How to Resolve Franchisor-Franchisee Conflict Legally

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How to Resolve Franchisor-Franchisee Conflict
Legally
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• India does not have any specific laws on
  franchising. A broad definition of transfer of
  technology covers franchising. Thus, the legal
  framework for new franchisers interested in
  setting up master franchises in India exists in
  terms of brand protection and rules regarding
  payment of franchise fees. When franchisors enter
  India, they are governed by a number of different
  national and regional statutes and codes rather
  than a single comprehensive statute. Here are few
  laws that help resolve conflicts between
  franchisors and franchisees (BBGV1462021)
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• 1. Contract Act-
• By nature, every franchising relationship is
  bound by a contract, hence the Indian Contract
  Act, 1872 is applicable to all franchising
  arrangements. Under the Contract Act, a
  contract is an agreement enforceable by law.
  Most conflicts relating to the act are as a
  result of Restraint of trade when franchisees
  are restricted from entering into a contract with
  another franchisor.
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• 2. Competition Law-
• The Competition Act disallows arrangements with
  respect to production, supply, distribution,
  storage, acquisition, or control of goods or
  provision of services that may cause an adverse
  effect on the competition in India (especially on
  local companies). The conflict, therefore, does
  not arise between the parties involved in the
  contract. It is between the franchisor and the
  law, making it even more challenging to deal
  with. However, there have been cases in India
  where judgments have been passed in favor of
  foreign companies in this matter.
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• 3. Trademarks Act-
• A trademark is protected under the provisions of
  the Trademarks Act 1999. On registration, the
  franchisor gets an exclusive right to use the
  mark in connection with the goods or services.
  Trademark registration is valid only for a period
  of 10 years and must be renewed thereafter. The
  trademark right is territorial in nature, hence
  it is very important for a foreign franchisor to
  get its trademark registered in India.
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• 4. Arbitration Act-
• Alternate dispute resolution is highly promoted
  in India, as the courts are flooded with cases.
  In such cases either domestic or international
  arbitration is possible. For the adoption of
  arbitration as a dispute resolution mechanism,
  the parties must opt for a separate arbitration
  agreement or may include an arbitration clause in
  the main contract. The fact that the matter is to
  be settled outside of court does not mean that it
  is quick. An example would be McDonalds vs CPRL
  London arbitration.
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• 5. Intellectual Property Protection-
• Trade secrets exist between parties standing in a
  contractual relationship, and any disclosure of
  such trade secrets is actionable. Although trade
  secrets are not dealt with under any particular
  legislation in India, they are covered under the
  Indian Contract Act 1872, Copyright Act 1952, and
  the common law of breach of confidence, which in
  effect amounts to a breach of contractual
  obligation. Section 72 of the Information
  Technology Act 2000 also provides protection
  however, the same is limited to electronic
  records. Appropriate terms with respect to
  disclosure and protection of trade secrets may be
  stipulated in the franchise agreement.
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• Do you need help? Do you want to you have all
  your legal frame work ready for your franchise?
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• Contact Us
• Address Unit No. 450, Mastermind-1 Premises,
  Royal Palms, Goregaon (E.), Mumbai 400065
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• Mobile No 91 9137256150
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