Retail Showroom Business Agreement Format
Updated sample agreement for a retail showroom arrangement in India, covering premises and fit-outs, consignment stock, commission or margin, GST compliance, staffing, insurance, brand use, termination, arbitration and jurisdiction.
Contents
Sample Retail Showroom Business Agreement
This Retail Showroom Business Agreement ("Agreemen") is executed at __________ on __________ by and between:
M/s ______________________________, having its office at ______________________________, hereinafter referred to as the "FIRST PARTY", which expression shall, unless repugnant to the context, include its successors and permitted assigns;
AND
M/s ______________________________, having its office at ______________________________, hereinafter referred to as the "SECOND PARTY", which expression shall, unless repugnant to the context, include its successors and permitted assigns.
WHEREAS the FIRST PARTY is engaged in the business of ______________________________ and desires to retail and store its products through a showroom operated at the premises described below;
AND WHEREAS the SECOND PARTY represents that it is lawfully entitled to use and operate the air-conditioned showroom measuring approximately ______ sq. ft. situated at ______________________________ ("Showroom");
NOW, THEREFORE, the parties agree as follows:
Permitted use of Showroom
The Showroom shall be used for retail sale, display and storage of the products supplied or approved by the FIRST PARTY. Any additional premises, product category or material change in use shall require written agreement of both parties and all necessary statutory approvals.
Renovation and base infrastructure
Unless otherwise agreed in writing, the SECOND PARTY shall provide the base premises, adequate electrical load, air-conditioning, flooring, ceiling, lighting, glasswork, electrical fittings, backup power and other agreed building infrastructure in accordance with mutually approved specifications. Any structural alteration shall be undertaken only with required owner and statutory permissions.
Interior fit-out and branded fixtures
Brand-specific interior works, wall modules, floor modules, display fixtures, signage and cash counters supplied by the FIRST PARTY shall remain governed by the agreed cost-allocation schedule. Ownership of removable branded fixtures shall be recorded separately to avoid dispute on termination.
Property outgoings and utilities
The SECOND PARTY shall discharge property tax, ground rent and other ownership-related dues relating to the Showroom unless otherwise agreed. Consumption-based operating expenses, including electricity, water, telecom and housekeeping, shall be borne by the party specified in the commercial schedule. Pre-existing dues relating to the premises shall be cleared by the SECOND PARTY.
Products, pricing and promotions
The stock supplied on consignment shall remain the property of the FIRST PARTY unless a tax invoice or other document expressly transfers title. Retail prices, discounts and promotional schemes shall be determined in compliance with applicable law, including Legal Metrology requirements relating to pre-packaged commodities where applicable. Nothing in this Agreement authorises resale above the legally permissible maximum retail price.
Commencement and delivery
This Agreement shall take effect from __________. The FIRST PARTY may dispatch goods to the Showroom on a consignment basis under proper delivery, e-way bill, invoice/delivery challan or other documents required by applicable law. Freight and transit obligations shall be borne as specified in the commercial schedule.
Commission, margin, accounts and withholding
The SECOND PARTY shall be entitled to commission or margin at the rate or formula stated in Schedule A, reconciled at least monthly. Applicable tax deduction at source or other withholding, if legally required, shall be made and supporting certificates or records shall be furnished in accordance with applicable income-tax law.
GST and indirect-tax compliance
Each party shall comply with the Central Goods and Services Tax Act, 2017, the applicable State/Union Territory GST law, the Integrated Goods and Services Tax Act, 2017 and rules/notifications applicable to its supplies. The parties shall clearly determine who is the supplier to the customer, who issues the tax invoice, the treatment of consignment transfers, commission or agency services, returns, credit/debit notes, e-invoicing and e-way bills, as applicable. Each party shall timely provide accurate GSTIN and transaction data needed by the other party for lawful compliance and input-tax-credit reconciliation.
