Presentation is loading. Please wait.

Presentation is loading. Please wait.

A Census of International Franchise Regulation

Published bySebastian Duffy Modified over 10 years ago

Similar presentations

Presentation on theme: "A Census of International Franchise Regulation"— Presentation transcript:

1 A Census of International Franchise Regulation
Andrew Terry Professor and Head School of Business Law & Taxation University of South Wales Sydney Australia Presented at the 2006 China Franchise International Summit International Franchise Academy Beijing Normal University Zhuhai PRC 11-12 November 2006

2 a healthy franchise requires adequate and appropriate infrastructure
political infrastructure economic infrastructure franchise sector commercial infrastructure legal infrastructure

3 legal infrastructure Legal institutions and processes
Commercial laws of General application franchise sector franchise-specific law?

4 franchising is a unique and proven model for business development
entrepreneurship involves risk not the role of government to remove risk but in the particular circumstances of franchising there are elements quite different to normal business development because of the control of the franchisor which can be an overriding risk for other than purely business or commercial reasons the challenge for franchise sectors – how to minimise these additional risks while leaving the commercial risks and decision to be handled by the parties.

5 franchisee relationship
information imbalance franchisor/ franchisee relationship power prior disclosure laws wide acceptance relational uncontroversial Unidroit Model Disclosure Law 2002 Relationship / conduct laws uneven acceptance highly controversial

6 justification for franchise-specific regulation
to avoid economic and social costs of business failure protect legitimate interests fairness standardisation orderly development official recognition, education and encouragement (in developing sectors) “… to regulate commercial franchise operations, protect the legitimate interests of the parties involved and promote the healthy and orderly development of commercial franchising” (China)

7 voluntary self-regulatory Codes
of Ethics adopted by national franchise associations franchise specific regulation regulation by law Act of Parliament Subordinate legislation Ministry rules

8 The regulated sectors Australia 1998 Belgium 2006 Brazil 1995 Canada Model Law 2005 Alberta 1980/1995 Ontario 2001 PEI 2007 China 1997/2005 France 1991 Indonesia 1997 Italy 2004 Japan 1983/2002 Kazakhstan 2002 Korea 1997/2002 Lithuania 2001 Malaysia 1998 Mexico 2001/2006 Romania 1997 Russia 1996 Spain 1996/2006 Sweden 2006 Taiwan 1999/2003 USA federal (FTC Rule) 1979/2007 state (UFOC) 1970(CA) Vietnam Unidroit Model Law 2002 Note: Little uniformity in nature, extent, scope and comprehensiveness of regulation.

9 definition of franchise
elements trade mark system fee control assistance specific inclusions / exclusions master franchising

10 registration Australia X Belgium Brazil Canada Model Law Alberta
Ontario PEI China France Indonesia Italy Japan Kazakhstan Korea Lithuania Malaysia Mexico Romania X Russia Spain Sweden Taiwan USA federal (FTC Rule) state (UFOC) 14 UFOC states Vietnam Unidroit Model Law

11 Other pre-conditions to franchising
Australia X Belgium Brazil Canada Model Law Alberta Ontario PEI China 2 stores/1 year France Indonesia Italy concept tested in market Japan Kazakhstan Korea Lithuania Malaysia X (but discretion to refuse regulation) Mexico X Romania X (but discretion to refuse regulation Russia Spain Sweden Taiwan USA federal (FTC Rule) state (UFOC) Vietnam operation for 1 year Unidroit Model Law

12 disclosure Franchisee prior disclosure Franchisor prior disclosure
Franchisor continuing disclosure Australia X Belgium Brazil Canada Model Law Alberta Ontario PEI China France Indonesia Italy Japan Kazakhstan  IP Korea Lithuania

13 Disclosure (cont’d) Franchisee prior disclosure
Franchisor prior disclosure Franchisor continuing disclosure Malaysia X Mexico Romania Russia Spain Sweden Taiwan USA federal (FTC Rule) state (UFOC) Vietnam Unidroit Model Law

14 franchisor prior disclosure
days pre contract/ payment prescribed disclosure document warning/ advice to franchisee Australia 14 Belgium 30 X Brazil 10 Canada Model Law Alberta Ontario PEI China 20 France Indonesia not specified Italy 15 Japan Kazakhstan Korea 5 Lithuania

15 franchisor prior disclosure (cont’d)
days pre contract/ payment prescribed disclosure document warning/ advice to franchisee Malaysia 10 X Mexico 30 Romania not specified Russia no Spain 20 Sweden “well before” Taiwan USA federal (FTC Rule) state (UFOC) Vietnam 15 Unidroit Model Law 14

16 prior disclosure non-contractual issues
Franchisor info/ experience/ litigation Start-up costs General sector info Australia X Belgium Brazil Canada Model Law Alberta Ontario PEI China France Indonesia Italy litigation Japan Kazakhstan Korea Lithuania

17 prior disclosure non-contractual issues (cont’d)
Franchisor info/ experience/ litigation Start-up costs General sector info Malaysia X Mexico some Romania Russia Spain Sweden Taiwan USA federal (FTC Rule) state (UFOC) Vietnam Unidroit Model Law

