Before framing a mind to open a cyber cafe, it is important to know the evolution of cyber cafes in the history of the world. Roots of a cyber cafe can be found in the history of South Korea. In 1988, near the Hongwick university, Seoulin, the first electronic cafe was opened by the Ahn Sang-Su and Keum Nuri. It was 16 Bit network connected to the telephones lines. The electronic cafe was a place for the user to do both online and offline task. The term cyber cafe was invented by the Ivon Pop in 1994. According to him, the cyber cafe was a cafe or a place which is equipped with full internet access. In the year 1994, Pritish Nandy, a renowned poet, film producer & politician opened the first ever cyber cafe in the hotel Leela Kempinski, Mumbai.
Choosing the best form of business entity
The first & foremost task of every businessman is to choose the best form of business entity. The business of cyber cafe can be of sole proprietorship or partnership or a company. Choosing the right type is solely depends on your capital and risk factor. If you want to take less risk or you have limited capital to start with than sole proprietorship is the best option for you. Sole Proprietorship also requires less paperwork. But in a sole proprietorship, you are personally responsible to pay your debts. On the other hand, you may think to open cyber cafes with a partner. In the partnership, your liability will be limited up to the extent of partnership agreement and profits will be divided between the partners. If you will form a company to run business cyber cafe, it will require more paperwork, more capital, Licensing & Registration. You can also open a cyber cafe franchise Setting a company is more expensive than the sole proprietorship.
If we remove the liability factor from the sole proprietorship, it is one of the best options for the business of the cyber cafe. Sole proprietorship easier to run than partnership and company. It requires less paperwork and he has the sole decision-making power.
- Cyber Cafe owner – A person who opens the cyber cafe for the purpose of the Business.
- User – means a person who avails or accesses the computer resource and includes other persons jointly participating in availing or accessing the computer resource in a cyber cafe1.
- Registered Agency2 – It is agency empowered by the Appropriate government to register cyber cafes.
- Appropriate government3 – It can be central or state government
Types of Cafe
- Internet only cafe – these are the cafes that provide only internet services.
- Combined Internet Cafes – It provides both gaming and internet services
- Pure Gaming Cyber Cafe – It provides both online and offline SERVICES.
- Cyber Cafe & Coffee – It provides access to internet services and free coffee
- Cyber Cafe & Restaurant – – It provides access to the internet and food
- Fully Equipped Cyber Cafes – fully Equipped cafes are the best cafe which is equipped with a printer, photocopy machine, fax machine, and a good infrastructure.
To open a cyber cafe, the owner has to register it with the registered agency notified by the central or state government in this regard. Generally, the power of registration of cyber cafe is given to the office of District Magistrate or to the office of the commissioner of the Police of a particular district. This registration agency will issue Unique Identification Number (UIN) to the owner.
Documents required for the registration
- Cyber Cafe Registration form – It will include details related to the Name of the cyber cafe, Address, Phone Number and Email Address & Kind of service provided by the cafe
- Types of business – sole proprietorship or partnership or company or society
- Name of owner/director/partner and photocopies of their ID proofs
- Whether it is registered or not. If yes then copy of registration from the registrar.
- Photocopy of Shop Registration Document or Rental Agreement or Lease & License Agreement of Shop Ownership Papers
- Any other documents to support proof of Establishment & Process
- Non Objection Certificate from the Owner of the place
Registration agency will follow the rules & guidelines of the appropriate government. The agency will send a person to visit a cyber cafe before granting a license to the owner.
The details of the registration of the cyber cafe would be available at the website of the agency. It is the duty of the appropriate government to establish online mechanisms to register the cyber cafe.
You can register the cyber cafe online from here http://www.cybercafeindia.com/register.php
Each state has a different process for registering the cyber cafe. The owner needs to follow the process of registration according to the rules of his home state.
List of States and links for Procedure & Registration Form for opening a cyber cafe:
Identification of user
A user who wants to use cyber cafe needs to produce a document for his identification to the owner of the cyber cafe. It is a duty of cyber cafe owner to permit user after checking his identity. The user needs to produce any one of the following documents for identification4
- Voter ID Card
- PAN Card
- An ID card issued by the government
- Driving License
- School or College ID
- Unique Identification Number
- Photo Debit or credit card
Owner of the cyber cafe should keep and maintain a record of a photocopy of identity proof which is produced by the users. It is should be authenticated by the user. It is a duty of the owner to keep the record for an at least 1 year.
