I. Economic data

A. Macro-economic data
 

- General data[1]

​

Population 2023: 1,407,563,842 inhabitants

Area: 3,287,263 km2

Density: 388/km2

GDP (nominal) 2022: $3,390 billion[2]

GDP/capita 2022: $2,388.60[3]

GDP (PPP) 2022: $11,904 bn[4]

GDP (PPP)/capita 2022: $8,400.40[5]

2021 growth rate: 8.7%

GNI/capita (PPP) 2021: $7,130

HDI 2021: 0.633

Literacy rate: 76%[6]

Life expectancy 2022: 68 years

​

- Policy[7]

 

India is a parliamentary Republic.

 

At the time of writing, Droupadi MURMU, has been the President of the Republic since July 21, 2022. The Government has been led by Narendra MODI since May 26, 2014, re-elected on May 30, 2019. The next elections will be held shortly in 2024.

 

Since the 1990s, the Congress Party (secular left) and the Bharatiya Janata Party (conservative Hindu right), to which Narendra MODI belongs, have alternated in government.

 

In terms of foreign policy, India aims to confirm and strengthen its status as a world power, and held the presidency of the G20 and the Shanghai Cooperation Organization in 2023. India also chaired the Global South Summit in January 2023.

 

India has applied for permanent membership of the United Nations Security Council, and sat as a non-permanent member for the last time in 2022.

​

- Economic development

 

Since the start of a vast program of economic reforms in 1990, India has enjoyed some of the highest growth rates in the world (real annual GDP growth averaging 6.8% between 1991 and 2016), and is now one of the world's leading emerging countries. After experiencing a slowdown from 2008 onwards due to the global economic crisis, India quickly bounced back with a growth rate of 10% in 2010[8].

 

India has experienced very high inflation, but the Indian economy has nevertheless largely stabilized since 2014. Inflation is now under control, with a rate of 6.7% in 2022[9].

 

The Covid-19 health crisis sent India into a period of recession not seen since the 1980s, with GDP declining by 7.3%[10]. India coped well and is now the world's third largest economy in terms of GDP per purchasing power parity (PPP), with a growth rate of 8.7% in 2021[11].

 

Government capital expenditure increased by 50% between April and September 2022, reaching Rs. 3.42 bn. To boost manufacturing, the Indian Government has been running the "Make in India" initiative since 2014, with the aim of encouraging Indian production and local manufacturing of semiconductors and screens[12].

 

- Resources[13]

 

India's agricultural resources (cereals, pulses, sugar cane, etc.) account for 16.8% of GDP. Mining (coal, iron, zinc, copper, manganese and bauxite) and industry (notably metallurgy, textiles and chemicals) account for 25.9% of GDP. The tertiary sector is the biggest wealth-creating sector, accounting for 57.3% of GDP.

 

India is the world's second largest producer of rice, wheat, tea, sugar cane and groundnuts. India also has the second largest livestock in the world, with 170 million head of cattle[14] .

 

India's main source of energy is coal, and it is one of the world's leading coal producers.

In 2020, tourism generated $13.4 billion in India.

 

- Population

 

India is the world's second most populous country, after China. The Indian population is growing by an average of 1.5 million a month. The urban population accounts for 57% of the country's total population[15].

 

More than forty cities have more than one million inhabitants. The country's main cities are geographically located on the coast of the Deccan peninsula or at the foot of the Himalayas[16]. Development and living standards vary greatly from one region to another.

 

India's ten most populous cities[17] are Delhi (32,941,309), Mumbai (21,296,517), Kolkata (15,332,793), Bangalore (13,607,800), Chennai (11,776,147), Hyderabad (10,801,163), Ahmedabad (8,650,605), Surat (8,064,949).), Pune (7,166,374) and Jaipur (4,207,084).

​

- Foreign investment

 

India's main trading partners are the United States, the European Union, the United Arab Emirates and China[18].

 

Foreign direct investment (FDI) inflows to India increased by 65.3%, from $266.21 bn in 2007-2014 to $440.01 bn in 2014-2021. From April 2020 to March 2021, total FDI inflow was $76.30 bn, which was the highest level of inward FDI recorded in 10 months[19].

