Consumer Protection Act

Dear Karan,

Can u solve it?

Shyam Ji Srivastava

Advocate

Dear Suchitra,

Thanks for reply. My question was that after signing of MOU, A  sent a deed of Agreement to B, in which he raised Franchise Fee by 5 times, now the point is whether B (who is going to take Franchise is CONSUMER under Consumer Protection Act?

Shyam Ji Srivastava

Advocate

09839028040

Sir,  Franchisee can be sued by the 'consumers' as the goods or services are sold in the brand name of the franchisor.  

Here I think as the MOU is between the school and its frnachisee, the matter does not come under the purview of Consumer Protection Act. You have to approach civil court.  

I am sorry for my earlier reply where I said, it comes under the consumer protection.

A memorandum of understanding may be evidence of an agreement between you and the other party. Many factors will come into play. Did you sign it? Did you agree with it? Are the terms in some way not enforceable? All these questions need to be answered.

 Generally there is a covenant as to following:

 A. This Memorandum is not a legally binding contract and under no circumstances does this Memorandum subject either of the Parties to liability for breach, whether material or minor, of contract or any other liability under national or international law or any other applicable law.

 B. The Parties hereby agree that they are not bound exclusively by this Memorandum and shall be at liberty to enter into any separate agreements or arrangements with any third party without reference to the other Party.

 Its also in practice that a MOU is followed by a detailed agreement between the parties. This is because, a MOU generally captures briefly the legal parameters and understanding between the parties. Broadly, speaking this a first step taken by parties to have their understanding and the deal contours in place, in a transaction.

With respect to the binding attributes of the MOU, the clauses that the parties intend to make binding under the MOU needs to be specifically stated therein.

Under English law an MoU  is NOT designed to be legally binding. An MoU or as it is also called, a Letter of Intent or Heads of Agreement, are usually designed to note down the pertinent commercial terms for further review and are Subject to Contract. The idea is that they are some comfort to the parties as to what the main commercial agreement is going to be before the parties have got to the formal contract stage. They are NOT a replacement for a Commercial Lease.

Having said that, an MOU can be challenged as to its contractual nature, but there is absolutely no point in putting it in place instead of a formally agreed contract. Or it maybe just an inappropriate usage of the term MOU, just make sure it doesn't have Subject to Contract written on it.

 The enforceability of the document will depend upon the exact language of the same. Labeling a document "MOU". "letter agreement", "letter of intent" will not, in and of itself, make a document binding or non binding.

Dear Suchitra

Thanks for your valuable views.

I think my case is covered in CPA.

I will inform you in detail later on.

Thanks and regards,

Shyam Ji Srivastava

Advocate

Please let me know about the status. I am too eager to know. Thanks a lot, Sir.

Hi 

I do have a similar enquire & need all your support for taking a franchisee of a cosmetic outlet, can i lodge a case in consumer court on Franchisor on the following grounds, though they assured of following the below obligations through e-mails & various conversations,  As well some of them in franchisee agreement, however nothing been followed so far with repeated followup. 

Main defalut is by providing inflated ROI & which is repeatedly missed to acheive by 90% over a period of 5months &never it can acheive even 10% of what ROI was assured. 

FRANCHISOR’S OBLIGATIONS
• Finalization of Location
• Provision of Operations Manual
• Education and Training
• Exclusivity of Franchisee
• Regulatory and Legal Approvals
• Ongoing Support
• Advertising and Promotion

I see its a blackmailing from the franchisor post establishing the business just to make more and more money by luring franchisee through inflated and baseless ROI projections.  This company has robbed me of  2.28 lacs Franchise fee + 4 Lacs Furniture / fixture /Infrastructure + 50k  Brand Publicity / + 4 lacs  shop diposit, 1.5 Lacks on registrations/ computer etc ( for which I  have all the bills etc)

1.     Will I be able to get all the money spent on establishing this business, 

2. can i go to consumer court with all the documents to prove myself as the franchisor is a fruad.

3. What are the preparations & legal documents i need to be prepared with before filing the case in consumer court against the Franchisor. 

regds

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