Management, staff and employment compliance
The Showroom shall be managed by the SECOND PARTY unless otherwise agreed. Employees engaged by the SECOND PARTY shall remain its employees and shall not be deemed employees of the FIRST PARTY merely because they sell or handle the FIRST PARTY's products. The employer shall comply with the applicable labour laws, including the labour codes brought into force from 21 November 2025, applicable rules, wage requirements, social-security obligations, working-time and workplace-safety requirements, and state/local establishment laws.
Shortage, pilferage and accidental loss
The SECOND PARTY shall exercise reasonable care over goods in its custody and shall be responsible for unexplained shortage, pilferage or loss attributable to its acts or omissions, subject to agreed stock-verification procedures. Loss caused solely by insured events or force majeure shall be dealt with in accordance with the applicable insurance policy and this Agreement.
Stationery and packing materials
The FIRST PARTY shall supply such branded stationery, labels, packing material and customer-support material as the parties agree. Their use shall comply with applicable packaging, labelling and consumer-information requirements.
Insurance of premises and fixtures
The SECOND PARTY shall maintain appropriate insurance for the Showroom building, furniture, fixtures, electrical installations, generators, air-conditioners and other assets owned or controlled by it, subject to insurability and the agreed risk allocation.
Insurance of stock
The FIRST PARTY shall arrange, or require the SECOND PARTY to arrange, adequate stock insurance against agreed risks such as fire, theft, burglary and other insurable events. The policy should identify the party having insurable interest and the beneficiary/loss payee as appropriate.
Advertising and promotion
Advertising and promotional expenditure shall be borne in the proportion stated in the commercial schedule. No party shall publish misleading advertisements, unlawful comparative claims or material that infringes third-party intellectual-property rights.
Minimum stock
The FIRST PARTY shall endeavour to maintain stock at commercially reasonable levels, including an indicative minimum stock value of Rs. __________ where agreed, subject to demand, availability, supply-chain conditions and force majeure.
Non-saleable and obsolete stock
Subject to reconciliation and agreed return procedures, the FIRST PARTY shall take back its consignment stock that becomes non-saleable, obsolete or remains after an agreed clearance period, except stock damaged through the SECOND PARTY's breach, negligence or unauthorised handling.
Trade marks, brand identity and intellectual property
The SECOND PARTY may use the FIRST PARTY's trade marks, trade names, logos and brand material only during the term, solely for authorised sale and promotion of the products, and in accordance with written brand guidelines. No ownership or independent right is transferred. On termination, the SECOND PARTY shall promptly discontinue such use and return or remove branded material as directed, subject to applicable law and the Trade Marks Act, 1999.
Refundable security deposit
The SECOND PARTY shall provide a refundable security deposit of Rs. __________, if agreed. The deposit shall be refunded within ______ days after termination/expiry and completion of stock, account and asset reconciliation, after adjustment only of amounts lawfully due and documented.
Term and renewal
This Agreement shall remain in force for ______ from the commencement date unless terminated earlier in accordance with this Agreement. Any renewal or extension shall be by written agreement setting out the revised commercial terms.
Amendments
No amendment, waiver or variation shall be effective unless recorded in writing and signed or otherwise validly authenticated by authorised representatives of both parties.
Termination and handover
Either party may terminate this Agreement by giving three months' written notice, unless a different period is stated in Schedule A. A party may also terminate for material breach if the breach remains uncured for ______ days after written notice, or immediately for insolvency, fraud, illegality or unauthorised use of intellectual property where legally permissible. On termination, the parties shall promptly reconcile stock, accounts, security deposit, records, fixtures and property belonging to the other party.
Ownership and custody of goods
Unless title has expressly passed under a lawful sale, the FIRST PARTY shall remain the sole owner of consignment stock entrusted to the SECOND PARTY.
- The SECOND PARTY shall not claim any lien, title or proprietary interest over such stock except a right expressly created by law that cannot validly be excluded.
- The SECOND PARTY shall not pledge, hypothecate, encumber, loan, gift or otherwise dispose of the stock except by authorised retail sale in the ordinary course of business.
