Restaurant Partnership Agreement (India)

Running a restaurant or food service business as a partnership in India requires obtaining several licences and registrations at the central, state, and municipal levels. Partners must ensure compliance before commencing operations, as violations attract closure orders, fines, and criminal prosecution. FSSAI Licence/Registration (Food Safety and Standards Authority of India): Under the Food Safety and Standards Act 2006 (FSSAI Act) and the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations 2011, every food business operator (FBO) must obtain either a basic registration (for petty food businesses with annual turnover up to ₹12 lakh or for manufacturers producing up to 100 kg/litres per day) or a state licence (for FBOs with annual turnover between ₹12 lakh and ₹20 crore, or for manufacturing/storage businesses of specified capacity) or a central licence (for FBOs with annual turnover above ₹20 crore, or manufacturers with capacity above prescribed thresholds, or businesses operating in multiple states or at Central Government premises). A restaurant partnership will typically require a state FSSAI licence. The FSSAI licence specifies the category of food products that may be handled, the premises details, and the Food Safety Management System (FSMS) to be maintained. Renewal is annual or every 1–5 years.

A restaurant partnership agreement should clearly allocate operational responsibilities between the partners to avoid management disputes — one of the most common causes of restaurant partnership failures in India. Vague or absent role definitions lead to power struggles, duplication of effort, and ultimately, business collapse. Kitchen and Food Operations: In a multi-partner restaurant, one partner is typically designated as the Kitchen and Operations Partner — responsible for menu planning, food quality, kitchen management, vendor sourcing (ingredients, packaging), FSSAI compliance (FSMS maintenance, hygiene standards, staff training under FOSTAC — Food Safety Training and Certification), and managing kitchen staff. This partner should have food industry expertise, and the deed should specify that this partner's decisions on food quality are final (subject to cost limits agreed by all partners). Front of House and Service: A separate partner may be designated as the Front of House Partner — responsible for restaurant ambience, service staff management, customer experience, complaints handling, reservation systems, and table management technology. Finance and Administration: One partner should be designated as the Finance and Administration Partner — responsible for bookkeeping, GST return filing (GSTR-1, GSTR-3B), income tax compliance (ITR-5), payroll processing, PF/ESI contributions under EPF Act 1952 and ESI Act 1948, banking operations, and vendor payments.

A restaurant operating as a partnership firm in India has distinct GST and income tax obligations that differ in important respects from other businesses, due to the specific GST treatment of restaurant services and the input tax credit restrictions that apply. GST on Restaurant Services: Under the CGST Act 2017 and Notification No. 11/2017-CT(R) (as amended), restaurant services are taxed as follows: (1) Standalone restaurants (not in hotels, or in hotels with room tariffs below ₹7,500) — GST at 5% with no Input Tax Credit (ITC). The restaurant must charge 5% GST on food and beverages served but cannot claim ITC on GST paid on purchases (raw materials, kitchen equipment, packaging). This no-ITC restriction effectively makes GST a cost for the business. (2) Restaurants in hotels with declared room tariff above ₹7,500 — GST at 18% with ITC. These restaurants (typically in star hotels) benefit from ITC on their purchases. (3) Outdoor catering — 5% GST without ITC. (4) Packaged food sold separately by a restaurant — taxed at applicable GST rates for the food item, which may vary (e.g., branded snacks at 12%, bakery items at 5%, ice cream at 18%). Delivery aggregator TCS: If the restaurant sells through Swiggy or Zomato, Section 9(5) of the CGST Act (as notified) makes the e-commerce operator (Swiggy/Zomato) liable to collect and deposit GST on restaurant services sold through their platform (Tax Collected at Source — TCS). The restaurant receives payment net of TCS, and this TCS is reflected in the restaurant's GSTR-2B for credit/reconciliation.

A Restaurant Partnership Agreement (India) does not legally require a lawyer in India, and individuals and businesses may draft and execute the document independently. The Indian Partnership Act, 1932 does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified India lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Supreme Court of India has jurisdiction over disputes arising from this type of document, and Registrar of Companies (ROC) may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.

A Restaurant Partnership Agreement (India) does not legally require a lawyer in India, though legal advice is recommended. Under Indian law, the Indian Contract Act 1872 governs agreements. The Companies Act 2013 and Registrar of Companies (ROC) regulate corporate documents. The Information Technology Act 2000 governs electronic contracts and data protection. The Consumer Protection Act 2019 provides consumer rights. The Income Tax Act 1961 requires tax compliance. Forms-legal.com provides this template as a starting point — always review with a qualified Indian advocate for significant transactions. Under India law, Indian Partnership Act, 1932, parties should seek independent legal advice from a qualified lawyer to confirm compliance with all applicable requirements. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). Forms-legal.com provides this template as a starting point for India-compliant documentation.