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Vol 7 (2009) - Issue 6

"Chipsaway" wins on appeal: A key decision supporting the enforceability of post-termination non-compete clauses

Mark Abell, Partner, Field Fisher Waterhouse LLP, London

The Court of Appeal's decision in the case of ChipsAway International Ltd -v- Kerr will be a welcome relief to franchisors. The court confirmed that the enforceability of a non-compete covenant will not be dependent upon the franchisor having set up a new franchisee in the franchise territory.

Illinois amends its franchise registration and disclosure laws

David W. Oppenheim, Partner and Felicia A. Nadborny, Associate, Kaufmann Gildin Robbins & Oppenheim LLP, New York

Illinois has become the third state to substantially amend its franchise registration and disclosure laws to make them more consistent with the amended FTC Franchise Rule, joining the states of California and South Dakota. In addition to conforming to the amended FTC Franchise Rule in some important ways, the amendments to the Illinois Franchise Disclosure Act (“Illinois Act”) also reflect current trends in other state franchise registration and disclosure laws. In this article, the authors summarize the key changes to the Illinois Act.

South Africa: A ripe landscape for franchising

Candice Meyer, Partner, Webber Wentzel, Cape Town

The franchising sector in South Africa has grown on average 25% per annum in recent years and is on course to double in size in the next 5 years. This article provides an overview of the business and regulatory environment for franchising in South Africa and addresses the opportunities and challenges for franchisors and franchisees.

Termination of franchise fgreements in Taiwan

Jacqueline C. Fu, Partner, K&L Gates, Taipei

This Article addresses the legal requirements under Taiwan law to terminate franchisees and the issues that frequently arise in the event of termination, including the obligations of the parties after termination and the legal remedies available to a franchisee in case of wrongful termination.

Analogous application of the Austrian Act on Commercial Agents to franchisees

Dr. Benedikt Spiegelfeld, Partner and Mag. Mark Krenn, Senior Attorney, CHSH Cerha Hempel Spiegelfeld Hlawati, Vienna

In the absence of specific franchise legislation, the Austrian Supreme Court has held that in certain circumstances the legislation governing commercial agency agreements can be applied to franchise relationships by analogy. This approach is relevant in particular to provisions relating to the termination of an agreement for good cause and compensation payable upon termination.

Turnover forecasts, dangerous?

A.M.A. Canta, Senior Associate and P.B. Hamelberg-Scheephorst, Senior Associate, CMS Derks Star Busmann, Utrecht

There is much discussion in the Netherlands on the subject of turnover forecasts provided by franchisors to their potential franchisees regarding the new business. Franchisors often provide these figures, or have them provided by third parties, to the potential franchisee for purposes of drafting a business plan or obtaining financing. When a franchisee does not achieve the turnover as forecast by the franchisor, he frequently holds the franchisor liable for damages.

New draft Vertical Agreements Block Exemption published for consultation

Cathy McKenna, Associate, Field Fisher Waterhouse LLP, London

On 28 July 2009, the Commission published a new draft Vertical Agreements Block Exemption Regulation and Guidelines for consultation with interested parties. The new draft does not fundamentally change the way that EU competition law applies to distribution and franchising agreements. It aims to respond to legal and market developments in the last 10 years. It does not however adequately reflect the significant impact of the internet on the distribution of goods and services nor take account of modifications requested by the franchising lobby.