Franchising Association of India (FAI) is holding its annual conclave at the IRF on 28th September 2010. The conclave will see some of the most successful franchisors and franchisees from India and overseas deliberating on the theme ’Franchising – The Future Of Retailing In India’.
Mr C Y Pal Chairman mentioned, "with the increasing spirit of enterprise in the retail sector, the franchising format is finding large and growing presence in hundreds of malls and otherwise all around the country. I believe that IRF 2010 will provide an excellent forum for debating the issues involved for managing orderly growth and for evolving the directional steps that the franchising industry should work towards in the coming years."
The backdrop of the event will revolve around how franchising as a business model has witnessed rapid growth in recent years, along with emergence of many modern retail formats, there is lot more that remains to be done to steer orderly growth of franchising to ensure ongoing successes in this domain and to minimise failures. Simply lobbying with the Government to bring in more regulation is not the right answer to the issues involved. Bringing in transparency and professionalism in Franchisor-Franchisee business relationships based on international best practices is going to be the major challenge.
The Discussion points being:
The current status: The number of franchising systems in the country and projected growth in the coming years.
Issues based on current experience.
Support systems required for orderly growth of the industry.
International best practices: Franchise agreements, disclosure norms.
Do we need Govt involvement and regulation?
Way forward in the coming years.
The conclave aims to foster the spirit of franchising in India which is growing at a very fast pace.The franchise event aims to bring the franchise industry together to discuss how they could collaborate to enhance franchise growth and play a vital role in the future of retailing in India .The conclave will see the franchise leaders and the entire franchise fraternity come together to celebrate the coming of age of franchising in India.
Members of the FAI could register online on:
http://www.indiaretailforum.in/fai.asp
Tags:FAI, Franchise Association India, Franchising Association Of India, Franchise Conclave, Franchise Event, Franchise Industry, franchising systems,india franchise, india franchising.
This Blog/Information/News Item/Press Release has been posted by Sparkleminds, A Franchise Consulting Company Based at Bangalore,India, Offering Complete Franchise Solutions Nationally and Internationally for more than a decade now.Visit www.sparkleminds.com for more details.
Showing posts with label FAI. Show all posts
Showing posts with label FAI. Show all posts
Friday, August 13, 2010
Sunday, April 18, 2010
Franchise Agreement And Franchise Legalities In India
Today, India is one of the biggest emerging markets for various goods and services, ranging from bare necessities to expensive luxuries. Until 1991 due to the archaic Foreign Exchange Regulation Act, 1973 (FERA), almost all sectors of goods and services relating to the consumer markets in India were secure from the grasp of foreign investors. After the repeal of FERA and the coming into force of the Foreign Exchange Management Act, 1999 (FEMA), foreign investors found their passage into India with rules for entry becoming far more favourable. Today, a convenient medium of entry by foreign companies into the Indian market is the franchising model. Franchising also exists as a successful business module for local companies in India within various sectors.
The United States of America stands at the forefront of the franchise boom. Today, the legal environment in the United States is highly conducive to the healthy growth and evolution of franchising. With more than 50% of total retail businesses in the United States, 45% in Canada and 26% in Australia choosing a franchise model for expansion the impact of franchising on retail industries across the globe is considerable. To foster the rapid and sustained growth that this channel brings it is critical that laws to regulate the franchising business exist.
However, there are no laws enacted solely for the purpose of regulating the growing business of franchising in India, even though many nations across the world have enacted such laws. The result is that when franchisors enter India they are governed by a number of different statutes and codes rather than a single comprehensive enactment.
Franchise Laws across the Globe
There are many countries which have developed comprehensive legislation to cover franchising in their respective dominions. At the federal level in the United States, the Federal Trade Commission ’s Rules on Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (1979) regulate the information a franchisor is required to supply the prospective franchisee in order to enable the franchisee to make an informed decision on the prospects of venturing into the business. The North American Security Administration Association (NASSA) has adopted a Uniform Franchise Offering Circular (UFOC) which delineates the information required to be disclosed to a prospective franchisee. Disclosure requirements under franchising are well-defined in the USA.
In 2000, the Ontario Legislature in Canada adopted the Arthur Wishart Act which deals comprehensively with disclosure requirements as well as important aspects of the franchisee-franchisor relationship such as fair dealing by each party to a franchise agreement as regards its performance and enforcement, and the right of action for damages for breach of the duty of fair dealing.
