FSSAI Rules & Regulations for Foreign Franchise Outlets in India

FSSAI Rules & Regulations for  Foreign Franchise Outlets in India

FSSAI Meaning

 

Food Safety and Standards Authority of India (FSSAI), also called the food authority was found in August 2011 under the sector Food Safety. It is a major part of the agency ‘Ministry of Health and Family Welfare’.

 

FSSAI License is mandatory before starting any food business.

                                                                              

Food Safety and Standards Act, 2006

The Act (Act no. 34) is a combination of laws that is related to food and the standards, rules and regulations to consider to establish food safety.

 

The FSSAI falls under the Food Safety and Standards Act. 

 

Purpose

  • For the safety of food
  • To ensure that the food consumed by the public is adulteration-free, healthy and consumable.

 

FSSAI Rules & Regulations – General

 

Section 92 (1) of the Food Safety and Standards Act, 2006 gives a legal right to the Food Authority to make rules/regulations and standards. After the introduction of the 2006 Act, FSSAI drafted six principal regulations.

 

Many modifications were made over the years taking into consideration important aspects like food consumption patterns, the introduction of new products, developments in the technology and also understanding the differences between national and international standards for food products. 

 

  1. Food Safety and Standards (Food or Health Supplements, Nutraceuticals, Foods for Special Dietary Uses, Foods for Special Medical Purpose, Functional Foods and Novel Food) Regulations, 2016
  2. Food Safety and Standards (Food Recall Procedure) Regulation, 2017
  3. Food Safety and Standards (Import) Regulation, 2017
  4. Food Safety and Standards (Approval for Non-Specified Food and Food Ingredients) Regulations, 2017.
  5. Food Safety and Standards (Organic Food) Regulation, 2017

 

FSSAI Registration

It is an absolute necessity for the restaurant owners to register under FSSAI. The registration can be easily done on the FSSAI government website.

 

The registration is divided into 3 categories

  • Basic Registration
  • State License Eligibility
  • Central License Eligibility

 

Documents required for FSSAI Registration

 

  • Identity proof
  • A complete and signed form
  • Address proof
  • List of the stakeholders and directors with their identity proof
  • Email id and contact number
  • Kitchen layout plan
  • Food safety management plan
  • Proof of possession of the premise
  • Water Testing Report
  • Partnership Deed/ Affidavit of Proprietorship
  • List of all the food items
  • Types of equipment
  • Medical certificate of employees

 

Food Safety License

 

  • Basic Food License
  • State Food License
  • Central Food License

 

  Registration criteria

Basic Registration: For Turnover less than ₹12 Lakh

State License: For Turnover between ₹12 Lakh to ₹20 Crore

     Central License: For Turnover above ₹20 Crore

 

Eligibility criteria

 

The eligibility criteria differ based on the type of registration

 

For Basic License Registration

These apply to all the business operators that are operating only in one particular state, city without any branches anywhere else. They have to register under FSSAI with the name ‘Basic FBO’.

 

The terms for eligibility for a Basic certificate are as follows:

  • Wholesaler, distributor, supplier, and retailer, food vending establishments, hawkers, club, canteen, Dhaba, hotel, restaurants, and storage with an annual turnover of less than Rs. 12 lakhs.
  • Retailers selling food items with limited business activities.
  • Small producers manufacturing their own goods.
  • A temporary shop selling food products.
  • Businesses involved in selling food at a social or religious gathering, except a caterer.
  • Cottage industries associated with food products.

 

State Food License

Annual turnover of the business - between Rs. 12 Lakh up to a maximum of Rs. 20 crores.

