• Master Franchise agreement

Hi,

We are an international company looking to sign a Master Franchise agreement with an Indian Based company for our brand to grow in India.

Is it better for us to include in the contract that any disputes etc should be dealt by indian jurisdiction only? Specifically, the Master Franchisee has requested courts in Faridabad only.

Or

Should we insist on allowing the agreement to be contested in English courts also or alone?

Please let me know your thoughts asap.
Asked 7 months ago in Business Law from United Kingdom

Dear Client,

This shall be decide by mutual consent of parties, better include arbitration clause and seat of arbitration according to comfort of each other.

Yogendra Singh Rajawat
Advocate, Jaipur
9806 Answers
8 Consultations

4.6 on 5.0

It is advisable that you mention in your agreement that all disputes out of the agreement would be subject to the jurisdiction of India only as foreign courts would not have jurisdiction to try upon disputes in India.

In Arbitration clause of the agreement, the place of arbitration can be mentioned to be some place out of India.

Siddharth Jain
Advocate, New Delhi
3849 Answers
42 Consultations

5.0 on 5.0

Sir first of all I would always advise that in commercial agreement instead of court arbitration clause should be there as Courts in India can take so much time to settle disputes due to pendency of case.

Further if you are going with the court or arbitration then you can give jurisdiction to India, being specific to courts of faridabad.

Further since you are franchisor you are in better position so you can insist English court for jurisdiction.

But i would still suggest that a strong arbitration clause should be there.

Shubham Jhajharia
Advocate, Ahmedabad
15323 Answers
63 Consultations

5.0 on 5.0

Include a mediation clause

both parties can appoint one mediator each and the two mediators so appointed can then appointed an umpire mediator who will then preside over the resolution of dispute qua the agreement through mediation between the parties

the mediator can preside through video conference and the mediation proceedings can happen through video conferencing or video concall so that no one is inconvenienced

only when mediation efforts, the matter can then be referred to a court of competent jurisidicition

avoid arbitration as it is extremely expensive. Not only the parties have to bear the professional fee of their respective lawyers but also the arbitrator fees for every sitting which amplifies the cost manifold

if you agree for the court jurisdiction at Faridabad where the franchisee desires, then do you have an agent deployed in that location who can represent your company in the legal proceedings and be able to give proper instructions to the appointed lawyer?

by law the parties cannot confer jurisdiction on any court.

the jurisdiction of court depends where the agreement is executed and where are the registered offices of the two parties situate?

if you have a registered office/branch in India then in case of any dispute the nearest court having jurisdiction can try the matter - nearest as in, near to the registered office/Indian branch of franchisor

Yusuf Rampurawala
Advocate, Mumbai
3883 Answers
16 Consultations

5.0 on 5.0

Sir in case total transactions are in India then indian courts will have jurisdiction. Court outside shall not have any bearing.

Further can contact for reviewing the document.

Shubham Jhajharia
Advocate, Ahmedabad
15323 Answers
63 Consultations

5.0 on 5.0

avoid arbitration clause

instead request for mediation clause

as operations will be conducted in India, in case of any dispute, the cause of action will also arise in India

will get back on the jurisdiction part by checking relevant provision

i have done franchise agreements but for local businesses. I am based out of Mumbai

the relevant section in civil procedure code is section 20

so in case of dispute, a suit can be filed at a place where the franchisee actually and voluntarily carries on business or works for gain or where the cause of action wholly or in part arises

Yusuf Rampurawala
Advocate, Mumbai
3883 Answers
16 Consultations

5.0 on 5.0

Where is seat of arbitration ? Deciding Court jurisdiction shall have biding effect.

Yogendra Singh Rajawat
Advocate, Jaipur
9806 Answers
8 Consultations

4.6 on 5.0

1) it is better that jurisdiction be vested in Indian courts in event any dispute arise between parties

2) instead of Faridabad it can be subject to jurisdiction of courts at Delhi as you would find more lawyers well versed in contract law in Delhi

Ajay Sethi
Advocate, Mumbai
61328 Answers
3722 Consultations

5.0 on 5.0

Courts outside of India would also have bearing even if the entire cause of action has arisen in India, if the agreement contains a clause where in the jurisdiction to settle disputes would be vested with the following ports and if agreed by both the parties to the agreement then it is absolutely valid as per law of the land.

If you need any legal assistance in this matter, feel free to contact.

