Franchise Agreement (India) by OLL
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DRAFT OF FRANCHISE AGREEMENT
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This template is a Franchise Agreement designed for a company to appoint an agent to operate a retail outlet in India. It outlines the responsibilities for furnishing the premises, managing stock on a consignment basis, and the payment of sales commissions to the agent.
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About this template
What is this template?
This document is a hybrid franchise and consignment agency agreement where the franchisor retains ownership of the inventory. It is not a standard sale-and-purchase franchise; instead, the agent receives a percentage commission on realized sales rather than buying stock upfront. It contains specific requirements for daily remittance of cash proceeds and the provision of a bank guarantee to cover stock value.
When should you use it?
Use this when a manufacturer wants to control retail pricing and inventory ownership while an agent provides the local premises and staff. If the agent is intended to purchase the stock outright for resale, use a standard Distribution Agreement or a Sale and Distribution Agreement instead.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 4 | Stocks and Consignment | Establishes that inventory remains the property of XYZ Limited while held by the Agent for retail sale at fixed prices. |
| THE AGENT COVENANTS WITH THE COMPANY | Agent Covenants | Prohibits the Agent from engaging in similar businesses or selling competing goods during the term of the agreement. |
| 7 | Remittance of Sale Proceeds | Obliges the Agent to remit the entire sale proceeds of the preceding day to the company's designated account every day. |
| 10 | Bank Guarantee | Requires the Agent to provide an irrevocable Bank Guarantee for a specific Rupee amount to cover the value of consignment stocks. |
| DURATION | Duration and Termination | Sets a fixed term in years and allows XYZ Limited to terminate unilaterally if the agent commits an act of bankruptcy. |
| CONSIDERATION | Consideration | Entitles the Agent to a commission at a specific percentage of the net sale price, payable by the 10th day of the month. |
| SECURITY DEPOSIT | Security Deposit | Mandates a refundable interest-free deposit in Rupees to ensure the performance of obligations under the agreement. |
Who it's for
- an Indian company appointing a partnership firm as a consignment agent for retail products
- a firm providing commercial premises free of cost to run a franchised retail outlet
- parties requiring a commission-based franchise model backed by an irrevocable bank guarantee
How long it runs and how it's signed
Law it's drafted under
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