A franchise agreement is a legal instrument that creates a legally binding relationship between the franchisor and franchisee. It is a document that outlines the terms and conditions put forth by the franchisor for the franchisee. A franchise is governed based on this agreement. It includes all the conditions to which both the parties agree willingly.

A franchisor is the one who offers to sell the franchise to a prospective franchisee. A franchisor sells the franchise whereas the franchisee has rights and obligations to run that particular franchise. A franchisee is granted these rights and obligations through the franchise agreement. This agreement is framed to protect the franchisors Intellectual property. The nature of the agreement is flexible and allows the franchisor to make the necessary changes with time.

There are some basic elements that a franchise agreement incorporates, however, a franchise agreement is not limited to these important elements and may include others as well:

1. Relationship between the franchisor and franchisee: this includes the names of the parties to the contract, defines their duties and obligation in this business arrangement, includes the details on ownership of Intellectual property, etc.
2. Duration: The duration for a franchise needs to be mentioned in the agreement. This includes the length for the franchise to operate.
3. Fees: there are initial and continuing fees paid to the franchisor by the franchisee. Therefore the agreement usually includes this amount. This amount may be paid to the franchisor for advertising the brand in the public domain and keeping up the reputation and goodwill of the brand.
4. Territory: This is not necessary in all the franchise agreements, however; at times the franchisor may assign a particular territory to the franchisee to operate the franchise. However, all the franchise agreement must specify the territory they want the franchise to operate in.
5. Training and support: Before the opening of a franchise, the franchisor may provide the host with the preopening training sessions to the franchisee. This may include field training, supply chain and quality control, headquarters support, etc.
6. Use of IP (Intellectual Property): Intellectual property is one of the main assets of a brand, therefore the agreement needs to define how the franchisee will use this IP and what is licensed to the franchisee.

These are some common elements that are found in a standard franchise agreement. With respect to the Franchise agreement in India, it is important to note that there is no separate law that governs franchise agreement, rather there are various laws, such as:

1. The Indian Contracts Act
2. Competition Act
3. Consumer Protection Act
4. Income Tax Act
5. The Trademarks Act, Design, and Patents Act.
6. FEMA (Foreign Exchange Management Act)

All the franchise business agreements and arrangements are governed under the above-stated act. Therefore the franchise agreement and business both should work and comply with all of the laws stated above.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.