FRANCHISE AGREEMENT
This AGREEMENT entered into on the ______ day of ____________, 20____,
BETWEEN ____________________ Limited, a Company incorporated under the Companies Act, 1956 or the Companies Act, 2013, having its Registered Office at ____________________, represented herein by its ____________, Shri ____________________ (hereinafter referred to as "XYZ Limited", which expression shall, whenever the context so requires or admits, mean and include its successors and assigns) of the ONE PART;
AND
M/s ____________________, a Partnership Firm, having its place of business at ____________________, represented herein by its Partner Shri ____________________ (hereinafter referred to as the "AGENT", which expression shall, unless the context so requires or admits, mean and include its Partners for the time being, their heirs, legal representatives, executors and permitted assigns) of the OTHER PART.
WHEREAS XYZ Limited is engaged, inter alia, in the business of marketing ____________ products, and is the owner of the trade name and trademark "XYZ";
WHEREAS XYZ Limited is desirous of promoting ____________ products under its trade name and trademark by setting up a chain of retail outlets all over the country on its own, as also by appointing stockists, retailers and franchisees for the purpose of setting up retail outlets;
WHEREAS the Agent has offered to set up one such Retail Outlet in the City of ____________, and has represented to XYZ Limited that it is in a position to invest the necessary capital, and is also possessed of suitable premises to set up and carry on the Retail Outlet, and XYZ Limited has accepted the said offer;
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:
That in consideration of the foregoing, the Company hereby appoints M/s ____________ as its Agent in the City of ____________, upon the following terms and conditions:
1. The retail outlet for marketing ____________ products under the name and style of "XYZ" shall be set up and run in the premises made available by the Agent, which premises is more fully described in the Schedule ("Premises"). The premises will be made available free of cost or charges to XYZ Limited by the Agent during the subsistence of this Agreement.
2. The Agent will meet and bear the entire cost of furnishing and decorating the interior and exterior of the Schedule Premises in accordance with the specifications and requirements of XYZ Limited, particularly touching upon the following aspects — elevation, décor and interior design, selection of furniture, fittings, counters and stands, lighting system, illumination, mannequins, window display, air-conditioning, fire-fighting equipment, furnishings, flooring, etc. — the cost of which is estimated to be of the order of Rs. ____________ (Rupees ____________). He shall also provide necessary warehousing facilities and office space for the Company's representatives.
3. The name of the shop shall be promptly and clearly displayed as ____________________.
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About this template
What is this template?
This is a hybrid franchise and consignment agency contract used for setting up branded retail outlets. It differs from a standard franchise by keeping stock ownership with the franchisor and requiring daily sales remittances rather than monthly royalty payments.
When should you use it?
Use this when the principal company intends to control the inventory and pricing while the agent provides the physical shop and staff. Use a Distribution Agreement instead if the shop owner is purchasing the stock outright for resale.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 4 | Stocks | The Company retains ownership of all stocks provided to the Agent on a consignment basis for retail sale at fixed prices. |
| Agent Covenant 7 | Remittance of Sale Proceeds | The Agent must remit the entire sale proceeds of the preceding day to the Company's designated account every single day. |
| Agent Covenant 10 | Bank Guarantee | The Agent must furnish an irrevocable Bank Guarantee for a specified amount in Rupees to cover the consignment stock value. |
| DURATION | Duration | The agreement lasts for a specified number of years and allows for termination by either party with a set notice period. |
| CONSIDERATION | Consideration | The Agent receives a commission at a specific percentage of the net sale price, excluding GST and other local taxes. |
| SECURITY DEPOSIT | Security Deposit | The Agent provides a refundable interest-free deposit via Pay Order to ensure the performance of all contractual obligations. |
Who it's for
- an Indian company appointing a partnership firm to operate a branded retail outlet on a consignment basis
- a business owner providing commercial premises to sell a manufacturer's stock for a percentage-based commission
- a retail franchisor requiring daily remittance of sale proceeds and a bank guarantee from its agents
How long it runs and how it's signed
Law it's drafted under
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