Master Franchise Agreement in India: Legal Checklist & Guide (2026)

What is a Master Franchise Agreement?

A Master Franchise Agreement is a sophisticated legal contract wherein the principal brand owner (Franchisor) grants an individual or corporation (Master Franchisee) the exclusive rights to a large geographical territory (e.g., an entire state or country). The Master Franchisee has the right to open company-owned outlets AND the right to sell sub-franchises to third parties within that territory.

Key Clauses in an Indian Master Franchise Agreement

Indian franchise law is not governed by a single comprehensive statute but rather a combination of the Indian Contract Act (1872), the Trademarks Act (1999), and the Competition Act (2002). Here is the essential checklist for drafting an MFA:

• Territorial Exclusivity: Clearly define the geographical boundaries. Is it exclusive or non-exclusive? Can the franchisor operate corporate stores in the same territory?
• Development Schedule: This defines the minimum number of units the Master Franchisee must open or sub-franchise within a specific timeframe (e.g., 50 stores in 5 years). Failure to meet this schedule usually results in loss of exclusivity or termination.
• Fee Structure & Revenue Split:
  • Initial Master Franchise Fee: A large upfront payment for the territorial rights.
  • Sub-Franchise Fee Split: How the fee paid by a new sub-franchisee is divided (e.g., 50% to Master Franchisee, 50% to Franchisor).
  • Ongoing Royalty Split: How monthly royalties collected from sub-franchisees are shared.
• Intellectual Property & Trademarks: A license granted under the Trademarks Act, 1999, allowing the Master Franchisee to use and sub-license the brand's IP.
• Termination & Step-in Rights: If the Master Franchisee fails, the Franchisor usually retains "step-in rights" to take over the sub-franchise contracts directly to protect the brand.