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Vol 12 (2014) - Issue 4

Canada’s anti-spam/anti-spyware legislation: An overview

Dominic Mochrie, Osler, Hoskin & Harcourt LLP, Toronto, Canada

The franchising industry in Canada has witnessed quite a few changes within the last year. Most recently, franchisors and franchisees are coming to terms with the impact of new anti-spam/anti-spyware legislation that will profoundly alter the way all organizations (not just franchisees and franchisors) conduct business in Canada. Provisions in relation to commercial electronic messages came into force on 1 July 2014. Further provisions on the installation of computer programs and a private right of action will come in to force in January 2015 and July 2017 respectively. This article provides a detailed overview of the new regulatory framework and assesses its impact on the franchising sector.

Franchising in Australia: A history

Michael T. Schaper, Ph.D., Deputy Chairman, Australian Competition & Consumer Commission; Adjunct Professor, John Curtin Institute of Public Policy, Curtin University and Jenny Buchan, Ph.D., Associate Professor, Australian School of Business, University of New South Wales

This article provides an overview of the development of franchising within Australia since its inception, with a particular focus over the last fifty years. It begins by discussing the introduction of some of the major individual franchise systems, and then examines the growth in numbers of franchisees and franchise systems. The history of government policy responses, and the evolution of regulation in the sector, is then outlined. This is followed by an overview of the emergence of franchising industry associations, and a discussion of some of the major advances in research and education. Whilst some early systems were already in operation by the end of World War Two, it was not until the late 1960s and early 1970s that the sector began to have a substantial presence in Australia. Initial activity primarily occurred in the automotive, petroleum and, somewhat later, fast food industries. By 1992 there were an estimated 450 franchise systems operating in the country. By 2002 this had grown to 700, and then over 1,100 systems and 73,000 outlets in 2012. The first legislation relating to franchising emerged at the state level during the 1970s and 1980s when several states and territories created their own franchising Commissioners to collect levies in particular industries, such as tobacco retailing. Other state laws were also enacted in the 1970s to regulate franchising in specific industries such as real estate. At the federal level, a growing level of debate and numerous formal enquiries led first to specific laws for the petroleum industry in 1980, followed by a voluntary national Code of Practice for all sectors in 1993, and then ultimately to a mandatory nation-wide Franchising Code of Conduct in 1998. A franchise industry association, now known as the Franchise Council of Australia, first emerged in 1982. Specific education and research in the sector began in Australian universities in the early 1990s, and has continued to grow since then.

Franchising – A viable option in the Indian retail sector

Sajai Singh, J. Sagar Associates, Bangalore, India

The retail landscape in India is changing rapidly on the back of a favourable demographic profile, growing brand awareness, rising disposable income levels and an industry appetite to cater to this emerging consumption boom. Franchising represents only 2.5% of the organised retail segment worth around USD 24 billion. Following an overview of the foreign direct investment regulatory regime in India, this article considers the structure of the Indian franchising sector and the laws applicable to franchising. The author concludes that franchising is a viable, and on many ways preferable, option for foreign brands seeking to benefit from the growing Indian retail sector.

Bitcoin and international franchising

Dr Mark Abell, Simon Fielder and Mumuksha Singh, Bird & Bird LLP, London, UK

As Bitcoin continues to gain traction, franchisors need to consider how best their documentation can facilitate the use of Bitcoin both in their franchisee’s consumer facing transactions and as a method of paying franchise fees. This article considers how this new crypto-currency may impact franchising businesses and suggests some of the steps that franchisors can take to mitigate the resulting risks. The author describes what Bitcoin is, its origins and commercial challenges are, whether and how franchised businesses should consider using, and how developments in regulation and taxation are impacting its use.

United States – Litigation and legislation update

Ronald K. Gardner, Dady & Gardner, P.A., Minneapolis, USA

There were approximately 500 cases decided in the last year in the United States affecting the issues that are typically in play in franchise and distribution cases. This article focuses on a number of key trends emerging from this substantial body of case law, in particular as regards the extent to which contract clauses preclude fraud claims and the complex question of vicarious liability of the franchisor. Additionally, there is a significant uptick in potential legislative activity in various states, particularly as it relates to the rights of franchisees.