Franchise Agreements in India: Check Clauses Allowing Unilateral Changes

When buying a franchise in India, reading the main agreement alone is not enough. It may also make the operations manual, digital portal content and policies issued in future binding on you. You therefore need to understand how your obligations could change after signing. Consistency across a franchise network is useful, but issuing routine operating instructions is different from having the power to change fundamental commercial terms.

1. First, identify which documents form part of the agreement

Ask the brand for the main agreement, all its schedules, the operations manual and a list of referenced policies. Look for wording such as: “All instructions, as amended from time to time, shall be binding on the franchisee.” This could give contractual significance to future documents you have not yet seen.

For each document, ask for its title, version, date and method of delivery to be recorded in writing. If the full manual is not available before signing, request at least an opportunity to review the binding obligations. Be particularly cautious about signing a declaration confirming compliance with material you have not read.

Next, check the order of precedence between documents. If the main agreement and the manual conflict, which takes priority? One negotiating aim could be to ensure that the signed main agreement and agreed schedules take precedence over general instructions. Simply stating that “all documents shall be read together” does not clearly resolve a conflict.

2. What protection does Indian law provide?

India has no separate, comprehensive franchise law, mandatory franchise disclosure document or central franchise registration system. Nor is there a prescribed format for franchise-specific pre-contractual disclosure. This does not mean that a brand may make misrepresentations or that general laws do not apply.

The Indian Contract Act, 1872 is the principal legal framework governing contract formation, free consent, performance, breach and remedies. Section 62 addresses certain situations, including alterations to a contract by agreement between the parties. However, if the original agreement already grants a power to make particular types of changes, the effect of a later instruction will depend on the wording and scope of that power and the circumstances. It is therefore unsafe to assume that every change is automatically invalid unless you sign again.

Depending on the activity, the Competition Act, 2002, the Trade Marks Act, 1999, tax laws and local business regulations may also apply. The absence of franchise-specific registration does not remove ordinary shop or business registration requirements. Ask your lawyer specifically whether the power to make changes is clearly defined or open-ended, and which obligations it can alter.

3. Distinguish routine instructions from fundamental amendments

A brand may need to update cleaning procedures, presentation standards or customer service methods. By contrast, changing the basis on which payments are calculated, the agreement’s term or the allocation of responsibilities can affect the underlying bargain. Understand the consequences before accepting the same procedure for both.

Propose separate categories of changes in the agreement:

• Routine operating instructions: These should be limited to specified subjects and allow a reasonable implementation period.
• Changes required by law or urgent safety needs: The reasons and relevant requirements should be explained, with provision for prompt action in an emergency.
• Material commercial amendments: These should be clearly identified, with an agreed process requiring both parties’ written consent.

For example, introducing a new complaint form is not the same as making you solely responsible for customer refunds. The latter requires a separate assessment of its financial and legal implications.

Also watch for wording that allows the brand alone to decide whether a change is “material”. Ask for objective criteria in the definition: does the change affect payments, obligations, operational capacity or existing rights? Consider its actual effect, not merely its label.

4. Agree procedures for notice, objections and record-keeping

A clause stating that a change takes effect “as soon as it is posted on the portal” creates practical risks. Ask which designated email address will receive notices, when changes will take effect and where previous versions will be available. Also clarify whether an employee reading a message or opening the portal will be treated as acceptance of an amendment.

The following arrangements may be useful to negotiate:

• Each new policy should be accompanied by a comparison showing changes from the previous wording.
• Affected franchisees should have an opportunity to ask questions and submit written objections.
• Material amendments should require the consent of named, authorised representatives.
• There should be a process for requesting additional time to comply and receiving a decision.
• Seeking clarification in good faith should not automatically be treated as a breach.

These are safeguards to negotiate into the agreement, not statutory rights you receive automatically. Keep signed documents, policy versions and correspondence about changes. If you disagree with an instruction, seek legal advice before deciding to stop complying with it.

Practical takeaway: Before buying, settle three points in writing: which document takes precedence, what the brand can change unilaterally, and which changes require your express consent.