​

India is the world's fifth largest recipient of capital[20] .

 

B. Economic data specific to franchising

 

- Historical background

 

India's first franchises appeared with the introduction of a retail business in the 1940s. However, franchising expanded from 1986 onwards with a computer training and education institute, which went on to attract the biggest international franchise brands to the Indian market[21] .

 

- Institution

 

The Franchising Association of India (FAI)[22] was established in 2001 to promote the concept of franchising and to represent the franchise sector in India. The Indian Franchising Association has established a code of conduct[23].

 

The FAI and the Institute of Certified Franchise Executives (ICFE) in the USA have worked together to launch the Certified Franchise Executive (CFE) program in India, which offers franchise executives professional training to broaden their professional knowledge and skills[24].

 

- Trade shows

 

Franchise India Exhibitions, the branch of Franchise India Holdings Ltd dedicated to organizing events (trade shows, awards, conferences), organizes several franchise and retail trade shows throughout the country every year. These include exhibitions in Pune (February 3, 2024), Bhubaneswar (February 18, 2024), Patna (February 25, 2024), Hyderabad (March 16 & 17, 2024) and Chennai (June 29 & 30, 2024)[25].

 

The annual Franchise India show in Delhi is the largest organized franchise fair in Asia, with over 500 stands and 50,000 participants. The 20th edition of Franchise India will take place on May 18 and 19, 2024[26].

 

The Franchise India Expo will also take place in Mumbai from November 30 to December 1, 2024[27].

​

- Statistics[28]

 

On average, more than 300 franchised stores open in India every year.

 

India has around 4,600 franchisors and 45,000 franchised outlets. Over 3,000 Indian brands have taken up the franchise model.

 

The GDP contribution of the trade, hotel and transport sectors increased by 14% between 2021 and 2022[29].

 

- Contract content

 

The cost of opening a franchise in India can average between 100,000 and 1,000,000 rupees[30].

 

On average, franchise contracts last one year[31].

 

- Special features

 

Although many consumers in India are familiar with Western products, setting up a concept in India will most often require tailoring products and sales methods.

 

In addition, the job description that was most in demand in India was "working from home", demonstrating a growing willingness, particularly since the Covid-19 health crisis, to telecommute[32].

 

- Economic impact

 

The franchise sector employs between 5.5 and 6 million people[33].

 

The Economic Times has estimated that within the next 5 years, the franchise sector will contribute between $140 and $150 billion to the Indian economy[34]. By 2021, this sector was generating between $47 and $48 bn.

 

- International

 

More and more foreign chains are setting up shop in India. These are mainly restaurant chains, and in particular the major restaurant chains from the United States.

50% of franchised brands are regional, 34% are national and 16% are local[35].

 

II. Legal information

 

A.Legal information directly related to franchising

 

- Applicable legislation

 

India has no specific legislation governing franchising. The relationship between franchisor and franchisee is therefore governed primarily by contract law (derived from the Indian Contract Act of 1872[36]), at all stages of the contract's life: formation, performance and termination.

 

Contract law does not require any eligibility conditions for a franchisor to offer franchises in India. Only the general conditions on capacity to enter into a contract need to be met by the parties (being over 18 years of age, of sound mind and that the party is not prevented from entering into the contract by virtue of any foreign law to which it might be subject)[37].

 

As franchisors, foreign franchisors are not subject to any specific rules. However, as foreign investors, they may be subject to certain constraints, as will be explained later. Subject to this reservation, as a general rule, the parties enjoy considerable freedom in organizing their contractual relations.

 

There is no specific legislation requiring franchise agreements or pre-contractual information documents to be written in a local language. In practice, however, it is customary for contracts to be drawn up in English.

 

- Pre-contractual information

 

As there is no specific franchising legislation, pre-contractual information has not been the subject of any particular law. It is therefore governed by the principle of good faith. It must not be misleading, and must enable the parties to enter into a commitment on the basis of the same information.

 

And as there is no specific legislation on pre-contractual information, there is no penalty as such for failure to comply with the obligation. The remedy - damages or even nullity - therefore depends on the specific case and the content of the contract[38]. It is up to the court hearing the case to determine whether a particular piece of information should have been given, and if so, to apply the appropriate penalty.

