A franchise agreement signed in Bengaluru on plain paper is not a document a Karnataka court will act on. Section 34 of the Karnataka Stamp Act, 1957 keeps an under stamped instrument out of evidence and stops anyone acting upon it. It comes back in only when you pay the deficit with a penalty of ten times the shortfall. Section 33 obliges any person in charge of a public office to impound the paper on sight. So the royalty clause you argued over for six weeks stops working at the moment you need it. The fix is ordinary. Compute the duty against the right Schedule article, stamp before signature, and keep the drafting and the stamping in one pair of hands.
Does your Bengaluru business need a franchise agreement, or will a licence do?
Not every arrangement that carries your brand is a franchise. Supplying stock to a dealer who prices and runs the shop his own way is a distribution contract. Letting one partner put your logo on a single campaign is a trade mark licence and nothing more. A franchise agreement is the heavier instrument. It hands over the operating system, the manual, the training and the quality standard, and it keeps the franchisor's right to audit and to take the brand back.
That scope question decides money in Karnataka, because the Schedule to the Karnataka Stamp Act charges each of those differently. An agreement not otherwise provided for sits in Article 5(j), which has been ₹500 since 3 February 2024. An assignment or transfer of intellectual property rights is charged under Article 5(ic) at one rupee for every one thousand rupees of consideration. Where the franchisor also hands over premises, a licence of immovable property comes in under Article 32-A. Section 6 then charges one document at the highest of the descriptions it answers to, so a bundled franchise paper is never stamped at its cheapest limb.
What has to be settled before a word of the draft is written?
The draft is only as good as the terms handed over. Most delays here are not legal ones. They happen because the franchisor has not fixed the royalty base, or has drawn the territory as loosely as south Bengaluru, which nobody can enforce.
| Clause | What you settle before drafting | Where it bites later |
|---|---|---|
| Territory | Named localities or pin codes, and whether the grant is exclusive | Two outlets fighting over the same customers |
| Fees and royalty | Joining fee, royalty on gross or net sales, marketing contribution | The consideration figure that drives duty on the brand limb |
| Brand licence | The exact mark, its class, and whether it is registered or applied for | Enforcement against a franchisee who trades on after exit |
| Premises | Whether the franchisor grants the site or the franchisee takes its own | Whether Article 32-A duty attaches to the same instrument |
| Term and exit | Length, renewal, cure period and post exit restraints | Notice fights, and stock and signage left in the outlet |
How does the drafting run once you hand over the terms?
- We take your commercial terms on a call and write them back to you as a short term sheet you confirm.
- Our team drafts the agreement around your model clause by clause, instead of editing a template written for someone else's business.
- You mark up the draft and we rework it, with one revision round inside the fee.
- We compute the duty against the Schedule articles your document actually answers to, and give you the figure before anyone signs.
- You execute, and we hand over the final set in Word and PDF with a short execution note.
The anatomy of the contract itself is set out in the full franchise agreement process nationwide. This page stays on what Karnataka adds to it.
Which Karnataka office ends up holding the document, and what can it ask for later?
None of them. The Department of Stamps and Registration collects duty; it takes no custody of your agreement, and a franchise agreement is not among the documents section 17 of the Registration Act makes compulsorily registrable. That changes the moment you fold a lease of the outlet into the same paper, because a lease for a term exceeding one year is compulsorily registrable and a sub registrar office then enters the picture.
Stamping is electronic in practice. The department publishes its own authorised collection centre network of 6,962 branch entries under fifteen organisations, of which 1,435 sit in the five Bengaluru urban sub registrar districts. Karnataka finally notified digital e-stamp rules on 7 August 2025, under which the repository copy is the original stamp and an instrument may be executed with a digital signature certificate. We stamp your instrument by the method the department is currently accepting. Kaveri 2.0 will compute duty and find the right sub registrar office without a login.
The brand limb answers to a different office again. Karnataka is served by the Trade Marks Registry at Chennai, and jurisdiction there follows the applicant's principal place of business in India. A Yelahanka franchisor whose franchisees open in four other states still has a Chennai file, and the licence clause is what makes the franchisee's use permitted use rather than an infringement to be argued later.
What gets asked of you later comes from a court. Bengaluru has dedicated commercial courts at the district judge level that hear commercial disputes above the statutory threshold, in both Bengaluru Urban and Bengaluru Rural. The Commercial Courts Act sets that floor at three lakh rupees. The Karnataka High Court hears commercial matters on appeal rather than as a court of first instance. So a Bengaluru jurisdiction clause should name the district level forum, and the instrument produced there has to be properly stamped.
What does the agreement cost, and when does it come round again?
Drafting is ₹9,999 and runs 3 to 5 days, with one revision round included. Stamp duty is separate. It is a Karnataka government charge on your own document, payable before or at the time of execution under section 17 of the Karnataka Stamp Act.
Section 30 settles the argument about who pays it. The executant bears the duty on an Article 5(j) agreement, the licensee on an Article 32-A licence, and the assignee on an assignment of intellectual property rights. Put that allocation in the agreement in words, because franchisor and franchisee each tend to assume the other side is paying.
It comes round more often than franchisors expect. A renewal, a change in the royalty base, a new territory or a new franchisee is a fresh instrument, and a fresh instrument carries fresh duty. Executing next year's renewal on paper stamped four years ago saves nothing, and costs the ten times penalty if it is ever tested.
Who in Bengaluru is signing franchise agreements right now?
- An aerospace components and testing venture in Yelahanka appointing authorised service and calibration partners, where the manual and the quality standard matter far more than the shopfront.
- A SaaS founder in Koramangala whose implementation partners sell and deploy under his brand, and whose seed round diligence asks to see that paper.
- Restaurant and cloud kitchen operators taking a second and third site, where the line between an Indiranagar territory and a Jayanagar one has to be written rather than assumed.
- Fitness, salon and preschool owners in HSR Layout and Whitefield turning one working unit into a network of five or six.
- Franchisees on the other side of the table, who want the agreement read properly before they commit to a five year term and a fit out.
Why LegalX India in Bengaluru
We draft the agreement, compute the duty on it, and tell you the number before anyone signs. The work is done by CAs and company secretaries who write these papers for Bengaluru franchisors and read them for Bengaluru franchisees, so one drafting hand sees both sides of the argument. Everything runs online. You get the draft, one revision round, the stamping route and a signed set in Word and PDF, at ₹9,999 in 3 to 5 days.