18 prior disclosure non-contractual issues (cont’d)
Existing franchise network. Non-renewals/ terminations/ transfers/ buy–backs/ceasing operation Earnings claims Franchisor financial statements Australia justify if given Belgium X Brazil Canada Model Law Alberta Ontario PEI China France Indonesia Italy if requested Japan Kazakhstan Korea Lithuania

19 prior disclosure non-contractual issues (cont’d)
Existing franchise network Non-renewals/ terminations/ transfers/ buy–backs/ceasing operation Earnings claims Franchisor financial statements Malaysia termination X Mexico Romania Russia Spain justify if given Sweden Taiwan USA federal (FTC Rule) state (UFOC) Vietnam Unidroit Model Law ceasing operation

20 prior disclosure: contractual issues
fees & payments restriction on source/ supply of products & services franchisee’s obligations (consolidated) franchisor’s obligations (consolidated) Australia Belgium X Brazil source Canada Model Law Alberta Ontario PEI China supply France Indonesia Italy Japan Kazakhstan Korea

21 prior disclosure: contractual issues (cont’d)
fees & payments restriction on source/ supply of products & services franchisee’s obligations (consolidated) franchisor’s obligations (consolidated) Lithuania X Malaysia Mexico Romania Russia Spain Sweden source Taiwan USA federal (FTC Rule) some state (UFOC) Vietnam Unidroit Model Law

22 prior disclosure: contractual issues (cont’d)
territory IP participation in franchise business operation renewal/ termination/ transfer/ dispute resolution other contract conditions Australia Belgium X some Brazil Canada Model Law copy of agreement Alberta Ontario PEI China France Indonesia Italy Japan Kazakhstan Korea

23 prior disclosure: contractual issues (cont’d)
territory IP participation in franchise business operation renewal/ termination/ transfer/ dispute resolution other contract conditions Lithuania X Malaysia Mexico Romania Russia Spain Sweden Taiwan USA federal (FTC Rule) state (UFOC) Vietnam Unidroit Model Law

24 the franchise agreement
Mandatory content Prior disclosure of specific provisions Australia X Belgium  some Brazil  few Canada Model Law + copy of agreement Alberta Ontario PEI China France Few Indonesia Italy copy of agreement Japan Some Kazakhstan Korea

25 the franchise agreement (cont’d)
Mandatory content Prior disclosure of specific provisions Lithuania X Malaysia Mexico franchisee obligations Romania Russia Some Spain Sweden few Taiwan  + copy of agreement USA federal (FTC Rule) state (UFOC) Vietnam Unidroit Model Law

26 the franchise agreement (cont’d)
Cooling off Certification re-independent advice Australia Belgium X Brazil Canada Model Law Alberta Ontario PEI China France Indonesia Italy Japan Kazakhstan Korea

27 the franchise agreement (cont’d)
Cooling off Certification re-independent advice Lithuania X Malaysia Mexico Romania Russia Spain Sweden Taiwan USA federal (FTC Rule) state (UFOC) Vietnam Unidroit Model Law

28 conduct / relationship issues
General standards of conduct Prescribed rights and obligations (consolidated) Australia X Belgium Brazil Canada Model Law fair dealing Alberta Ontario PEI China France Indonesia Italy loyalty, fairness, good faith Japan Kazakhstan Korea good faith

29 conduct / relationship issues (cont’d)
General standards of conduct Prescribed rights and obligations (consolidated) Lithuania X Malaysia best business practice Mexico Romania Russia Spain Sweden Taiwan USA federal( FTC Rule) state (UFOC) Vietnam Unidroit Model Law

30 conduct / relationship issues (cont’d)
Specific relationship issues (of general application) termination term/ renewal transfer other Australia X right to associate/ general release from liability Belgium Brazil Canada Model Law right to associate Alberta Ontario PEI China France Indonesia encroachment Italy term Japan vertical restraints Kazakhstan Korea unilateral amendment/ unfair trade practices

31 conduct / relationship issues (cont’d)
Specific relationship issues (of general application) termination term/ renewal transfer other Lithuania renewal Malaysia X confidentiality/ post termination restraints Mexico Romania general Russia trade practices Spain Sweden Taiwan USA federal( FTC Rule) state (UFOC) 19 states 18 states 10 states 7 states Vietnam Unidroit Model Law

32 dispute resolution Mediation of disputes Australia  Belgium X Brazil
Canada Model Law Alberta Ontario PEI China France Indonesia Italy Japan Kazakhstan Korea

33 dispute resolution (cont’d)
Mediation of disputes Lithuania X Malaysia Mexico Romania Russia Spain Sweden Taiwan USA federal (FTC Rule) state (UFOC) Vietnam Unidroit Model Law

34 the regulatory future The balance of informed opinion throughout the franchising world is that in the special circumstances of franchising there are elements sufficiently different to normal business development to justify regulation. Clear trend to regulation Australian experience is positive: Wide sector acceptance Stronger relationships Increased certainty Reduced disputation More effective dispute resolution Better sector/government and media cooperations Focus for sector education, research, networking Catalyst for strong sector body

35 The experience in Australia under the mandatory Franchising Code of Conduct provides comfort to those franchising sectors facing regulation that appropriate and balanced regulation can have a beneficial effect on the franchising sector and encourage its orderly development for the benefit of all stakeholders.

