three components of the clause should be drafted
diligently. Firstly, the clause should determine the events/grounds under
which the agreement could be terminated. Distinguish between immediate
termination and curable breach. Some events like fraud, criminal activities,
breach of IP and confidentiality can enable immediate termination. However,
some events like non-compliance of operating manuals, audit miscalculations
may provide a cure period. On the failure of curing the defect, a termination
notice can be served. The pre-termination obligations include the details of
the termination notice. The party which intends to terminate must serve prior
notice to another party. The time and mode for serving such notice should be
clearly mentioned in the clause. The next part must mention the mode of
communication of acceptance of the termination notice. Lastly, the clause
should enlist the obligations that would arise on the termination of the
agreement. This is the heart of this clause, as it will determine the actions that
would be brought in an event of termination. Some of the important
obligations that one must not miss while drafting the termination clause
include maintaining confidentiality, returning all the materials provided by the
franchisor, payment of all the dues, etc. The franchisor may also covenant
that the franchisee should not open a competing business within the same
location. ]

9. ACKNOWLEDGEMENTS

The parties acknowledge as follows:

9.1. The Franchisee shall comply with all reasonable and lawful instructions
of the Franchisor from time to time relating to the marketing and
carrying on of the Business in the Territory, the Manual and shall
generally carry out its franchise in such manner as it thinks best to
promote the interest of franchised business.
9.2. The Franchisee agrees that the Franchisor may during the period of
notice ending on the date of termination of this Contract appoint a
successor to the Franchisee and may introduce that successor to
customers and potential customers and allow that successor to make

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 itself known as the Franchisor’s Franchisee so as to be able to
commence business from the day after expiry of this Contract.
9.3. The Franchisor shall have a right of set off under this Contract and shall
be entitled to deduct from any commission due to the Franchisee any
sums owed by or due from the Franchisee to Franchisor.
9.4. The Franchisee agrees to indemnify the Franchisor against any liabilities
incurred by Franchisor as a result of the Franchisee breaching any law
from time to time in force in the Territory or the incurring of any
unauthorised liability.
9.5. Any change of ownership or control in the Franchisee must be first
approved in writing by the Franchisor.
9.6. The Franchisor shall have an option to purchase the Business for the
same offer purchase price and on the same terms as those set out in
any genuine bona fide offer for the Business. The terms set out in [⚫]
shall apply to such a right of first refusal and in the event that the
Business is sold to a third party.
9.7. The Franchisor shall be entitled to inspect and the Franchisee’s books of
account at any time by service of reasonable notice to the Franchisee (of
not less than [⚫] days) of such proposed inspection or audit which shall
be during reasonable business hours.
9.8. The Manual and the copyright in it shall at all times remain the property
of the Franchisor. The Term “the Manual” refers to all updates and other
changes made to it by the Franchisor from time to time.
9.9. The Franchisee shall not assign, delegate, or otherwise transfer the
performance of the franchise granted by this Agreement or any right or
obligation under it.
9.10. The Franchisee shall achieve sales of a minimum of [⚫] a calendar week
during each week of the Term.
9.11. Following the payments of the Service Fees, Managerial Fees, and
Marketing Fees, the Franchisor shall undertake the marketing in
connection with the Business and Cafe as set out in [⚫].

[Comment: The acknowledgment clause is in its true sense, an

acknowledgment from the franchisee that he or she has read and understood
the agreement, has had an opportunity to review the agreement with an
independent counsel, and has signed the agreement voluntarily. This clause
should reflect all the important terms of the agreement. Such terms should
include all the goals in the form of income, termination, confidentiality, fees,
charges, payments, audits of accounts, right of franchisor to inspect the
business, liabilities on breach of terms, etc. The clause has to be drafted in a

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 manner that the voluntary acceptance of all the terms by franchisee should
be clearly seen.]

10. MISCELLANEOUS

10.1. Assignment: The Franchisee shall not without the prior written consent
of the Franchisor sub-contract, assign or otherwise assign any or all of
its rights and obligations under this Contract.

[Comment: The assignment clause outlines the extent of the

permissibility of the assignment of the intellectual property of the
franchise. It should clearly state the permissions required and the
restrictions imposed on such assignments.]

10.2. Waiver: Any indulgence granted by the Franchisor to the Franchisee in

respect of the performance by the Franchisee of its obligations under
this Contract or any neglect or failure by the Franchisor to enforce any
of the terms of it shall not be construed as a waiver or variation of this
Contract or otherwise prejudice any of the Franchisor’s rights under it.

[Comment: The waiver clause is to ensure that no party accidentally waives its
responsibilities under the agreement. It also aims to ensure that there is no
waiver of the right to bring proceedings and recover damages, etc. under the
agreement in the event of a breach of the contract by the other party. Such a
waiver which will be detrimental to the rights of the other party and should
not be allowed.]

10.3. Contract: The schedules and annexure form part of this Contract and
any reference to ”this Contract” includes the schedules, annexures, and
recitals in the introductory paragraphs.

