Franchising as a method for expanding a business into new commercial centres has spread all around the globe, distinctive nations have distinctive laws which are pertinent to franchising.
In the United States of America there are a number of laws overseeing the franchising business. These laws oversee the franchisor-franchisee relationship requiring all franchise offerings to be enlisted and franchisors to give all the disclosure documents. Different nations with a high level of franchise laws are Australia, Brazil and Malaysia.
In numerous different areas of the world there are no specific laws set up administering the franchise business. In these places more basic laws are applicable to the franchise business, for example, in the European Union where franchise relationships are administered by competition laws.
In India while there are no specific franchise laws, there are a number of laws and regulations that can be made pertinent to franchising. These laws incorporate those addressing to competition, consumer protection, IP, labour, property and obviously tax assessment.
Below given are the laws governing franchising in India:
The Competition Act was ordered by the Competition Commission of India in 2002 however did not come into full action until 2009. The act aims to promote competition and flexibility of exchange / trade, secure consumers and avert anti competition agreements and exercises that adverse effect competition in India. In franchising The Completion Act expects to guarantee that tie-in arrangements, exclusive supply and distribution agreements and resale value support don’t hinder competition in the commercial space.
INTELLECTUAL PROPERTY LAWS
There are four acts covering Intellectual Property Rights (IPRs) in India; The Copyright Act (1957), The Patents Act (1970), The Trademarks Act (1999) and the Designs Act (2000). These rights are fundamental to the survival of the franchise business and give protection to trademarks, licenses and registered design and enable legitimate activities to be brought against outsiders for encroachment of these rights.
CONSUMER PROTECTION LAWS
The Consumer Protection Act was started in 1986 to give plan of action to buyers who get blemished products or experience unacceptable service. Under these laws consumers are urged to file complaints and could file an action against a franchisor, a franchisee or both relying upon the way of the franchise agreement.
THE FOREIGN EXCHANGE MANAGEMENT ACT
Established in 1999, this act represents payments in foreign currency and is for the most part relevant to cross-border franchise agreement.
There are a number of labour laws in India that might be relevant to franchises subsequently it is critical that the franchisee and franchisor know about these and that obligations in connection to workforce are unmistakably portrayed in the franchise agreement.
INCOME TAX ACT
The Income Tax Act of 1961 represents the tax parts of any franchise in India and furthermore that a cross-border franchisor comply with local tax regulations concerning any relevant tax treaties.
THE ARBITRATION AND CONCILIATION ACT
Established in 1996 The Arbitration and Conciliation Act administers the India law of residential and worldwide arbitrations. This law may come into impact on account of franchisee-franchisor disputes.
PROVINCIAL INSOLVENCY ACT
The Provincial Insolvency Act of 1920 comes into picture on account of individual franchise unit or franchise chain financial related bankruptcy.
RESERVE BANK OF INDIA RULES
The franchising agreement is also subject to all guidelines issued by the Reserve Bank of India (RBI).