Download ppt "A Census of International Franchise Regulation"

Similar presentations

How Franchise Sales Laws Affect The Franchise Sales Process Starting A Franchise Washington, DC Economic Partnership Presented By: Carl E. Zwisler Gray.

How Franchise Sales Laws Affect The Franchise Sales Process Starting A Franchise Washington, DC Economic Partnership Presented By: Carl E. Zwisler Gray.
© 2008 Oracle Corporation – Proprietary and Confidential.

© 2008 Oracle Corporation – Proprietary and Confidential.
General form of a rights-based claim:

General form of a rights-based claim:
Feichter_DPG-SYKL03_Bild-01. Feichter_DPG-SYKL03_Bild-02.

Feichter_DPG-SYKL03_Bild-01. Feichter_DPG-SYKL03_Bild-02.
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust. 1.1 ACCOUNTING Financial and Organisational.

PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust. 1.1 ACCOUNTING Financial and Organisational.
Copyright © 2003 Pearson Education, Inc. Slide 1 Computer Systems Organization & Architecture Chapters 8-12 John D. Carpinelli.

Copyright © 2003 Pearson Education, Inc. Slide 1 Computer Systems Organization & Architecture Chapters 8-12 John D. Carpinelli.
Chapter 1 The Study of Body Function Image PowerPoint

Chapter 1 The Study of Body Function Image PowerPoint
Copyright © 2011, Elsevier Inc. All rights reserved. Chapter 6 Author: Julia Richards and R. Scott Hawley.

Copyright © 2011, Elsevier Inc. All rights reserved. Chapter 6 Author: Julia Richards and R. Scott Hawley.
Author: Julia Richards and R. Scott Hawley

Author: Julia Richards and R. Scott Hawley
1 Copyright © 2013 Elsevier Inc. All rights reserved. Appendix 01.

1 Copyright © 2013 Elsevier Inc. All rights reserved. Appendix 01.
Properties Use, share, or modify this drill on mathematic properties. There is too much material for a single class, so you’ll have to select for your.

Properties Use, share, or modify this drill on mathematic properties. There is too much material for a single class, so you’ll have to select for your.
UNITED NATIONS Shipment Details Report – January 2006.

UNITED NATIONS Shipment Details Report – January 2006.
RXQ.11.4.1 Customer Enrollment Using a Registration Agent (RA) Process Flow Diagram (Move-In) Customer Supplier Customer authorizes Enrollment (11.3.2.1)

RXQ Customer Enrollment Using a Registration Agent (RA) Process Flow Diagram (Move-In) Customer Supplier Customer authorizes Enrollment ( )
Document #07-2I RXQ.11.4.1 Customer Enrollment Using a Registration Agent (RA) Process Flow Diagram (Move-In) (mod 7/25 & clean-up 8/20) Customer Supplier.

Document #07-2I RXQ Customer Enrollment Using a Registration Agent (RA) Process Flow Diagram (Move-In) (mod 7/25 & clean-up 8/20) Customer Supplier.
1 Doingbusiness in 2006 Creating Jobs Simeon Djankov Manager, Doing Business Project, World Bank September 15, 2005 Belgrade.

1 Doingbusiness in 2006 Creating Jobs Simeon Djankov Manager, Doing Business Project, World Bank September 15, 2005 Belgrade.
ActionDescription 1Decisions about planning and managing the coast are governed by general legal instruments. 2Sectoral stakeholders meet on an ad hoc.

ActionDescription 1Decisions about planning and managing the coast are governed by general legal instruments. 2Sectoral stakeholders meet on an ad hoc.
The Managing Authority –Keystone of the Control System

The Managing Authority –Keystone of the Control System
1 National Police Board 16 September 2009 Elisabeth Styf President ECIIA Chief Audit Executive for the Swedish Police Service 21 police authorities, the.

1 National Police Board 16 September 2009 Elisabeth Styf President ECIIA Chief Audit Executive for the Swedish Police Service 21 police authorities, the.
International Telecommunication Union Geneva, 20-21 July 2009 1 THE CERTIFICATION AND APPROVAL REGULATION FROM ANATEL - BRAZIL Julio Cesar Fonseca Technical.

International Telecommunication Union Geneva, July THE CERTIFICATION AND APPROVAL REGULATION FROM ANATEL - BRAZIL Julio Cesar Fonseca Technical.
1 RA I Sub-Regional Training Seminar on CLIMAT&CLIMAT TEMP Reporting Casablanca, Morocco, 20 – 22 December 2005 Status of observing programmes in RA I.

1 RA I Sub-Regional Training Seminar on CLIMAT&CLIMAT TEMP Reporting Casablanca, Morocco, 20 – 22 December 2005 Status of observing programmes in RA I.

Similar presentations

Ads by Google