 

The Indian Franchise Association's Code of Conduct, which applies to its members, requires franchisors to provide the Indian Franchise Association and potential franchisees with a pre-contractual information document. This document must contain, in particular, the franchisor's offer, the professional experience of the franchisor, managers and executives, previous litigation, previous bankruptcies, the rights offered to franchisees, the trademark, patents, and the company's operating method.

 

- Contract performance

 

As there is no specific legislation governing franchising, the relationship between the parties is governed primarily by the 1872 Contract Act mentioned earlier. The field of law is therefore largely characterized by freedom of contract, with the parties to the franchise contract deemed to be on an equal footing. It is therefore the law of the parties that governs the mutual obligations, and in particular the duration of the contract, non-competition and confidentiality obligations, early termination conditions, interest on arrears, as well as dispute settlement procedures (designation of the competent court or Indian or international arbitration body). The contract may also enable the franchisor to prevent the transfer of the franchisee's business.

 

The franchisor may not unilaterally modify the terms of the contract, and any modification must be in writing and subject to mutual consent[39].

 

There is no right to renew a contract: the franchisor is under no obligation to renew a contract that has expired unless the contract provides otherwise. The freedom of the parties is framed by a general obligation of good faith, enforced both civilly and criminally.

 

- Jurisdiction and applicable law

 

India has ratified the 1958 New York Convention[40] facilitating the recognition and enforcement of foreign arbitral awards.

 

- Trademarks

 

India is a party to a number of international conventions on intellectual property rights, including the 1967 Paris Convention, which specifies that each contracting State shall grant the same protection to nationals of other contracting States as it does to its own nationals in respect of intellectual property.

 

In 2013, India also joined the Madrid System[41], which enables companies to obtain trademark protection in up to 130 countries by filing a single international application, in a single language, with the World Intellectual Property Organization (WIPO). Under Article 6 of the Madrid Agreement, trademark registration is valid for 20 years.

 

The initial registration procedure stems from the Trade Marks Act 1999[42] and the Trade Marks Rules 2002 and 2017[43]. Trademarks are registered in the Trade Marks registry, maintained by the Controller General of Patents, Designs and Trade Marks[44], which reports to the Ministry of Commerce and Industry. Although not a party to the Nice Agreement, India has adopted its classification.

 

When a trademark is filed, the Controller carries out a review that essentially concerns the distinctive character of the trademark. Trademarks which are already registered, and which are identical or similar to the newly filed trademark, are protected at the initiative of their owners, through an objection process open for three months from the date of filing. Registered trademarks are valid for 10 years and may be renewed (Section 25 of the Trade Marks Act 1999). The trademark is removed from the Register if it is not renewed.

In India, trademark applications can be handled both nationally and through the WIPO. Examinations are conducted on absolute and relative grounds before acceptance and registration. Trademark applications can be filed on a 'proposed to be used' basis or with a specific user claim.  India allows multi-class trademark registrations. Trademarks become vulnerable to non-use cancellation if not used for 5 years and 3 months from the registration date. To develop a franchise in this country, it is advisable to cover "Business assistance relating to franchising" under class 35, which is accepted, as well as retail services, also in class 35. Recording a franchising agreement is not mandatory, but registering a licensee as a "Registered User" offers legal benefits, such as the authority to file an infringement suit. Recordal is possible only for registered trademarks, not pending applications, and must be filed within six months of the agreement.

 

B. Peripheral legal data

 

- Competition law

 

Franchise agreements are subject to competition law.

 

In India, the Competition Act 2002[45] governs competition law.

Section 3 of the Competition Act 2002 prohibits and may annul agreements that have or may have the effect of appreciably restricting competition on Indian territory.

 

Section 3 states that, unless they can be shown to generate efficiency gains, agreements are deemed to appreciably restrict competition, if they:

 

-directly or indirectly fix buying or selling prices;

-limit or control production, supply, markets, technical development, investment or the provision of services;

-geographically split the market and customers;

-directly or indirectly lead to bid-rigging or collusion in requests for tenders.

