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Vol 13 (2015) - Issue 1

Franchising cases in Malaysia

Lin Li Lee, Tay & Partners, Kuala Lumpur, Malaysia

The Malaysian Franchise Act, among other, provides for registration of the franchise agreement and the automatic renewal of franchise agreements at the end of the term. The penalties for contravention of the Act have been amended by prescribing different penalties for offences committed by a body corporate and that of non-body corporates such as natural persons or partnerships. This article analyses two court cases, which provide an insight into how Malaysian courts interpret the Act’s provisions.

Encroachment issues around the world

Rocío Belda de Mergelina, Garrigues SLP, Madrid, Spain, Eric H. Karp, Witmer, Karp, Warner & Ryan, LLP, Boston, USA and Ted P. Pearce, Nexsen Pruet, PLLC, Charlotte, USA

Encroachment can occur when a franchisor, through company-owned outlets or by granting other franchises, competes in the same market with an existing franchisee’s business, often leading to disputes between franchisors and franchisees. Most franchise systems accord franchisees some form of protected area in which it will be secure against competition from a similar branded outlet for a period of time. In the franchise agreement, the grant of a protected territory is usually followed by the reservation of rights provision. This article analyses the law and case law in various countries around the world in relation to territorial exclusivity and reservation of rights with a particular focus on franchise specific disclosure regulations, competition law, contract law and the concept of good faith. Franchisors focused on expanding their systems in other markets must understand the relevant legal frameworks in order to grapple with the intricacies of territorial development and the consequences of encroachment.

Recent trends in enforcement of laws in Korea

Soowon Hong, Hwang Mok Park P.C., Seoul, Korea

Recent changes to the Korean Fair Transactions in Franchise Business Act and enforcement activity by the Korea Fair Trade Commission (KFTC) show a pro-active focus on eliminating abusive practices and establishing fair competition in the franchise business. This article analyses the stricter regulatory and enforcement framework for franchising in Korea and concludes that these risk becoming a barrier to foreign companies looking to expand their franchise systems into Korea.

The new Australian Franchising Code of Conduct and the obligation of good faith – will it live up to expectations?

Kathryn Edghill, Bird & Bird, Sydney, Australia

This article examines one of the most significant changes to the Australian Franchising Code of Conduct, the introduction of an express obligation to act in good faith. It discusses the impact of that change on the franchisor/franchisee relationship and considers whether it applies to the conduct of franchisees. An analysis of established case law on good faith and reasonableness in franchise agreements shows that the introduction of an express obligation of good faith has not fundamentally changed the law, but merely codified the rules.