In the United Kingdom, there exists no operative franchise-related legislation. However different aspects are governed by norms laid down by the British Franchise Association (BFA), the regulatory body of the franchise industry in the United Kingdom. These include a code of ethical conduct, disciplinary procedure, complaints procedure and appeals procedure.
The Australian government has adopted a mandatory code of conduct and has also modified the Trade Practice Act 1974 to provide for franchising. The new code imposes comprehensive disclosure requirements and provides for mandatory mediation of franchising disputes and minimum standards for franchise agreements including, inter alia, a cooling period, refrain from seeking from a franchisee a general release liability, disclosing material facts and refrain from unreasonably withholding consent to transfer of the business.
In April 2002, the Japan Fair Trade Commission (JFTC), the competition authority of Japan, published new guidelines on franchising. These guidelines contain three parts - a general description of franchising, provisions for the disclosure of necessary information (such as details of the assistance to be offered to franchisees, the nature, amount and conditions of repayment, if any, of the fee to be paid at the time of entering into a franchise agreement, etc.) at the time of the offer of a franchise and a part on vertical restraints between a franchisor and its franchisees. Under the guidelines, the failure to provide necessary information shall constitute deceptive customer inducement, which is considered an unfair trade practice.
On 31 December 2004 the Ministry of Commerce of the People’s Republic of China promulgated the Measures for the Regulation of Commercial Franchises which became the sole legal framework for franchising in China. The measures became operative on 1 February 2005 and provide detailed regulations for franchising, comprising of 42 articles over nine chapters covering a wide span of areas from the franchise agreement to disclosure requirements, special rules for foreign invested enterprises and legal liabilities.
Need for a Franchise Law in India
A healthy legal environment is of great importance for franchising and should include provisions pertaining to all areas that fall within the ambit of franchising. This includes, inter alia, commercial law relating to contracts and joint ventures and intellectual property law for protection of trade marks and know-how. Franchise arrangements are subject to an array of laws and regulations in addition to those regulating commercial contracts and intellectual property rights. There are no specific laws governing franchising in India. As a result a draft franchise agreement may be governed by different laws.
Primarily a franchise agreement is a contract between the franchisor and the franchisee. The first law which comes into the picture is the Contract Act 1872 which governs contracts in India. A franchise agreement will be governed by the Indian Contract Act, 1872 and the Specific Relief Act, 1963 which provides for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract. If a party to the franchise agreement commits a breach of contract, the aggrieved party has the option to initiate a suit for specific performance in Indian courts and apply for relief in the form of a temporary or permanent injunction, which may be granted at the discretion of the court considering the balance of convenience and the interests of justice. An order granting or rejecting an injunction may be appealed by an aggrieved party.
Laws relating to taxation, property laws, insurance law and labour laws also apply to franchise transactions. Additionally, laws and regulations applying to specific sectors of goods and services will also apply depending on the franchised.
The following are the reasons why a comprehensive franchise law is required in India:
Application of Multiple Legislation
A well-defined legal structure is indispensable for the effective functioning of any business operation. The international business environment demands a well-defined suitable legislation that is complete in all respects. The lack of a comprehensive legislation on franchising in India leads to the applicability of multiple laws to a franchise transaction.
This poses the following problems:
Complexities: Parties to a contract normally prefer agreements with a simple approach and encompassing all the required law procedures and rules required to be complied with. However the application of different laws to one agreement makes it complex to decide various issues arising from the agreement.
Ambiguities: Due to the necessary application of multiple legislation, ambiguities are created as to certain issues. For example, a franchisor would imagine that a certain issue is the franchisee’s responsibility under one law, whereas the franchisee would think the opposite based on a different law.
Time-Consuming: Referring to multiple laws consumes a lot of time at the initial stages of a transaction as well as other points of time when the agreement is sought to be enforced. This proves to be detrimental to the smooth functioning of franchising operations in India and also makes time-bound operations involving new enterprises difficult.
Absence of Disclosure Requirements
Countries with specific franchising legislation make it imperative for parties to a franchise agreement to disclose certain factual information pertaining to the business of the parties. This ensures transparency and facilitates an informed decision. A franchisor should be required, by law, to make certain disclosure to the prospective franchisee wherein he is supposed to reveal detailed information regarding himself, his litigation and bankruptcy history, his financial position, the facilities he offers etc. In India, in the absence of effective disclosure norms, a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures.
In the absence of a specific statute governing the franchise agreement, the franchisor refrains from providing any information that is likely to prejudice or make a franchisee reconsider the business proposition of the franchisor. The lack of proper disclosure requirements provides a golden opportunity to a franchisor to abuse his position of importance as he is virtually under no statutory obligation to make the requisite disclosure.
