Buying a Franchise in India: Check the Legal Rights to the Brand

Buying a franchise with a familiar name may seem straightforward, but the company making the offer does not always own that name. It may be an authorised licensee, a master franchisee or simply a sales agent. Before entering the Indian franchise market, check who will grant you the right to use the brand and which documents establish their authority. Do this before paying any non-refundable fees.

1. Establish the company’s identity and the brand’s ownership separately

Start by comparing the legal names in the proposal, payment instructions and draft agreement. The name on the shopfront, the trade mark owner and the entity signing the agreement may all be different. That is not necessarily a problem, but the chain of rights connecting them must be clear.

Ask the party making the offer for:

• The contracting entity’s full legal name, registered address and relevant registration details.
• The trade mark application or registration numbers for the brand name and logo.
• The name of the owner of each relevant trade mark.
• Evidence of a licence or master franchise agreement if the owner is a different entity.
• Evidence that the person signing is authorised to do so.

Check company or limited liability partnership details against the records held by India’s Ministry of Corporate Affairs. For other types of entity, obtain the appropriate documents. A company’s registration does not prove that it has the right to sell franchises for a particular brand. If the payment recipient has a different name, ask for a written explanation and evidence of authorisation.

2. Check the trade mark’s actual status

Search the Indian Trade Marks Registry’s public records using the name and application number. Do not rely solely on an image of a certificate sent by the franchisor. The brand’s word mark and logo may have different statuses.

An application is not a registration. Pending, objected to, opposed, registered and expired statuses mean different things. A pending application is not, by itself, evidence of fraud, but you need to understand the risks of starting a business on that basis. An unregistered mark may also receive protection against passing off in certain circumstances, so have a specialist assess the position.

Read the description of goods and services covered by the registration as well. Do not draw conclusions from the class number alone or from a similar name. The registration should be relevant to the activity your outlet will carry out. Also check the owner’s name, renewals and any recorded assignments of ownership.

If the brand has recently changed its name or ownership has moved to another company, ask for the relevant transfer documents. Where public records are incomplete, obtain additional evidence and independent legal advice.

3. Trace the chain of rights from the owner to your business

If the entity you are dealing with does not own the trade mark, the key question is whether it has the right to grant you permission to use it. Permission to operate under a brand is not the same as permission to grant franchises to others.

Check the underlying licence or master agreement for the following:

• Does it expressly permit sublicensing or sub-franchising?
• Does its scope cover the proposed business and its operation in India?
• Does your appointment require separate written consent from the owner?
• How long is the underlying permission valid, and does it cover your proposed franchise term?
• Is that permission subject to any dispute, suspension or notice of breach?

If confidentiality prevents disclosure of the full agreement, ask for certified copies of the relevant clauses and direct written confirmation from the owner. Do not treat an email from a sales agent as sufficient. If the terms do not align, do not invest on the strength of verbal assurances about future renewal.

4. What protection does Indian law provide?

India has no dedicated central franchising law, mandatory franchise-specific registration or general mandatory pre-sale franchise disclosure document regime. Membership of an association is not proof of government approval or brand ownership either. Do not mistake a recommendation to introduce a disclosure regime for legislation already in force.

The Trade Marks Act, 1999 is important for trade mark registration, protection and authorised use. The Indian Contract Act, 1872 applies to questions concerning agreements, the parties’ obligations, misrepresentation, fraud and breach. Depending on the circumstances, remedies such as injunctions under the Specific Relief Act, 1963 may also be relevant.

The absence of mandatory franchise disclosure does not give anyone permission to make false claims. Even so, obtaining evidence of rights in advance is better than seeking remedies after a dispute arises. General business registration requirements and activity-specific permissions may apply separately.

5. Turn the evidence into contractual protection

Record the findings of your checks in a schedule to the agreement: which name and logo you may use, for which activities and for how long. Make sure permission to use them on shop signage, packaging, local advertising and digital accounts is also clear.

Obtain written assurances from the franchisor that it holds the necessary rights and that, apart from any disclosed exceptions, there are no claims or restrictions that would interfere with your authorised use. Agree terms covering notification of changes to those rights, legal support for third-party claims, defence costs and appropriate indemnities. Negotiate to make payment of fees conditional on receiving the necessary evidence and consents.

Practical takeaway: Before paying, confirm three things: who owns the brand, whether the party granting you permission is authorised to do so, and whether those same rights are clearly set out in your signed agreement.