Franchising Ethics To Be Followed In Pre-School Business

Sneha Santra
Sneha Santra May 31 2018 - 4 min read
Franchising Ethics To Be Followed In Pre-School Business
To Maintain A Good Reputation With Franchisees And Within The Franchising Industry, It Is Important That Franchisers To Have An Ethical Framework

Preschool franchises in India are booming businesses right now. Parents are more concerned about their kids' future and are willing to spend money to give the children the best possible education right from preschool levels. Therefore, Opening a preschool franchise business in India can be a profitable and lucrative business decision. But to maintain a good reputation with franchisees and within the franchising industry, it is important that franchisors have an ethical framework by which to operate. Below are the Franchising ethics that should be followed before starting a pre-school business.

In the marketing and selling of franchises, it is always recommended, to be honest, and avoid creating false expectations. Among all the codes considered, franchise disclosure obligations are imposed by law. Generally, the codes of ethics mandate full and accurate disclosure of all information material to the franchise relationship delivered to a prospective franchisee within a reasonable time before the execution of any agreements. It is the responsibility of each prospective franchisee to conduct a thorough due diligence of the franchise system to retain competent legal and other advisors, and fully understand the terms contained in the Franchise Disclosure Document before signing any Franchise Agreement.

Intellectual property

Intellectual property rights and obligations are invariably governed by statute; and because all of the codes of ethics require compliance with applicable laws, it may be assumed that the obligation to respect intellectual property rights is, thus, subsumed in that requirement. The licensor has the right to protect its intellectual property and to define the terms under which it licenses to others the use of its intellectual property.  It is the terms contained in the Franchise Agreement that define the license granted to the franchisees and which govern the relationship between the franchisor and franchisee. 


Before entering into a new franchise agreement, the prospective franchisee must provide the franchisor with a signed statement that they have been given independent advice by a lawyer, business adviser or accountant about the proposed franchise agreement or informed that they should seek that kind of advice but have decided not to do so.

Cooling off

A franchisee may terminate a franchise agreement within seven days after entering into the agreement or paying any non-refundable money, whichever is earlier. If the franchisee chooses to exercise their cooling-off rights, they must be given a refund minus any reasonable expenses incurred by the franchisor within 30 days.

Transferring a Franchise Agreement

A request to transfer a franchise agreement must be put in writing by the franchisee to the franchisor. The franchisor will be taken to have consented to the transfer if they do not object within 60 days of the written notice. He/she cannot unreasonably withhold consent to the transfer of a franchise agreement.

Termination of a franchise agreement

Where a franchisor seeks to terminate a franchise agreement due to a breach of the agreement by the franchisee, the franchisor must give the franchisee a reasonable opportunity to remedy the alleged breach. If the breach is remedied in that time, the franchisor must not terminate the agreement as a result of that breach. A franchisor may also have a right under the terms of the franchise agreement to terminate the agreement before the agreement expires even though the franchisee has not breached the agreement nor consented to the termination. But they must give the franchisee reasonable notice of the proposed termination and the reasons for it.

Dispute resolution procedures

A franchise agreement must set out a dispute resolution procedure that complies with the code. When a dispute arises, you should first refer to the dispute resolution procedure set out in your agreement. However, under the code the complainant must inform the other party in writing of the nature of the dispute, what outcome they want and what action they think will settle the dispute. The parties to the dispute must then try and agree about how to resolve the dispute. If the parties cannot agree on a solution to the dispute within three weeks, either party may refer the matter to a mediator. The parties must attend the mediation and try to resolve the dispute. Otherwise, each party will be equally liable for costs associated with mediation or help to resolve the dispute. 

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