Buying a franchise in India? Read the agreement, not the brochure.
Upload a franchise, master franchise or area development agreement and get the fees and royalties, territory, compulsory supplies, termination, renewal, transfer and post-term non-compete checked against Indian law.
What people are surprised to learn
A non-compete after the franchise ends engages Section 27 of the Contract Act.
Section 27 makes agreements in restraint of trade void, with a narrow exception for the sale of goodwill, which a franchisee usually is not making. India has no franchise disclosure law, so what the agreement says is what you get. We flag post-term restraints and every fee.
What this review checks
- Franchise fee, royalty, brand fund and minimum royalties
- Territory exclusivity and the franchisor’s reserved rights
- Compulsory supplies and pricing control (Competition Act s.3(4))
- Post-term non-compete (Contract Act s.27)
- Termination for minor breach and what you forfeit (s.73–74)
- Renewal on then-current terms, and transfer of the outlet
- Ownership of improvements to the brand or manuals
- GST on fees and royalty, and personal guarantees
Quick answer
What should I check in a franchise agreement in India?
List every fee: the franchise fee, royalty, brand fund, technology and training fees, and any minimum royalty. Then check whether the territory is exclusive; whether you must buy supplies only from the franchisor; when the franchisor can terminate and what you lose; renewal and transfer terms; and any non-compete after the agreement ends, which engages Section 27 of the Contract Act.
Who this review is for
- First-time franchisees buying a unit franchise
- Master franchisees and area developers
- Existing franchisees facing renewal on new terms
- Buyers taking over a running franchised outlet
How it works
- 1
Upload the agreement
PDF, Word, a photo or pasted text, with its schedules and annexures.
- 2
Choose your state
Stamp duty, registration practice and tenancy law vary by state, so the report tells you exactly what to confirm locally.
- 3
Read the report
Fees, territory, supplies, termination, renewal, transfer and restraints, explained plainly with the clause quoted.
- 4
Talk to franchisees
Questions to ask the franchisor, and to existing franchisees, before you commit.
6 red flags to look for
A non-compete after the agreement ends
Section 27 of the Contract Act makes restraints of trade void, with a narrow goodwill-sale exception a franchisee usually does not fall within.
No exclusive territory, or wide reserved rights for the franchisor
The franchisor can open another outlet, or sell online, next to you.
Compulsory purchase of all supplies from the franchisor
Your margins depend on prices you do not control; tie-ins are assessed under Competition Act s.3(4).
Termination for minor breach with forfeiture of fees and fit-out
Forfeiture is read down to actual loss under Sections 73–74, but you would have to contest it.
Renewal on the franchisor’s then-current terms
Royalties and obligations can change when you renew.
Sales or payback projections not written into the agreement
India has no franchise disclosure law, so only what is written in the agreement counts.
Terms explained
- Franchise fee
- The one-time fee to join the franchise system.
- Royalty
- An ongoing fee, usually a percentage of sales, paid to the franchisor.
- Brand or marketing fund
- A pooled advertising contribution, often a percentage of sales.
- Master franchise
- The right to develop, or sub-franchise, a brand across a region.
- Territory
- The area in which the franchisor agrees not to place another outlet, subject to reserved rights.
- Operations manual
- The franchisor’s rulebook, usually incorporated into the agreement and changeable by the franchisor.
Pricing in India
One plan covers all 14 India analyzers. Prices exclude GST at 18%; a GST invoice with your GSTIN is available.
Single Review
₹999 one-time + GST
One contract review. No subscription, pay once, use within a year.
Pro
₹3,299 / month + GST
4 reviews / month. For founders, freelancers and consultants.
Business
₹6,599 / month + GST
10 reviews / month for HR teams and regular reviewers.
Scale
₹13,199 / month + GST
25 reviews / month for high-volume teams and firms.
Franchise FAQs
What should I check in a franchise agreement in India?
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List every fee: the franchise fee, royalty, brand fund, technology and training fees, and any minimum royalty. Then check whether the territory is exclusive; whether you must buy supplies only from the franchisor; when the franchisor can terminate and what you lose; renewal and transfer terms; and any non-compete after the agreement ends, which engages Section 27 of the Contract Act.
Does India have a franchise law like the US FDD rule?
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No. India has no franchise-specific statute and no mandatory disclosure document, so a franchise agreement is governed by general contract law. Anything promised in a brochure or conversation counts only if it is written into the agreement.
Can a franchisor stop me running a similar business after I leave?
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A post-term non-compete engages Section 27 of the Contract Act, which makes restraints of trade void with a narrow goodwill-sale exception. Restrictions during the agreement are a separate question. The report flags both.
Is GST charged on the franchise fee and royalty?
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Franchise fees and royalties are generally taxable supplies, so the agreement should state whether they are inclusive or exclusive of GST. Confirm the treatment with your chartered accountant.
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ClauseAudit provides information and analysis, not legal advice, and does not create an advocate–client relationship. Findings use calibrated language because enforceability depends on facts and forum. Consult a qualified advocate before acting on any finding. See India pricing.