Rules of Franchising – Are there any?

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Indian law doesn’t impose any rules and regulations on expansion through franchising in India. There is no specific legislation for regulation of franchise in India but yes allied legislation lays the foundation for taking care of franchise business in India. A detailed agreement abides both franchisor and franchisee in a tight legal framework which acts as a rulebook and guidelines folder for both the parties.

Rules of franchising

There is also no restriction imposed on the franchisor whether he chooses FOCO or FOFO for his expansion platform unlike foreign territories where everything gets decided on the forefront of franchising idea.

The independence of doing business their own way makes franchisors a bit more responsible in terms of choosing their franchisees and evaluating the success rates afterwards. This is because of the zero interference of the government or the law. So, the sole accountability of performance lies on the shoulder of the franchisor or business owner.

But, on the side a franchisee needs rules to safeguard his interest as he has nothing on which he can rely upon once business deal is done and other party turns out to be defaulter. Franchisee loses on this front. There is no look back once you are in a deep pit.

So, rules should be there to reduce this kind of damage not only for franchisees but for franchisors also in case if franchisees defaults in paying franchise fees and royalty.

Indian law should come forward with handout of rules and regulations on franchising to keep a check on fair practice issues in business and to provide a stable platform of performance of business in market.

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