How to Set Franchise Software Terms in India

When turning an existing business into a franchise, billing, ordering and inventory software is often treated as a ready-made solution. Yet giving another business access to the account used in your own shop is not always lawful or practical. Clear technology terms protect franchisees from unexpected costs and the brand from operational disruption. Start not by buying software, but by setting out rights and responsibilities in writing.

1. First, check that you have the right to share the software

List every system the new outlet will need to operate: billing, online ordering, inventory management, customer membership and payment systems. For each one, record who owns it, whose name is on the contract and on what basis the franchisee will be entitled to use it.

A software subscription does not automatically give you the right to make it available to a separate legal entity. Check the provider’s terms: do they permit multiple shops, separate companies and additional users? Will each franchisee need a separate contract, or will their account sit under your master agreement?

For bespoke software, check your agreement with the developer too. Do not assume that payment alone transfers all intellectual property rights to you. The rights to use, modify and maintain the software, and to give other franchisees access, should be explicit.

Prepare a technology schedule listing mandatory systems, authorised users, required equipment and responsibility for setting up accounts. Make it part of the franchise agreement; keep day-to-day usage instructions in the operations manual.

2. Make fees and support measurable

A phrase such as ‘software included’ is not enough. It could mean initial installation or only access for a limited period. Franchisees should understand the full cost before signing.

Set out the following separately in the technology schedule:

• Who will pay for installation, equipment and migration of existing data.
• Whether recurring subscription fees will be charged per outlet, device or user.
• The charges for additional features, messaging and integrations with external systems.
• How applicable taxes and provider price increases will be handled.
• Who will provide support and during what hours.

Specify separate timescales for acknowledging technical issues and resolving them. A complete billing outage at an outlet and an incorrectly formatted report should not have the same priority. Define how issues should be reported, who is responsible and how unresolved problems will be escalated.

Do not promise franchisees greater service availability than the provider commits to. If service may be suspended for maintenance, agree how notice will be given and suitable maintenance windows. The written arrangements must be achievable in practice.

3. Plan how outlets will operate during an outage

An internet outage at one outlet and a software failure across the entire network are different situations. Prepare fallback procedures for both. Can limited operations continue offline? Which sales will need to stop? What details must be retained for entry into the system later?

Fallback billing procedures must comply with applicable tax and invoicing rules. Simply writing amounts on paper is not an adequate arrangement for every business. Have your accountant and technology provider check the process.

Access controls should also be clear. Give each employee permissions appropriate to their role; do not use one shared password across all outlets. Assign responsibility for revoking access when employees leave and for reporting suspicious activity.

Document how often data will be backed up, who will hold the backups and when restoration will be tested. Creating a backup and being able to restore operations from it are two different things.

Records should remain available if you change providers or the franchise relationship ends. Agree the format in which franchisees will receive the business records they are legally entitled to retain, how long access will remain available and who will help with the transfer. Transfers or deletion of personal information must comply with applicable legal obligations.

4. Review the terms under Indian law

India has no separate national franchise law, mandatory franchise disclosure document or central franchise registration system. This does not mean technology terms fall outside the law. The Indian Contract Act, 1872 provides the main framework for contracts, free consent, performance and breach. Avoid misleading claims about features and support.

The Copyright Act, 1957 is relevant to software rights. Brand use falls under the Trade Marks Act, 1999, while arrangements such as mandatory technology purchases may require review under the Competition Act, 2002, depending on the circumstances. Applicable tax, information technology and personal data protection obligations should also be checked separately.

Practical takeaway: Before granting your first franchise, prepare a written technology schedule covering usage rights, the full cost, support, fallback operations and the return of records. Then ask the software provider and your legal adviser to check that the promises made can actually be delivered.