The franchising contract

Abstract

The exponential growth of Franchising, from its origins in the 1950's in the United States of America, until today, is attributed to a number of factors. The basiG factor lies in the expertise and strength of the franchisor and the entrepreneurial spirit of the franchisee. The introduction of franchising in Europe came later, at the beginning of the 1970's. Over the past few decades franchising has become an important commercial method, with the number of franchise systems continuously increasing ranging from all the comers of the businessspectrum from cleaning services to International hotels. The relationship between the parties in a franchise system is governed by a franchise contract. The drafting of the franchise contract forms the backbone of the franchise system. A flawless franchise contract not only provides security for a successful franchise business but also reduces the possibility of future misunderstanding between the franchisor and the franchisee that may lead to the eventual termination of the franchise relationship. A perfect model of a franchise contract is inexistent. A franchise contract is drafted according to the objectives of the franchise system. This thesis gives an outline of essential provisions which need to be catered for in every franchise agreement. The exponential growth of the Internet has given rise to new elements which need to be reflected upon in the franchise contract. Although, specific legislation for franchising is verylimited, a franchise agreement is subject to a considerable number of laws and regulations. A franchise contract may appear prima facie to be valid, however it may then be considered void as it may inadvertently be caught by a particular piece of legislation. Special consideration needs to be given to legislation and regulations to which a franchise agreement may be subject to. In this thesis, special consideration is given to competition law, intellectual property rights, general civil law provisions, EU Regulations and Directives as well as E-Commerce legislation.