Applicability of Laws of other Countries
Normally, the absence of franchise laws enables foreign franchisors to make the laws of their own country applicable to the agreements entered into with the franchisees in India. The same is the case with franchisors who enter into franchising agreements with franchisees from other countries. This proves to be an additional burden on the parties, particularly the franchisee.
Lack of Proper Format for Franchising Agreements
Due to lack of a specific format, franchisors from other countries draft agreements which are in the same format as is approved or followed in their countries. Such agreements are made to suit the specific environment of their respective countries and hence are not suitable for Indian environment.
Liability of Parties Uncertain
Due to the lack of specific legislation, the liability of either party is either determined by the agreements entered into between them or on the basis of general prevailing law. The liability clause is different in different countries, and this leads to a great discrepancy among the courts which try such disputes on liabilities.
The Central Government is currently considering a franchise law aimed at fast resolution of disputes; the proposal is expected to be placed before a sub-committee of the National Development Council. The aforesaid problems surrounding franchising in India necessitate the enactment of a specific legislation pertaining to franchising in India and providing for the gamut of activities that franchising encompasses. A special franchise law would greatly accelerate dispute resolutions and fortify the Indian retail industry.
Source:Franchising Association Of India.FAI,
The United States of America stands at the forefront of the franchise boom. Today, the legal environment in the United States is highly conducive to the healthy growth and evolution of franchising. With more than 50% of total retail businesses in the United States, 45% in Canada and 26% in Australia choosing a franchise model for expansion the impact of franchising on retail industries across the globe is considerable. To foster the rapid and sustained growth that this channel brings it is critical that laws to regulate the franchising business exist.
However, there are no laws enacted solely for the purpose of regulating the growing business of franchising in India, even though many nations across the world have enacted such laws. The result is that when franchisors enter India they are governed by a number of different statutes and codes rather than a single comprehensive enactment.
Franchise Laws across the Globe
There are many countries which have developed comprehensive legislation to cover franchising in their respective dominions. At the federal level in the United States, the Federal Trade Commission ’s Rules on Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (1979) regulate the information a franchisor is required to supply the prospective franchisee in order to enable the franchisee to make an informed decision on the prospects of venturing into the business. The North American Security Administration Association (NASSA) has adopted a Uniform Franchise Offering Circular (UFOC) which delineates the information required to be disclosed to a prospective franchisee. Disclosure requirements under franchising are well-defined in the USA.
In 2000, the Ontario Legislature in Canada adopted the Arthur Wishart Act which deals comprehensively with disclosure requirements as well as important aspects of the franchisee-franchisor relationship such as fair dealing by each party to a franchise agreement as regards its performance and enforcement, and the right of action for damages for breach of the duty of fair dealing.
In the United Kingdom, there exists no operative franchise-related legislation. However different aspects are governed by norms laid down by the British Franchise Association (BFA), the regulatory body of the franchise industry in the United Kingdom. These include a code of ethical conduct, disciplinary procedure, complaints procedure and appeals procedure.
The Australian government has adopted a mandatory code of conduct and has also modified the Trade Practice Act 1974 to provide for franchising. The new code imposes comprehensive disclosure requirements and provides for mandatory mediation of franchising disputes and minimum standards for franchise agreements including, inter alia, a cooling period, refrain from seeking from a franchisee a general release liability, disclosing material facts and refrain from unreasonably withholding consent to transfer of the business.
In April 2002, the Japan Fair Trade Commission (JFTC), the competition authority of Japan, published new guidelines on franchising. These guidelines contain three parts - a general description of franchising, provisions for the disclosure of necessary information (such as details of the assistance to be offered to franchisees, the nature, amount and conditions of repayment, if any, of the fee to be paid at the time of entering into a franchise agreement, etc.) at the time of the offer of a franchise and a part on vertical restraints between a franchisor and its franchisees. Under the guidelines, the failure to provide necessary information shall constitute deceptive customer inducement, which is considered an unfair trade practice.
On 31 December 2004 the Ministry of Commerce of the People’s Republic of China promulgated the Measures for the Regulation of Commercial Franchises which became the sole legal framework for franchising in China. The measures became operative on 1 February 2005 and provide detailed regulations for franchising, comprising of 42 articles over nine chapters covering a wide span of areas from the franchise agreement to disclosure requirements, special rules for foreign invested enterprises and legal liabilities.