- The SECOND PARTY shall maintain safe custody, stock records and reasonable loss-prevention controls.
- The FIRST PARTY may, during reasonable business hours and with minimal disruption, verify physical stock and relevant stock records itself or through authorised representatives.
- Any verified shortage shall be reconciled at the valuation method agreed in Schedule A, after accounting for authorised sales, returns, damaged stock and documented insured losses.
Force majeure
Neither party shall be liable for delay or non-performance to the extent caused by an event beyond its reasonable control, including natural disaster, war, riot, governmental restriction, epidemic, widespread utility failure or similar event, provided the affected party promptly notifies the other, uses reasonable efforts to mitigate the impact and resumes performance when reasonably possible. Payment obligations already accrued shall not be excused merely by force majeure.
Dispute resolution and arbitration
The parties shall first attempt in good faith to resolve any dispute through written discussions for ______ days. If unresolved, the dispute shall be referred to arbitration by a sole arbitrator jointly appointed by the parties in accordance with the Arbitration and Conciliation Act, 1996, as amended. If the parties fail to agree on the arbitrator, appointment shall be made in accordance with the Act. The seat and legal place of arbitration shall be __________; hearings may be conducted physically or electronically as permitted. The language shall be English. The award shall be final and binding, subject to remedies available under applicable law.
Jurisdiction
Subject to the arbitration clause, courts at __________ shall have jurisdiction only to the extent they are otherwise courts of competent jurisdiction under applicable law. Nothing in this clause shall confer jurisdiction on a court that lacks it under law.
Counterparts and records
This Agreement may be executed in counterparts, each of which shall be treated as an original. Each party shall retain a signed copy together with schedules, inventories and amendments. Electronic execution may be used where legally valid and appropriate, subject to stamp and registration requirements.
Restriction on wholesale/dealer sales
The SECOND PARTY shall not sell consignment stock to dealers, wholesalers, resellers or other trade buyers unless expressly authorised in writing by the FIRST PARTY and such restriction is lawful and consistent with applicable competition and other mandatory laws.
Execution
IN WITNESS WHEREOF, the parties, through their duly authorised representatives, have executed this Agreement on the date first written above.
Name: __________________
Designation: _____________
Date: ___________________
Name: __________________
Designation: _____________
Date: ___________________
Witnesses
1. Name, address and signature: __________________________________________
2. Name, address and signature: __________________________________________
Legal and Compliance Notes for India
The commercial arrangement should be consistent with the Indian Contract Act, 1872. GST provisions should reflect the actual structure of the arrangement-such as principal-to-principal sale, consignment, agent/commission model or franchise-type arrangement-because invoicing and tax consequences can differ.
Retail packaged goods may also attract the Legal Metrology Act, 2009 and the Legal Metrology (Packaged Commodities) Rules, 2011, including mandatory package declarations where applicable. Brand use should be documented consistently with the Trade Marks Act, 1999.
Where showroom staff are employed, the four central Labour Codes-the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and Occupational Safety, Health and Working Conditions Code, 2020-have been brought into force from 21 November 2025. State rules and state Shops and Establishments legislation may also apply.
Stamp duty and registration requirements depend on the instrument, the rights created and the state in which it is executed. If the arrangement itself grants or creates an interest in immovable property, a separate appropriately stamped and, where required, registered lease/licence document may be necessary.
Frequently Asked Questions
Is this agreement suitable for every retail showroom?
No. It is a base format. Parties should modify it for their actual ownership, lease/licence, consignment, franchise, agency, stock, tax and employment arrangements.
Why has the old VAT/service-tax wording been removed?
The sample now uses GST-era terminology and requires the parties to allocate invoicing, GST, e-way bill, return and reconciliation responsibilities according to the actual transaction model.
Why specify the seat of arbitration?
The seat identifies the legal place of arbitration and is important for determining the procedural law and supervisory court framework under the Arbitration and Conciliation Act, 1996.