[Comment: The purpose of the above clause is to ensure that the parties read
the agreement including the schedules and annexures as a whole. The
agreement should be interpreted as a whole. ]

10.4. Notices: Any notice required to be given pursuant to this Contract shall
be in writing and shall be given by delivering the notice by hand at, or by
sending the same by prepaid first class post (airmail if to an address
outside the country of posting) to the address of the relevant party set
out in this Contract or such other address as either party notifies to the

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 other from time to time. Any notice given according to the above
procedure shall be deemed to have been given at the time of delivery (if
delivered by hand) and when received (if sent by post).

[Comment: The above provision lays down the permissible mode of notice so
as to avoid any confusion. All the acceptable modes of delivery of notice shall
be listed under this clause. While this provision may seem inconsequential, if
the contract does not have this provision, the courts could hold the contract
as inequitable. ]

10.5. Authority: The parties undertake that they each have the right, power,
and authority and have taken all action necessary to execute and
deliver, and to exercise their rights and perform their obligations under
this Contract.

[Comment: The above clause limits the authority under the agreement. This
clause binds only those who are parties to the agreement to exercise the
rights and obligations. Any other person who acts on behalf of the parties
shall be mentioned under this clause.]

10.6. Severance: If any part of this Contract becomes invalid, illegal, or

unenforceable such provision shall be severed from this Contract and
the parties shall in such an event negotiate in good faith in order to
agree the terms of a mutually satisfactory provision to be substituted
for the invalid, illegal, or unenforceable provision which as nearly as
possible gives effect to their contractual intentions as expressed in this
document.

[Comment: The severability clause directs the court or arbitrator that if any
clause in the agreement isn’t enforceable under the law, that the rest of the
agreement should remain enforceable. This clause would enable the other
under the agreement to survive and would protect the parties against the
frustration of the agreement in toto.]

11. GOVERNING LAW & LANGUAGE & JURISDICTION

11.1. This Agreement is in the English Language and no translation into any
other language shall be a valid interpretation.

11.2. This Agreement is governed by and shall be construed in accordance with the

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applicable law.
 existing Indian Laws. The Courts at [●] shall have exclusive jurisdiction in respect
of this Agreement.

[Comment: The parties can negotiate on what laws should drive the
agreement. The governing laws would depend on various factors such as the
place where it is made; the place of performance; the domicile, nationality or
business center of the parties; the situation of the subject matter, and so on.
However, once the parties decide on the laws that they want to apply to the
agreement such should be clearly mentioned under this clause. The parties
should also mention the jurisdiction of courts that would decide the dispute.
When both parties to the agreement are based in the same territory, then it
would be desirable to subject any disputes out of the agreement to courts in
that territory. However, when the parties are based in different territories, the
choice of jurisdiction becomes a point of negotiation.]

12. DISPUTE RESOLUTION

12.1. Any and all dispute/difference between Franchisor and the Franchisee
including in relation to interpretation of this Agreement shall be
referred for amicable negotiation and settlement between the parties to
be resolved within 30 days of notification thereof.
12.2. In case of non resolution of any dispute or difference in the manner specified
above, the same shall then be mandatorily referred to Arbitration, in the case the
amount of any matter in dispute is less than or equal to Rs [●], the number of
arbitrators shall be one (1) independent arbitrator appointed mutual consent. In the
case the amount of any matter in dispute is greater than Rs [●], the number of
arbitrators shall be three (3) independent arbitrators, with one appointed by each
Party, and the two appointees selecting the third arbitrator. Each arbitrator shall be a
competent and reputable individual with experience as a judge, a chief executive
officer or chief financial officer of a reputed company in the marketing industry.
12.3. The Arbitrators shall not be limited by the Code of Civil Procedure, 1908
and the Indian Evidence Act, 1872 and shall be free to chart out the
procedure to be followed in arbitration.
12.4. The arbitration proceedings shall commence on and from the date of
appointment of Sole Arbitrator and the award shall be made within a
period of 60 days from appointment of Sole Arbitrator.
12.5. The proceedings of arbitration and the award shall be made in English.
12.6. The venue of proceedings shall be in [place] and the arbitration shall be
subject to The Arbitration & Conciliation Act, 1996 and rules framed
thereunder and under jurisdiction of the courts at [place].
12.7. The fees payable to the Arbitrators (including arbitrator fees and costs

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 but excluding any filing fee payable by a Party commencing the
arbitration) shall be borne equally by the Parties, provided, however, that
the Client shall pay, and the Company shall not be responsible for, any such fees
payable to the Arbitrators that exceed Rupees [●] .

[Comment: The dispute resolution clause should be clear and descriptive. It

should determine the forum to which parties wish to refer the dispute to.
When the parties decide on resolution through Arbitration, all the parameters
required to draft an arbitration clause should be followed. The arbitration
clause would normally stipulate the manner in which the arbitration is carried
out. The clause would also mention the seat and venue of the arbitration, the
procedure for appointment of the arbitrator, the fees payable, the laws
applicable, the language of the arbitration, appeals, etc.]

SIGNED AND DELIVERED ON BEHALF OF THE FRANCHISOR

Name: [●]
Designation: [●]

SIGNED AND DELIVERED ON BEHALF OF THE FRANCHISEE

Name: [●]
Designation: [●]

All in the presence of:

1.

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applicable law.
 2.

Schedule
Fees and Payment

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applicable law.