Business Law

Avoiding pitfalls in forging strategic alliances in India

Many organizations in growing international locations find it difficult to evolve due to increasing competition and market integration. Mergers and acquisitions are one strategic choice, but they may become a complicated, unstable, and expensive affair. An alliance is a natural response that can help companies live on. Strategic alliances give to get the right of entry to additional sources while maintaining competitive benefit and growing market presence.

In strategic alliances, the events agree to remain independent contractors operating toward a common goal instead of being stakeholders of a felony entity. Through a partnership, the partners percentage their surplus or complementary competencies. Efficiently controlled strategic alliances assist agencies in increasing their services substantially, without additional funding. There are numerous advantages to pooling assets. However, there are also some challenges. Performance failure and incompatibility troubles are commonplace and could lead to break-united states of America or the failure of alliances.

In India, however, there is additionally a regulatory undertaking. For example, even though overseas entities had been allowed to have a stake in the multi-emblem local region, the 30% neighborhood sourcing requirement proved to be a stumbling block for a few. Major worldwide brands determined it difficult to confirm, which pressured many to go out of India, now and again central to bitter fights.

Since alliances are dependent on contractual or quasi-contractual bases, parties have needed to revisit their agreements to implement the termination and dispute decision clauses. Hence, legislating for and negotiating the termination, indemnification, and governing regulation clauses is paramount.


The grounds for termination should determine that a fabric breach of the agreement shall entitle the technology licensor or franchisor to compel the licensee or franchisee to de-emblem and wrap up the business. The overseas birthday party can make sure that the defaulting licensee ceases using its emblem without delay. It does no longer compete in a similar or by-product commercial enterprise. Additionally, agreements also can offer clauses to waive a licensee’s or franchisee’s right to prison action against the licensor or franchisor while the settlement is terminated.

In a franchise settlement, the connection between the franchisor and franchisee is on a main-to-major foundation. A clean provision to this quit in the franchise agreement will guard the franchisor towards any interpretation of implied corporation, which could otherwise expose the franchisor as most important for the acts of the franchise.

Since go-border franchising transactions contain the safety of the owner’s intellectual property, such agreements may additionally offer for: (a) distant places or impartial governing laws; and (b) global dispute resolution. Furthermore, the events may agree on a neutral venue and juridical seat for the arbitration court cases and select to submit completely or non-completely to an overseas court docket, which has inherent jurisdiction over the dispute.

When there may be a dispute regarding termination, every so often, the Indian accomplice continues to carry at the enterprise using the franchisor’s trademark, emblem, and information without necessarily paying for his or her use. The overseas accomplice can then provoke a lawsuit with interlocutory software for an injunction to shield its highbrow property.

Litigation can take a long time, or even if the franchisor finally ends up with a beneficial judgment, the prices concerned and the damage to the emblem in pursuing litigation may be extensive. The Supreme Court has held that the furniture of a meantime injunction is a matter of discretion of the courts, and the following exams are to be implemented: (a) whether the plaintiff has a prima facie case; (b) whether or not the balance of comfort is in favor of the plaintiff; and (c) whether or not the plaintiff could suffer irreparable damage if the defendant isn’t always limited.

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