🇮🇳 Country hub · reviewed 2026-10-09
Franchising in India: the 2027 guide for Southeast Asian franchisors
India has no franchise law, lets royalties leave the country without caps, and allows full foreign ownership of restaurants. The work is in the detail: a domestic tax rate on royalties that doubled in 2023, trademarks that can be lost to an earlier local user, and post-term non-competes that courts will not enforce.
India at a glance
- Franchise statute
- None. Contract, competition, trade mark, FEMA and tax law apply Secondary · ICLG Franchise 2025: India (LexOrbis), 2024-10-31
- Royalty remittance
- Free, with no caps, since 2010 Official · RBI circular, current account liberalisation, 2010-05-13
- Restaurants, foreign ownership
- Up to 100%, automatic route Official · DPIIT Consolidated FDI Policy, 2020-10-15
- Royalty withholding tax
- 20% plus surcharge and cess before treaty relief Secondary · AZB & Partners on the 20% royalty rate, 2023-04-30
- Vietnam–India treaty
- Royalties capped at 10%, trade marks included Official · Vietnam–India tax treaty, Article 12 (VCCI WTO Center), 1994-09-07
- Madrid Protocol
- In force for India since 8 July 2013 Official · WIPO, India joins the Madrid System, 2013-04-08
Guides for India
Vietnamese brands already trading here
Three O'Clock, listed on FranX, signed an international franchise agreement with FranGlobal, the international arm of Franchise India Holdings, in January 2025, covering India, Nepal, Sri Lanka and Bangladesh with a target of at least 100 stores over ten years. Its first three Indian stores opened in Gurugram on 8 November 2025. NYNA Coffee has also signed a master franchise for India. Secondary · Tuoi Tre News, 2025-01-15Secondary · Tuoi Tre News, 2025-11-10Secondary · QSR Media
Frequently asked questions
Is there a franchise law in India?
No. India has no franchise statute, no mandatory disclosure document and no franchise registration. Franchising is governed by general laws, including the Indian Contract Act 1872, the Competition Act 2002, the Trade Marks Act 1999, FEMA 1999 and income-tax and GST law.
Does a foreign franchisor need FDI approval to franchise in India?
Not if it only licenses its brand and know-how to an Indian-owned franchisee: that is not a foreign investment. FDI rules apply only if the franchisor takes equity in an Indian company. Restaurants are open to 100% foreign ownership under the automatic route.
Can royalties be paid freely out of India?
Yes. Since May 2010 Indian banks can remit royalties and lump-sum fees under brand or technology agreements without government approval and without rate caps.
How much tax does India withhold on royalties paid to a Vietnamese franchisor?
India's domestic rate is 20% plus surcharge and cess, but the Vietnam–India tax treaty caps tax on royalties at 10% of the gross amount for the beneficial owner, and its definition of royalties includes trade marks. Claiming the treaty rate needs a tax residency certificate and the prescribed form.
Are non-compete clauses enforceable against franchisees in India?
Only during the franchise term. Section 27 of the Indian Contract Act voids restraints of trade, and the Supreme Court has held restraints that continue after the contract ends to be void. Confidentiality obligations are a safer way to protect know-how after termination.
Looking for a partner in India?
Master and area rights open in India are listed on the FranX Rights Board. Operating stores for sale are on Resales.