Franchisor not refunding deposit amount and threatening for using brand name
4 months ago
Hi,
I have made deposit amount of Rs. 3 Lakh each for franchise business to the Franchisor for two locations "X" and "Y".
I have started the business in "X" Location and after 2.5 years, the business was not suitable for me and raised concern with franchisor that the business was not suitable for me, they have not provided enough support and stated:
1. I am ready to transfer ownership of the "X" business to anyone that brand appoints and directs
2. Not ready to proceed further to start business in "Y" location and requested refund of Rs. 3 Lakh deposit ( I have made the deposit through RTGS and not signed any agreement)
Even after multiple follow up mails the Franchisor, they have not responded to any of the mail communication for Rs. 3Lakh deposit refund.
So, after 3 years post mail communication, I have decided to withdraw from the Franchisor (dropped mail to the franchisor team) and stopped Royalty payments.
In mail communication, I had stated that I am removing board names from my premises (shared pictures to the brand) and for complete removal of brand references in my bills and social media platforms, the franchisor should refund the deposit amount of "Rs 3Lakh" paid for "Y" location.
There was no response from the Franchisor even to that mail and so I have reinstated all the brand name in my premises.
Now, after 2 years the franchisor dropped mail stating that I am unauthorisedly using the brand names and I should pay the royalty for using the brand name.
I replied back, quoting all earlier mails and RTGS payment snapshot to them and stated that
1. Since, they have not responded to my mails for 2 years, I have reinstated all the brand name in my premises.
2. If they want to remove brand name from my premises, they should refund back my deposit amount for Rs. 3Lakh with interest.
3. I will not make payment for any Royalty in 2 years, since they have read my mails and not responded to it.
We appreciate your expertise and insights on the legal aspects of this matter. Your guidance will be invaluable in navigating this dispute.
Thank You.
A franchise agreement is a contract under which the franchisor grants the franchisee the right to operate a business or offer, sell, or distribute goods or services identified or associated with the franchisor's trademark. The legal requirements for a franchise agreement in India include disclosure of material facts, clear specification of terms, and compliance with intellectual property laws. The agreement must also specify the terms and conditions for termination, non-compete clauses, and governing law and jurisdiction. Indian Contract Act, 1872 governs the validity, interpretation, and enforcement of the franchise agreement. It establishes the contractual rights and obligations of both parties and provides remedies for breaches of contract. Improper management and operations are the leading cause of business failure, which led to the sale of the business to a third party who became the new franchisee for that territory. This allows the failing franchisee to terminate its obligations under the franchise agreement and under any lease. With the one-sided contractual terms at some point in time, the other parties had no other choice except to sign on the dotted line, on the contract which is formulated by the other parties of the contract. In this situation, the terms of a contract will not be final and binding. A party in a contract couldn’t strive with the other party with the one-sided contractual terms. A dispute arising out of Franchising is considered a commercial dispute and comes under the purview of the Commercial Court Act, 2015 which was enacted to establish a distinct procedural framework for dealing with commercial disputes above a certain specific value. The main objective of the Act is to enable a speedy redressal of commercial disputes in India. Commercial disputes include any dispute arising out of a commercial relationship between parties such as mercantile documents, export and import of merchandise or services, admiralty, maritime law, aviation, infrastructure, immovable property, franchising, distributions, joint venture, management, shareholders, partnership agreements, intellectual property rights, insurance, etc., its interpretation and enforcement. A commercial court has jurisdiction to deal with any suit or application dealing with a commercial dispute arising within its territorial jurisdiction where the value of the specified subject matter in a dispute exceeds INR 300,000(Three Lakhs). The Act mandates that parties are required to make attempts to resolve their commercial disputes through mediation before initiating proceedings before the commercial court. The mediation is administered by the authorities under the Legal Services Authorities Act,1987. The commercial courts are required to adjudicate a commercial dispute as per the procedure laid down under the Code of Civil Procedure, 1908. The Act provides for systematic collection and publication of data by courts in a uniform format. This is further governed by the Commercial Courts (statistical data) Rules,2018. So, in the prevailing situation, it is advisable to get in touch with an Advocate handling Commercial disputes before the Commercial Court for guidance and steps.
Termination of contract
West Bengal Tender for Fortified Rice
Breech of Employment Agreement
Fraud money by friend
civil law
