Buying a Franchise in India: Check the Brand’s Trade Mark Rights

When buying a franchise under a familiar name, it is easy to assume that the company making the offer also owns that name. Yet the brand owner, its representative in India and the company signing the agreement with you may be different entities. To build a reliable franchise partnership, first establish who can legally authorise you to display the brand’s name and logo at your premises.

1. Understand the difference between name recognition and ownership of rights

A trade mark can be a name, symbol or other protected identifier that distinguishes a business’s goods or services. A company registration, website or social media account alone does not prove that the company holds trade mark rights in the brand. Likewise, filing a trade mark application is not the same as securing registration.

Ask the franchisor for a written list of the brand names and logos you will use, their application or registration numbers, the owner’s name and the relevant goods or services. Do not rely solely on a photograph of a certificate. Have the current status, ownership and available documents checked against the records of India’s official Trade Marks Registry.

Pay particular attention to:

• Whether the name in the agreement matches the name in the registration.
• Whether your proposed business falls within the scope of the relevant goods or services.
• The validity of the registration and its renewal status.
• Whether the records show any examination objections, opposition proceedings or disputes over rights.

An unregistered name does not necessarily mean there are no rights: protection may also arise from prior use. In that situation, however, it is especially important to seek an independent trade mark lawyer’s assessment of the risks.

2. Check the full chain of authorisation from the owner to you

If the company entering into the agreement is not the trade mark owner, ask for the documents granting it the necessary rights. It may operate under authorisation from a group company, a licence or a master franchise arrangement. Simply stating that both companies belong to the same group is not enough.

Check that the documents allow it not only to use the brand in India but also to authorise other franchisees to do so. If its authorisation expires before your proposed agreement ends, ask how your business would continue if those rights lapse during the term. Relevant extracts with confidential commercial terms redacted, or confirmation from the rights holder, may be provided; the necessary rights must still be clear.

For example, a company may have permission to operate its own branded outlets but not to grant franchises to others. A letter of introduction or a sales representative’s assurance is therefore no substitute for actual authorisation. For a foreign brand, an overseas registration alone should not be taken as evidence that rights in India are secure.

3. What protection does Indian law provide?

India has no separate, dedicated franchise law. Nor is there a general franchise-specific registration requirement or mandatory pre-sale disclosure document for selling franchises. Do not therefore assume that brand rights have already been checked through a government franchise approval process. General business registrations and permits are separate matters.

The Indian Contract Act, 1872 provides the main framework governing agreements, free consent, fraud, misrepresentation and breach of contract. If you are induced to enter into an agreement by false information about brand rights, there may be grounds to seek rescission or other remedies, depending on the facts and applicable provisions. Compensation is not automatic in every case.

The Trade Marks Act, 1999 is the principal legislation governing trade mark registration, protection and permitted use. The Copyright Act, 1957 may also be relevant to logos or other creative material. Depending on the business, general competition, tax and foreign exchange laws may also apply. Signing a franchise agreement does not extinguish a third party’s valid rights.

4. Allocate the risk of losing rights in the agreement

Have the findings of your checks incorporated into the agreement and its schedules. Obtain a clear written assurance from the franchisor that it has the authority to permit use of the listed trade marks. The agreement should also specify where and how they may be used, including at the premises, on packaging, in local advertising and on digital pages.

Then ensure the agreement addresses these questions:

• If a third party challenges use of the name, who will handle the response and legal defence?
• If you have to stop using the brand, who will pay to replace signage, packaging and promotional materials?
• If the original owner terminates the franchisor’s authorisation, will there be an arrangement allowing you to continue using the brand?
• If lawful use is no longer possible, what terms will govern fee refunds, suspension of payments or termination of the agreement?

Do not assume these safeguards apply automatically: they need to be negotiated and clearly documented. Also ask a lawyer to check whether any limitation of liability elsewhere in the agreement undermines these commitments.

Practical takeaway: Before paying, cross-check three things: the trade mark records, the full chain of authorisation allowing you to use the brand, and your written protections if those rights end. A popular name is a worthwhile investment only when your right to use it is clear.