Applicable for- FSSAI State License

Apply to - the state government where the business is based

 

Eligibility requirements:

  • FBO likes supplier, wholesaler, distributor, retailer, food vending establishments or Dhaba, club, canteen and restaurants with an annual turnover of within Rs. 12 Lakh to up to Rs. 20 crores.
  • Production and processing units of vegetable oil by the process of solvent extraction and refineries including oil expeller unit. With a turnover within Rs. 12 lacs to Rs. 20 crores annually.
  • Hotels with a 4-star rating or less.
  • Storages with a capacity of less than 50,000 metric tones yearly.
  • Dairy Units including milk chilling units, with a daily limit to handle or process, among 500 to 50000 litres.
  • A daily slaughtering capacity of more than 2 and up to 50 large animals.
  • All food processing units including with a daily capacity of not less than 100 kg/litre to up to 2 metric tones.

 

Central Food License

Eligibility requirement-  turnover above Rs. 20 crores

License to be applied to - the Central Government

 

The FBOs having more than one branch of restaurants or food joints require to apply for a Central Food License.

FBOs operating in 2 or more states have to apply for one Central License for its Registered Head Office and separate license or registration for all branches as per the eligibility standards applicable to them. Following Food Businesses require to apply for FSSAI central license by the governing authority:

  • FBOs like restaurants, retailers, distributors, and suppliers with an annual turnover of more than Rs. 20 crores.
  • Exports, imports linked with the Central Government
  • Manufacturing and processing units of vegetable oil by the method of solvent extraction and factories with a capacity of over 2 metric tones per day.
  • Dhaba, canteens, and other food industries with branches in more than one state and with a yearly turnover of more than Rs. 12 lakhs.
  • Wholesalers that have an annual income of not less than Rs. 30 crores.
  • Hotels that have been rated 5-star or more.

 

Foreign Franchise Outlets in India

 

Franchising is when the owner of the business gives permission to a third party to establish and run a business.

 

A lot of international brands have been functioning in India for many years.  India is the second-largest franchise market in the world after the US which includes 4600 franchisers at present

 

Some of the major U.S brands that operate in India include Dunkin Donuts, Levis, KFC, Baskin Robbins, Dior, Calvin Klein, Aeropostale, Guess.

 

The Indian Franchise Industry contributes $50.4 billion in the market, according to the report of Franchise Association of India(FAI).

 

India does not have any rules and regulations specifically for the purpose of franchising, but certain laws are applicable in the business.

Some of these rules and laws that apply to the franchise are the laws prescribed in the below Acts-

 

  • The Indian Contract Act, 1982
  • The Competition Act, 2002
  • The Designs Act, 2000
  • The Patents Act, 1970
  • The Copyright Act, 1957
  • The Consumer Protection Act, 1986
  • The Trademarks Act, 1999
  • Income Tax Act, 1961
  • Foreign Exchange Management Act, 1999
  • The Arbitration and Conciliation Act, 1996

 

FDI Rules

 

The franchisors are also required to follow the rules of Foreign Direct Investment(FDI) as ‘foreign investors’.

 

Trademark Rules

 

According to The Trademark Rules, 2017, the international companies operating in India are supposed to file for a trademark of their brand name.

 

 

 

Bankruptcy Rules

 

Bankruptcy is one of the major issues, which was faced by some of the largest companies this year.

 

As per the rules in the Insolvency and Bankruptcy Code, 2016, the contract between a franchisor and a franchisee must mention that the franchisor can immediately terminate an agreement if the business files for bankruptcy.

 

Handling disputes

 

The law that concerns resolving the franchisor-franchisee dispute is quite flexible. The franchisor has been given the option to specify the country where the dispute would be resolved.

 

Conclusion

 

With the rapid growth of the Franchise Business in India and the fact that it has occupied a huge market size and brought in a lot of employment and other benefits, it is extremely important to have a legal framework and specific rules and regulations that will make the franchise business effortless.

 

It will also be beneficial if the challenges that come along while setting up a franchise is eliminated, be it the high real estate charges or the high royalty fees for the international companies to function in India.

 

 

About Mahiya

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Mahiya Ahmad is a PR Associate & Content Creator working for Enterslice Private Limited.

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