Need for a Franchise Law in India
A healthy legal environment is of great importance for franchising and should include provisions pertaining to all areas that fall within the ambit of franchising. This includes, inter alia, commercial law relating to contracts and joint ventures and intellectual property law for protection of trade marks and know-how. Franchise arrangements are subject to an array of laws and regulations in addition to those regulating commercial contracts and intellectual property rights. There are no specific laws governing franchising in India. As a result a draft franchise agreement may be governed by different laws.
Primarily a franchise agreement is a contract between the franchisor and the franchisee. The first law which comes into the picture is the Contract Act 1872 which governs contracts in India. A franchise agreement will be governed by the Indian Contract Act, 1872 and the Specific Relief Act, 1963 which provides for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract. If a party to the franchise agreement commits a breach of contract, the aggrieved party has the option to initiate a suit for specific performance in Indian courts and apply for relief in the form of a temporary or permanent injunction, which may be granted at the discretion of the court considering the balance of convenience and the interests of justice. An order granting or rejecting an injunction may be appealed by an aggrieved party.
Laws relating to taxation, property laws, insurance law and labour laws also apply to franchise transactions. Additionally, laws and regulations applying to specific sectors of goods and services will also apply depending on the franchised.
The following are the reasons why a comprehensive franchise law is required in India:
Application of Multiple Legislation
A well-defined legal structure is indispensable for the effective functioning of any business operation. The international business environment demands a well-defined suitable legislation that is complete in all respects. The lack of a comprehensive legislation on franchising in India leads to the applicability of multiple laws to a franchise transaction.
This poses the following problems:
Complexities: Parties to a contract normally prefer agreements with a simple approach and encompassing all the required law procedures and rules required to be complied with. However the application of different laws to one agreement makes it complex to decide various issues arising from the agreement.
Ambiguities: Due to the necessary application of multiple legislation, ambiguities are created as to certain issues. For example, a franchisor would imagine that a certain issue is the franchisee’s responsibility under one law, whereas the franchisee would think the opposite based on a different law.
Time-Consuming: Referring to multiple laws consumes a lot of time at the initial stages of a transaction as well as other points of time when the agreement is sought to be enforced. This proves to be detrimental to the smooth functioning of franchising operations in India and also makes time-bound operations involving new enterprises difficult.
Absence of Disclosure Requirements
Countries with specific franchising legislation make it imperative for parties to a franchise agreement to disclose certain factual information pertaining to the business of the parties. This ensures transparency and facilitates an informed decision. A franchisor should be required, by law, to make certain disclosure to the prospective franchisee wherein he is supposed to reveal detailed information regarding himself, his litigation and bankruptcy history, his financial position, the facilities he offers etc. In India, in the absence of effective disclosure norms, a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures.
In the absence of a specific statute governing the franchise agreement, the franchisor refrains from providing any information that is likely to prejudice or make a franchisee reconsider the business proposition of the franchisor. The lack of proper disclosure requirements provides a golden opportunity to a franchisor to abuse his position of importance as he is virtually under no statutory obligation to make the requisite disclosure.
Applicability of Laws of other Countries
Normally, the absence of franchise laws enables foreign franchisors to make the laws of their own country applicable to the agreements entered into with the franchisees in India. The same is the case with franchisors who enter into franchising agreements with franchisees from other countries. This proves to be an additional burden on the parties, particularly the franchisee.
Lack of Proper Format for Franchising Agreements
Due to lack of a specific format, franchisors from other countries draft agreements which are in the same format as is approved or followed in their countries. Such agreements are made to suit the specific environment of their respective countries and hence are not suitable for Indian environment.
Liability of Parties Uncertain
Due to the lack of specific legislation, the liability of either party is either determined by the agreements entered into between them or on the basis of general prevailing law. The liability clause is different in different countries, and this leads to a great discrepancy among the courts which try such disputes on liabilities.
The Central Government is currently considering a franchise law aimed at fast resolution of disputes; the proposal is expected to be placed before a sub-committee of the National Development Council. The aforesaid problems surrounding franchising in India necessitate the enactment of a specific legislation pertaining to franchising in India and providing for the gamut of activities that franchising encompasses. A special franchise law would greatly accelerate dispute resolutions and fortify the Indian retail industry.
Source:Franchising Association Of India.FAI,
Friday, April 2, 2010
Franchise Courses and Training Programme Launched By Indian Franchising Association.