 

The Competition Commission of India (CCI)[46] was set up in 2003 to prevent and regulate anti-competitive practices in India. The law specifies that it does not prevent any person from taking reasonable steps to protect his or her intellectual property rights.

 

- Personal data

 

India has recently introduced legislation to protect personal data. The Digital Personal Data Protection Bill[47] was passed on August 9, 2023 and published in the Gazette of India on August 11, 2023[48].

 

The road to personal data protection was paved by a landmark ruling in 2017, in which India's Supreme Court[49] declared that the right to privacy is a fundamental right guaranteed by the Indian Constitution.

 

The Digital Personal Data Protection Bill is largely inspired by the European Union's General Data Protection Regulation (GDPR). However, certain distinctions remain. Firstly, the GDPR provides six legal bases for the processing of personal data to be lawful, whereas the Digital Personal Data Protection Bill provides two legal bases, which are the consent of the data subject and the legitimate uses of the data collected (Section 4 of the Digital Personal Data Protection Bill).

 

Section 2 of the Digital Personal Data Protection Bill defines personal data as data relating to a natural person who is identifiable by that data or with other data.

 

Chapter V of the Digital Personal Data Protection Bill provides for the creation of an authority to oversee the application of this text, the Data Protection Board of India. At the time of writing, the Data Protection Board had not yet been established[50].

 

- Special provisions for foreign investments

 

Foreign investments are governed by the FDI Policy[51] and the Foreign Exchange Management Act (FEMA) 1999[52].

 

The principle is freedom of foreign investment in Indian companies in the vast majority of sectors. However, there are exceptions to this principle. Investment may, as the case may be, take place after simple notification to the Reserve Bank of India (RBI), or subject to authorization by the Foreign Investment Promotion Board (FIPB). In most cases, foreign direct investment is subject to prior authorization by the Indian authorities. In practical terms, therefore, and barring a few exceptions, only companies with limited shareholder liability governed by the Companies Act 1956[53] are open to foreign direct investment.

 

There are two types of company: Private Limited Companies and Public Limited Companies. The former, which are not allowed to participate in public offerings in the savings sector, cover small and medium-sized structures; they have a maximum of 50 shareholders. They are less onerous than Public Limited Companies, and shareholders enjoy a degree of freedom in organizing the company. Minimum capital is 100,000 Rupees (€1,720). Public Limited Companies may, but are not obliged to, make a public offering. The formalities imposed on these companies are more onerous than those of Private Limited Companies. Furthermore, shareholders have less freedom to organize the company. The minimum capital is 500,000 Rupees (around €8,600). The rules governing these companies are likely to be reformed in the near future, with a view to making them more flexible.

 

Finally, companies must be registered with the Companies Register.

​

Main websites

​

-Intellectual property: https://www.ipindia.gov.in/ ;

-Indian Franchise Association: https://www.fai.co.in/;

-Foreign investment: https://fifp.gov.in/;

-Competition: https://www.cci.gov.in/;

-Legislation: https://www.indiacode.nic.in/;

-Official statistics: https://www.mospi.gov.in/;

-World Bank: https://www.banquemondiale.org/fr/home;

-International Monetary Fund: https://www.imf.org/fr/Home

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[1] Unless otherwise indicated, the data below is taken from the Atlas socio-économique des pays du monde, Larousse, 2024 edition.

[2]https://www.diplomatie.gouv.fr/fr/dossiers-pays/inde/presentation-de-l-inde/

[3] Ditto

[4] https://donnees.banquemondiale.org/indicator/NY.GDP.MKTP.PP.CD?locations=IN

[5] https://donnees.banquemondiale.org/indicateur/NY.GDP.PCAP.PP.CD

[6] https://donnees.banquemondiale.org/indicator/SE.ADT.LITR.ZS?locations=IN

[7] Unless otherwise indicated, the information below is taken from https://www.diplomatie.gouv.fr/fr/dossiers-pays/inde/presentation-de-l-inde/

[8] Atlas socio-économique des pays du monde, Larousse, 2024 edition

[9] https://www.diplomatie.gouv.fr/fr/dossiers-pays/inde/presentation-de-l-inde/

[10] https://economic-research.bnpparibas.com/html/fr-FR/Inde-pied-20/07/2021,43399

[11] Atlas socio-économique des pays du monde, Larousse, 2024 edition

[12] https://www.makeinindia.com/about

[13] Unless otherwise stated, the data below is taken from the Atlas socio-économique des pays du monde, Larousse, 2024 edition.

