Franchise agreement: service business

This franchise agreement is for the franchise of services only for example, a beauty salon or a mortgage broker. The agreement is suitable where one party, the franchisor, wishes to effectively licence out his business to another, the franchisee. In return for being permitted to use the trade marks and other intellectual property of the franchisor, the franchisee will pay a fee.

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About this document

This is a comprehensive franchise agreement for the sale of services, for example, an accountancy firm, an architect’s practise or hairdressers. It is suitable where one party, the franchisor, wishes to effectively licence out his business to another, the franchisee. In return for being permitted to use the trade marks and other intellectual property of the franchisor, the franchisee will pay a fee.  This franchise agreement has been drawn so as to be exclusive or non-exclusive – you choose.

In India, there are no rules or regulations for the terms of a franchise agreement. This means that you are free to negotiate the best deal. This is a complete franchise agreement – you simply delete what is not required in order for you to negotiate what you want.

The agreement deals with confidentiality and intellectual property in detail, thus protecting the interests of the franchisor. Further, this agreement specifically sets out the responsibilities of both parties, allowing a smooth and flexible relationship and one where fewer disputes are likely to occur.

Agreement features and benefits

We have given the buyer of this document a large degree of control over what the franchisor will give and what the franchisee will do in return. We have included the usual provisions such as:

  • Use of trademarks and intellectual property
  • Provision of marketing and marketing materials
  • Development of public relations and promotional campaigns
  • Training and support
  • Sourcing materials

Protection of his investment is likely to be very important to a franchisee. The agreement covers this in detail, from franchise renewal rights, transfer with pre-emption to intellectual property that the franchisee might create. These should provide fair terms that incentivise the franchisee and allow him to benefit from having built up his franchise without the franchisor relinquishing too many rights.

Agreement contents

This is one of the longest Net Lawman documents with 31 pages (excluding guidance). The contents include the following paragraphs:

  • Warranties that the franchisee is able to take on the franchise;
  • Grant of franchise;
  • Obligations of the franchisor to the franchisee: both initially and on-going;
  • Fees and payment terms;
  • Rights to renewal;
  • Data Protection law compliance;
  • Franchisee’s undertakings;
  • Transfer terms: including pre-emption rights for the franchisor to acquire the business;
  • Terms relating to the corporate structure of the franchisee;
  • Termination: rights to terminate the agreement and process for termination;
  • Insurance;
  • Risk and retention of title;
  • Use of subcontractors;
  • Intellectual property rights: extensive provision for the protection of the franchisor's property;
  • Confidentiality;
  • Limitation of liability;
  • Publicity;
  • Indemnity;
  • Dispute resolution;
  • Other legal paragraphs to protect your interests.
Draftsman

This document was written by a solicitor for Net Lawman. It complies with current Indian law.

IN-MADfrn01 - Franchise agreement: service business

 
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