When a restaurant-franchise relationship becomes heated, ending an agreement must be a last resort, writes Vinod Mahboobani
India’s robust economic development, rapidly growing middle-class and rising global brand awareness in the past few decades have resulted in a number of international chains taking a keen interest in the domestic restaurant industry.
International brands entering the country have traditionally adopted a franchising structure in order to quickly and easily establish and expand their local footprint. By appointing one or more master, or larger, franchisees and developing their restaurant network through these partners, franchisors have in most cases grown organically and effectively, considering the country’s immense size, variances in its languages and cultures, and the myriad regulatory issues across states and territories.
The relationship between an international franchisor and its local franchisee is very much based on trust and of paramount importance in the Indian context. Any franchisor looking to succeed in the domestic market should closely look at a number of legal and commercial factors, including but not limited to the domestic legal framework and dispute resolution procedures.
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Vinod Mahboobani is the chief legal officer and general counsel at KFC Global and Pizza Hut International