A study by Indian Franchise Association
Bridging practical training gap would be the biggest challenge for education institutes post economic recovery
New Delhi, Delhi, March 31, 2010 /India PRwire/ -- New Delhi- April 1, 2010: Indian Franchise Association (IFA) has taken an initiative of launching India's first short term professional training courses on retail and franchising for MBA students and working executives. In India, 400,000 engineers graduated last year but only one in four of them was employable, rest could not make through due to lack of required technical skills, fluency in English, ability to work in a team or delivering basic oral presentations. Similarly the case with management education, hence the core objective of these training courses would be to make them employable. IFA has aggressive plans to promote short term professional training courses by establishing training centres in various parts of the country to educate students or professionals on the modalities of franchising and retail.
On certification courses introduction, Mr. Arvind Singhatiya, Head-Training and Content, Indian Franchise Association, said "It's indeed a landmark education initiative by IFA for management students and working professionals, as this will benefit them with expert training vis-à-vis seamless support for their placement in the burgeoning modern retail and franchise sector. We are in the process of tying up with B- schools, franchise companies and retail organizations to create a common podium for knowledge workers and seeking companies".
Commenting on the continuous demand in the market with an optimistic approach, Mr. Singhatiya further added, "Economy is bouncing back, this time in a big way; this will lead to an enormous demand of trained professionals and these training sessions are so tailored as to prepare students to meet industry needs and bridge the gap between education and practical training".
Experts agree that India's knowledge based economy needs dynamic and analytical knowledge workers who can become the motivating force for innovation and growth in this country. Professional training is need of the hour and it would add immense value if induced with the regular professional courses.
These short terms courses are one of their kind and a first step in India taken by IFA towards youth for them to understand fresh franchise business models and patterns adopted in the practical marketplace to excel in future for their growth.
Notes to Editor
About Indian Franchise Association
Indian Franchise Association (IFA) is India's premier, non-political, not-for-profit body representing Indian Franchise Sector. IFA's endeavor is to promote, promulgate and popularize the concept of franchising as a mode of doing business across the industry verticals and to nurture the entrepreneurial skill of every Indian. IFA is acting as a catalyst for franchise and modern retail sector's growth through various policy papers, conference, B2Bs workshops and liaison with the government of India for policy issues.
Bridging practical training gap would be the biggest challenge for education institutes post economic recovery
New Delhi, Delhi, March 31, 2010 /India PRwire/ -- New Delhi- April 1, 2010: Indian Franchise Association (IFA) has taken an initiative of launching India's first short term professional training courses on retail and franchising for MBA students and working executives. In India, 400,000 engineers graduated last year but only one in four of them was employable, rest could not make through due to lack of required technical skills, fluency in English, ability to work in a team or delivering basic oral presentations. Similarly the case with management education, hence the core objective of these training courses would be to make them employable. IFA has aggressive plans to promote short term professional training courses by establishing training centres in various parts of the country to educate students or professionals on the modalities of franchising and retail.
On certification courses introduction, Mr. Arvind Singhatiya, Head-Training and Content, Indian Franchise Association, said "It's indeed a landmark education initiative by IFA for management students and working professionals, as this will benefit them with expert training vis-à-vis seamless support for their placement in the burgeoning modern retail and franchise sector. We are in the process of tying up with B- schools, franchise companies and retail organizations to create a common podium for knowledge workers and seeking companies".
Commenting on the continuous demand in the market with an optimistic approach, Mr. Singhatiya further added, "Economy is bouncing back, this time in a big way; this will lead to an enormous demand of trained professionals and these training sessions are so tailored as to prepare students to meet industry needs and bridge the gap between education and practical training".
Experts agree that India's knowledge based economy needs dynamic and analytical knowledge workers who can become the motivating force for innovation and growth in this country. Professional training is need of the hour and it would add immense value if induced with the regular professional courses.
These short terms courses are one of their kind and a first step in India taken by IFA towards youth for them to understand fresh franchise business models and patterns adopted in the practical marketplace to excel in future for their growth.
Notes to Editor
About Indian Franchise Association
Indian Franchise Association (IFA) is India's premier, non-political, not-for-profit body representing Indian Franchise Sector. IFA's endeavor is to promote, promulgate and popularize the concept of franchising as a mode of doing business across the industry verticals and to nurture the entrepreneurial skill of every Indian. IFA is acting as a catalyst for franchise and modern retail sector's growth through various policy papers, conference, B2Bs workshops and liaison with the government of India for policy issues.
Subscribe to:
Posts (Atom)