[14] https://www.larousse.fr/encyclopedie/divers/Inde_activit%C3%A9s_%C3%A9conomiques/186988

[15] Atlas socio-économique des pays du monde, Larousse, 2024 edition

[16] Ditto

[17] https://statisticstimes.com/demographics/country/india-cities-population.php

[18] Atlas socio-économique des pays du monde, Larousse, 2024 edition

[19] https://www.investindia.gov.in/fr-fr/foreign-direct-investment

[20] Ditto

[21] https://fai.co.in/aboutus

[22] 510/511 B-Wing Sagar Tech Plaza, Sakinaka, Mumbai - 400 072, tel: 022 - 4054 0590, e-mail: support@fai.co.in

[23] https://fai.co.in/aboutus

[24] https://fai.co.in/educating_for_excellence

[25] https://www.franchiseindia.com/event

[26] https://www.franchiseindia.com/expo/

[27] https://www.franchiseindia.com/expo/mumbai/

[28] Unless otherwise indicated, the information below is taken from https://www.sparkleminds.com/global/franchise-industry-statistics/#:~:text=Franchise%20industry%20statistics%20for%202021,are%20by%20multi%2Dunit%20franchisees.

[29] https://www.coface.com/fr/actualites-economie-conseils-d-experts/tableau-de-bord-des-risques-economiques/fiches-risques-pays/inde

[30] https://www.sparkleminds.com/consultancy/cost-of-franchising-a-business/#:~:text=The%20actual%20costs%20you%20incur,10%20lahks.

[31] https://www.franchiseindia.in/registration_features.php

[32] https://www.sparkleminds.com/global/franchise-industry-statistics/#:~:text=Franchise%20industry%20statistics%20for%202021,are%20by%20multi%2Dunit%20franchisees.

[33] https://www.sparkleminds.com/global/franchise-industry-statistics/#:~:text=Franchise%20industry%20statistics%20for%202021,are%20by%20multi%2Dunit%20franchisees.

[34] https://economictimes.indiatimes.com/industry/services/retail/india-franchise-industry-to-touch-usd-140-150-billion-in-next-5-years-says-report/articleshow/101787512.cms?from=mdr

[35] https://economictimes.indiatimes.com/industry/services/retail/india-franchise-industry-to-touch-usd-140-150-billion-in-next-5-years-says-report/articleshow/101787512.cms?from=mdr

[36] Act n°9 of 1872

[37] https://www.franchise.org/sites/default/files/2022-09/2023%20Franchise%20-%20India.pdf

[38] https://www.franchise.org/sites/default/files/2022-09/2023%20Franchise%20-%20India.pdf

[39] Ditto

[40] New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958

[41] Madrid Agreement Concerning the International Registration of Trademarks

[42] N°47 of 1999

[43] https://ipindia.gov.in/writereaddata/Portal/News/312_1_TRADE_MARKS_RULES_2017__English.pdf

[44] Antop Hill, S.M. Road, Mumbai-400037, Tel Mumbai: +91-22-24101145, Tel Delhi: +91-11-28032406, e-mail address: cgoffice-mh@nic.in

[45] N°12 of 2003

[46] 9th Floor, Office Block - 1, Kidwai Nagar (East),New Delhi: 110023, India, Tél : 011-20815022

[47] N°22 of 2023

[48] https://mind-data.fr/15092023.PD.html#:~:text=Vot%C3%A9e%20le%209%20ao%C3%BBt%202023,des%20donn%C3%A9es%20num%C3%A9riques%20en%20Inde.

[49] Judgment justice K.S. Puttaswamy (Retd.) vs Union of India, No (2017) 10 SCC 1, AIR 2017 SC 4161

[50] https://www.dlapiperdataprotection.com/index.html?t=authority&c=IN

[51] https://static.investindia.gov.in/2020-10/FDI-PolicyCircular-2020.pdf

[52] N°42 of 1999

[53] Act n°1 of 1956