For more safety and security, the owner can take a photograph of the user via webcam stored in one of the computers of the cyber cafe. The said photograph should be authenticated by the user and authorized by the owner. The camera photographs should be maintained in the log register.
The owner can allow a friend or any person who comes with the user but such permission is given after producing valid identity card of such a person.
Minor without the photo identity can avail the services only after producing the ID card of the adult accompanying him. If the owner of the cyber cafe feels any suspicion with the user, he will directly report this to the police.
Policy Regarding Auditing & Logging
- It is a duty of the owner to maintain the log register for a period of one year. The owner should check that log register is secure and not altered during this period.
- This log register should contain the information of the user and the person accompanying him.
- The log register shall contain at least the following details of the user, namely:5 — Name, Address, Gender, Contact Number, Type and detail of identification document, Date, Computer terminal identification, Log in Time, Log out Time
- The owner can also maintain the log register in an online form. Such digital log register should have the facility of a digital signature.
- The owner has to prepare a monthly record of the log register and on the 5th of every next month, he has to send this report to the concerned person appointed by the registration agency.
- It is a duty of the owner to maintain and store the backup of the following data for a period of 1 year
(i)History of websites accessed using computer resource al cyber cafe;(ii) Logs of the proxy server installed at a cyber cafe
Cyber Cafe owner can take assistance and help from the
Indian Computer Emergency Response Team (CERT-ln) for any queries related to the logs. “Guidelines
for auditing and logging – CISG-2008-01” is a guideline made and updated
by Indian Computer Emergency Response to give a helping hand to the cyber cafe
owners. These guidelines are available
Inspection of the cyber cafe
A person is appointed by the registration agency to inspect the cyber cafes. This person has the power to inspect the cafe any time. It is a duty of the owner to produce each & every document before the inspecting person. If a person who is inspecting finds anything contrary to rules6 then he can directly report it to the registration agency and on the basis of this information license of the cyber cafe can be canceled.
Owning a cyber cafe franchise? Here are the possible legal regulations you should know:
There are many companies in India providing franchises of cyber cafes. If you are planning to purchase a cyber cafe franchise, the following legal regulations you must know :
- There is no specific legislation for the franchise in India. It is governed by different statutes or legislation.
- Cyber cafe owner(Franchisee) should enter into the Franchise Agreement with the franchisor. The contractual obligation in Franchise Agreement is governed by the Indian Contract Act, 1882. Right & liabilities of franchisor & Franchisee has been listed in the Franchise Agreement.
- Franchise Agreement should be a valid contract. It should contain franchise fee, estimated investment, Royalty fees, training, and administrative support provided by the franchisor, duration, terms for renewal, rights of reselling the franchise.
- The franchisor can put reasonable restraint on the Franchisee from carrying out competing business or limiting it to a given territory. The franchisee cannot sue the franchisor for restraint for trade under section 27 of the Indian Contract Act.
- Under the Consumer Protection Act, the consumer can take remedies from both franchisor and franchisee. It is because services are given by the cafe owner under the brand name of the franchisor.
- To avoid the Monopoly by the large franchise companies, Competition Act, 2002 prohibits the arrangements of production, distribution, and control of goods and services which renders adverse effect on competition within India.
- Franchisor’s trademark name and copyright are protected under Indian Trademark Act 1999 and Copyright Act respectively. The franchisor can file in the Indian court for infringement of trademark name and copyright
1. Section 2(j), Information Technology (Amendment)Act,2008
2. Section 2(h), Information Technology (Amendment)Act,2008
3. Section 2(b), Information Technology (Amendment)Act,2008
4. Section 4, Rules made by Central government via Notification 1 April 2014,
5. Section 5, G.S.R. 315(E), Rules made by Central government via Notification 11 April 2011
6. G.S.R. 315(E), Rules made by the Central government via Notification 11 April 2011,
Symbiosis Law School, NOIDA
email: [email protected]