The Direct Franchise Agreement is a fundamental document used when a business (franchisor) grants another party (franchisee) the right to operate under its business model and brand in India. This agreement is essential for businesses expanding through franchising in the Indian market, whether domestic or international brands. The document comprehensively covers all aspects of the franchise relationship, including intellectual property rights, operational standards, financial terms, and compliance requirements under Indian law. It's structured to comply with various Indian regulations including the Indian Contract Act, competition laws, and intellectual property protection laws, while also addressing practical business considerations. The Direct Franchise Agreement is particularly important as India lacks specific franchise legislation, making it crucial for the agreement to be thorough and self-contained in defining the parties' rights and obligations.
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1. Parties: Identification and details of the franchisor and franchisee, including registered addresses and company registration numbers
2. Background: Context of the agreement, brief description of the franchise business, and purpose of the agreement
3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and rules of interpretation
4. Grant of Franchise: Scope of franchise rights, territory details, and exclusivity provisions
5. Term and Renewal: Duration of the agreement and conditions for renewal
6. Franchise Fees and Payments: Initial franchise fee, ongoing royalties, advertising contributions, and payment terms
7. Franchisor's Obligations: Support, training, operations manual, marketing support, and other obligations of the franchisor
8. Franchisee's Obligations: Operational standards, compliance requirements, reporting obligations, and business conduct requirements
9. Intellectual Property Rights: Usage of trademarks, trade secrets, and other IP, including protection obligations
10. Training and Support: Initial and ongoing training requirements, support services, and assistance provisions
11. Quality Control: Standards maintenance, inspection rights, and quality assurance requirements
12. Marketing and Advertising: Marketing obligations, advertising guidelines, and brand standards
13. Records and Audit Rights: Record-keeping requirements and franchisor's audit rights
14. Confidentiality: Protection of confidential information and trade secrets
15. Non-Competition: Restrictions during and after the term of the agreement
16. Termination: Grounds for termination, procedures, and consequences
17. Post-Termination Obligations: Obligations and restrictions after agreement end
18. Dispute Resolution: Procedure for resolving disputes, including jurisdiction and arbitration provisions
19. Governing Law: Applicable law and jurisdiction
20. General Provisions: Standard boilerplate clauses including notices, assignment, force majeure
1. Multi-Unit Development Rights: Include when franchisee has rights to develop multiple units
2. E-commerce Rights: Include when online sales or digital platforms are part of the franchise
3. International Operations: Include for cross-border franchise operations
4. Sub-Franchising Rights: Include if franchisee has rights to grant sub-franchises
5. Equipment Leasing: Include if franchisor provides equipment on lease
6. Property and Location Requirements: Include detailed property requirements if location is crucial
7. Data Protection and Privacy: Include detailed provisions for handling customer data
8. Supply Chain Requirements: Include if specific supplier relationships are mandatory
1. Schedule 1 - Territory Description: Detailed description and/or maps of the franchised territory
2. Schedule 2 - Fees and Financial Terms: Detailed breakdown of all fees, royalties, and payment structures
3. Schedule 3 - Brand Standards Manual: Operating procedures and brand standards (summary/reference)
4. Schedule 4 - Initial Training Program: Details of mandatory initial training
5. Schedule 5 - Approved Products/Services: List of approved products/services to be offered
6. Schedule 6 - Approved Suppliers: List of approved suppliers and purchasing terms
7. Schedule 7 - Initial Investment and Setup Requirements: Detailed costs and requirements for setting up the franchise
8. Schedule 8 - Intellectual Property: List of trademarks, copyrights, and other IP included in the franchise
9. Schedule 9 - Marketing Guidelines: Detailed marketing and advertising guidelines
10. Schedule 10 - Required Insurance: Insurance types and coverage requirements
11. Appendix A - Form of Confidentiality Agreement: Standard confidentiality agreement for employees
12. Appendix B - Personal Guarantee Form: Standard form for personal guarantees if required
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