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Vol 2 (2004) - Issue 5

International franchise agreements - Research, risk and reward

Frank Zaid, Partner, Osler, Hoskin & Harcourt LLP, Toronto, Ontario

In this feature, Frank Zaid discusses the key legal issues that should be considered by franchisors who intend to expand their operations across international borders. He warns that the factors to be considered in planning, developing, structuring, implementing and enforcing an international franchise programme are extremely complex. After giving a detailed analysis of the key legal terms in international franchise agreements, the article concludes with an appendix which sets out sample international franchise agreement provisions.

Important developments in German franchise law through far-reaching court decisions

Albrecht Schulz and Birge Kubala, CMS Hasche Sigle, Stuttgart

In a number of simultaneous decisions on the franchise system operated by Apollo Optik, a chain of opticians, the Federal Court of Justice (Bundesgerichtshof) has made decisions which have far-reaching implications for franchise practice. These will affect many franchise systems in operation in Germany and should be observed in any new franchising agreements. Any existing agreements and the practice of numerous systems should therefore be reviewed.

Irish competition law—Recent developments

Gillian McNamara and Emma Keavney, Mason Hayes & Curran, Dublin

Irish competition law has recently undergone a series of changes, with the aim of bringing the Irish position more in line with EU competition law. This commenced with the introduction of the Competition Act, 2002 which replaced and consolidated the more piecemeal existing regime contained in the Competition Acts, 1991–1996 and the Mergers and Take-Overs (Control) Acts 1978–1996. The most recent development in this regard has been the issuance by the Irish Competition Authority in January, 2004 of a notice (“Notice”) and a declaration (“Declaration”) in respect of vertical agreements and concerted practices. The Notice and Declaration are relevant to the franchising business in that they are akin to exemptions to the prohibition on anti-competitive agreements and concerted practices contained in the Competition Act, 2002. As such, franchising agreements should be drafted to come within the terms of either the Notice or the Declaration to avoid falling foul of Irish competition law. Both documents are closely modelled on the EU Vertical Agreements Block Exemption Regulation 2790/1999 (“the EU Block Exemption”). The purpose of this article is briefly to explain the current Irish competition law regime and to highlight the changes introduced by the Notice and Declaration.

US Report October 2004

Michael G. Brennan and Tara A. Cope, Piper Rudnick LLC, Chicago

This issue's US Report is devoted to a discussion of the recent publication by the Federal Trade Commission of its Staff Report on Proposed Franchise Rule Amendments. The proposed changes-which do not yet have the force of law-will amend an FTC Rule which has been in force for nearly 25 years. These amendments will affect both the form and content of the disclosure documents provided to prospective franchisees, as well as the procedures by which disclosures are made. They will alter the manner in which franchisors offer and sell franchises in the USA.

EU Report October 2004

André Bywater and James Webber, Eversheds LLP, Brussels

The European Commission is now in a transitional phase, as the old guard makes way for the new. This means a new Commissioner taking up the reins of competition law, Neelie Kroes-Smit from Holland, whose extensive business background may make her something of a “poacher turned gamekeeper”. In the meantime, Mario Monti remains active as outgoing Commissioner, especially as regards anti-cartel enforcement as, in addition to publishing a study on the use of private litigation (see below), the Commission has publicised its desire to use a new procedure as part of its modernisation of antitrust enforcement under which the Commission can officially accept binding commitments made by cartel participants to cease anti-competitive behaviour, thereby terminating an investigation more speedily.