How to Allocate Responsibility for Franchise Customer Complaints in India

When franchising your existing business in India, it is risky to treat customer complaints as solely the outlet’s responsibility. Customers often make no distinction between the local operator and the brand owner. To maintain trust across your franchise network, establish clear arrangements for receiving complaints, approving remedies and sharing costs before granting your first franchise. This guide focuses on that division of responsibility.

1. Distinguish contractual arrangements from customers’ legal rights

India has no separate central franchising law, mandatory franchise disclosure document or central franchise registration system. This does not mean that your agreement alone governs customer complaints. General laws and sector-specific rules also apply.

The Indian Contract Act, 1872 provides a key basis for responsibilities and contractual remedies between the brand owner and the franchisee. The Consumer Protection Act, 2019 is important for customer rights relating to defective goods, deficiencies in services and unfair trade practices. Its product liability provisions may also be relevant.

Which party is legally liable will depend on its actual role, the promises made and the facts of the case. Both parties are not automatically liable for every complaint. However, stating in the agreement that “all complaints are the franchisee’s responsibility” does not remove the brand owner’s potential statutory liability.

Ask a lawyer to check that your policy does not claim to restrict customers’ legal rights. A clause allocating costs between the parties is not a substitute for the legal remedies available to customers.

2. Assign responsibility according to the type of complaint

Rather than using the same process for every complaint, categorise complaints by cause and severity. For each category, identify who will receive the complaint, who will make decisions and who will escalate it when necessary.

An initial responsibility checklist could look like this:

• Local service failings: The local manager should handle complaints about slow service, incorrect bills or staff conduct.
• Potentially defective goods: The outlet should collect proof of purchase and product details; the brand team and relevant supplier should be involved in the investigation.
• Promises made in brand advertising: If a benefit advertised in a central campaign is not provided, the brand team should help decide on a remedy.
• Safety or health complaints: The local team should prioritise the customer’s immediate safety and notify the designated senior contact without delay.

These are suggested internal arrangements, not a definitive allocation of legal liability. Appoint a primary contact and a backup in case they are unavailable. Do not pass customers from one party to another while internal responsibility is being determined.

3. Set out authority to provide remedies separately from responsibility for costs

Authority to accept a complaint, authority to issue a refund and responsibility for bearing the final cost are three separate matters. Do not combine them in one vague sentence.

In a schedule to the agreement, specify when the local manager may replace goods, provide a service again or approve a refund. Also state whose approval is needed beyond those limits and what happens if no response is received. Set deadlines according to your actual operational capacity and applicable legal requirements; do not present them as universal legal rules.

Internal cost allocation can be settled after the customer has received a remedy. For example, it may not be appropriate to allocate the cost of a local billing error on the same basis as the cost of a misleading promise in a central advertising campaign. Where the cause is disputed, establish a process for provisional payment, review of evidence and final settlement between the parties.

A voucher is not a substitute for a refund in every situation. Any commercial resolution must comply with applicable law and respect the customer’s rights.

4. Keep complaint records without collecting unnecessary information

Give each complaint a reference number. Record the purchase date, the outlet concerned, the problem, the remedy requested, communications and the final decision. Create a written record of verbal complaints too, so that cases are not lost when staff change.

Where relevant, retain receipts, product photographs, batch details or service booking records. Collect only the personal information needed to resolve the complaint. Set rules for access, security, retention and sharing in line with applicable data protection requirements.

Before closing a case, tell the customer what remedy has been agreed and its current status. Approval of a refund and actual payment are different stages. Both should be clearly shown in the record.

5. Test the arrangements before granting your first franchise

Run simulated complaints involving an incorrect bill, a defective product and a safety issue. Check whether staff can identify the right contact, gather the necessary evidence and obtain approval without bottlenecks. Also establish a joint review process for recurring causes of real complaints.

Keep decision-making authority and cost responsibilities in the agreement, and complaint-handling steps in the day-to-day operating instructions. The two documents must not conflict.

Practical takeaway: Before granting your first franchise, prepare a one-page responsibility checklist, clear authority to approve remedies and a shared complaints register. Keeping the customer’s remedy separate from the internal settlement between the parties makes accountability clearer.