Signature Framework

Franchise Agreement Checklist

The company might be genuine, the products might be good — but if it isn’t written into the agreement, it doesn’t exist. Go through every clause below before you sign anything.

How to use this: Read the actual agreement clause by clause against this list. If a clause is missing, ask for it to be added in writing before you sign.

Not legal advice. For a legally binding review, have the agreement checked by a qualified lawyer before signing.

1. Parties & Basic Details

Get the identities and duration right first.

Full legal registered name and address of the company (not just the brand name)
Your name or firm’s legal details are correctly and completely mentioned
Effective date and total term of the agreement is clearly stated
Renewal process and conditions are specified — automatic, or by mutual written consent

2. Territory & Exclusivity

Vague territory language is a common source of disputes.

Territory is defined precisely — district, taluka, or pin codes, not a vague “region”
Monopoly or exclusivity rights are explicitly written in, if promised
Conditions under which exclusivity can be revoked or diluted are spelled out
Agreement states whether the company can appoint additional distributors in your area

3. Products & Pricing

Never rely on a verbal understanding for what you sell and at what price.

Complete list of products covered is attached as an annexure or schedule
MRP and your distributor pricing are mentioned or referenced in an attached price list
Process and notice period for future price revisions is specified
Process for adding or removing products from the portfolio is defined

4. Orders, Supply & Payment

The operational terms that affect your cash flow every month.

Minimum order quantity or value per month/quarter is clearly stated
Payment terms are defined — advance, credit period, accepted payment modes
Delivery timelines are committed, with freight cost and transit risk assigned
Procedure for short supply, damaged goods, or expired stock returns is documented

5. Marketing & Promotional Support

Get support commitments in writing, not just on the sales call.

Promotional materials the company will provide are specified — visual aids, samples, gifts
Any cost-sharing arrangement for promotional inputs is clearly mentioned
Marketing or launch support for new product additions is addressed

6. Obligations & Restrictions

Know what you’re committing to, and what you’re restricted from doing.

Your obligations are clearly listed — minimum purchase, sales targets, reporting
Restrictions on selling competing products are clearly scoped, not open-ended
Confidentiality clause states its scope and duration — not indefinite by default
Any security deposit or advance is specified, with clear refund conditions

7. Termination & Exit

Check this before you sign, not after.

Notice period required for termination by either party is clearly stated
Conditions for the company to terminate unilaterally are reasonable, not arbitrary
Handling of unsold stock on termination is addressed — ideally with a buyback clause
Any non-compete period after termination is stated, along with its duration
Process and timeline for return of your security deposit is specified

8. Dispute Resolution & Legal

Where and how disagreements get resolved matters more than it seems.

Governing law and jurisdiction is specified — and reasonably accessible to you
Arbitration clause, if included, defines a clear and fair process
Indemnity clauses state who bears liability for what, without shifting disproportionate risk to you

Red Flags in the Agreement Itself

These point to a one-sided contract, however good the company seemed on the call.

Obligations and penalties for you with no reciprocal commitments from the company
No termination or exit clause — or one that only lets the company terminate
Territory or exclusivity terms are vague or left for “future discussion”
No mention of security deposit refund terms or timeline
Heavy penalty clauses for you, with no equivalent accountability for the company
Verbal promises (margins, support, exclusivity) are not reflected in the written agreement
Company pressures you to sign quickly, without time to review or seek legal advice

Want a second opinion before you sign?

Book a 1-on-1 consultation and walk through a specific agreement together.

Book a Consultation
See the Due-Diligence Checklist

Resource Category: Checklist

5 Minutes company Test