Siddharth Jain
Advocate, New Delhi
3849 Answers
42 Consultations

5.0 on 5.0

If there is arbitration clause then courts would not have any jurisdiction in the event of any dispute between parties

2) you can contact any lawyer for vetting the agreement

Ajay Sethi
Advocate, Mumbai
61328 Answers
3722 Consultations

5.0 on 5.0

As per your previous understanding it is better to includes the arbitration clause Indian Court because all the operation after franchise agreement is operative in India only.

A decision from the UK code will be difficult to execute in India and again you have to visit the Indian Court for the execution purpose

Vimlesh Prasad Mishra
Advocate, Lucknow
4900 Answers
12 Consultations

4.9 on 5.0

1) Yes, you can put arbitration Clause in the agreement and jurisdiction clause in the agreement. Depends upon which country company you're signing clause.

Ganesh Kadam
Advocate, Pune
6426 Answers
47 Consultations

4.9 on 5.0

1. Since the franchisee will operate in India, the clause that U.K. court will have the jurisdiction to try any futire disapute between you may not be acceprted by the Indian Court in cae he files any application/suit against you in India.

2. So, it will be prudent on your part to have the clause in the agreement mentioning that Faridabad Court in India will have the jurisdiction in the mjatter.

Krishna Kishore Ganguly
Advocate, Kolkata
21771 Answers
564 Consultations

5.0 on 5.0

As statewd in my earlier post, Indian Court of the place, where the said franchisee will operate from, should have the jurisdiction to try the matter in connection with any future dispute arising between you and your franchisee in India.

Krishna Kishore Ganguly
Advocate, Kolkata
21771 Answers
564 Consultations

5.0 on 5.0

Is it better for us to include in the contract that any disputes etc should be dealt by indian jurisdiction only? Specifically, the Master Franchisee has requested courts in Faridabad only.

If your original jurisdictions for arbitration as per your company rules is in UK, you can even mention the dispute jurisdiction in your country itself, or if you feel that you can accommodate the request of the master franchisee in India, then you can agree to it considering the feasibility about it.

Should we insist on allowing the agreement to be contested in English courts also or alone?

It will depend on the feasibility to conduct the litigation in India by you in case one arises in the future, if you dont foresee the feasibility, then you may stipulate the dispute jurisdictions within your own territory, because the franchisee actually comes under your territorial jurisdiction for all such purposes.

T Kalaiselvan
Advocate, Vellore
51451 Answers
612 Consultations

5.0 on 5.0

there is a strong arbitration clause in the agreement.

My question is wether courts outside of India would have any bearing on the agreement as all operations will be in India.

If you invoke the arbitration clause of the franchisee agreement, whether made in India or elsewhere, it would be valid especially while you are operating from your country.

Also, we require a good franchise lawyer/firm to review our agreement and represent us in India.

You can choose one from this portal also or can look for one through your own sources outside this forum.

T Kalaiselvan
Advocate, Vellore
51451 Answers
612 Consultations

5.0 on 5.0

Dear Querist,

Thank you for your query and providing a concise background.

By way of introduction, I am an Indian advocate who has over the period of many years, inter alia, gained exposure to cross border commercial litigations, particularly worked on and defended a multimillion loan repayment recovery claim before Mercantile court (Queen's Bench Division) which had a very similar jurisdiction issue ( I had worked exclusively with an English Barrister and team of instructing solicitors for a period of a two years on a multitude of matters on these lines).

Coming to your query, I will strongly advise the English courts to have the jurisdictions over the matter. I hope you are aware that the Indian judicial system moves at a snail's pace and a simple breach of contract/damages suit could take anywhere between 3-7 years as a bare minimum. However the only disadvantage would be the cost of litigation in the UK in comparison to in India. In the event, you do pick the Indian jurisdiction, New Delhi should be your choice for a variety of reasons which we can discuss in the event you opt for a consultation with me.

Coming to your second query, as to how will the English Courts be willing to adjudicate a matter which is more or less very 'Indian' in its character. But this concerns aspects of Private International Law (popularly known as conflicts of Law) and the English courts are more likely to entertain a claim. However this completely depends on how clear and concise your agreements are. Having worked on similar issues in the past, I can certainly assist you in drafting and negotiating a contract on these lines.

I hope this assists.

Tanmeet Singh
Advocate, New Delhi
10 Answers

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