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Vol 13 (2015) - Issue 4

Canada – Developments in franchising legislation and case law

Peter Snell, Gowling Lafleur Henderson LLP, Vancouver, Canada

Franchise practitioners in Canada have to be extremely careful in crafting disclosure documents and franchise agreements to comply with provincial franchise legislation, and the interpretations of the provincial laws as dictated by the courts. This article analyses the proposed new franchise legislation in British Columbia and recent court cases considering the relationship between franchisors and franchisees. The author also discusses the first notice of violation under Canada’s Anti-Spam Legislation, which impacts franchisors’ online marketing activities.

Franchising goes global: The need for an international regulators network

Dr. Michael Schaper, Deputy Chairman, Australian Competition and Consumer Commission

Franchising regulation today sits in the middle of a paradox. It is a business model that depends on a tightly-bound set of rules and relationships between parties, and where international systems are growing and thriving. Yet it is also an industry where regulatory bodies do not communicate with each other. This article considers whether it is time for franchising regulators around the world to come together and start co-operating more effectively.

A note of caution for franchise businesses: 'commercial common sense' under the spotlight

Victoria Hobbs and Graeme Payne, Bird & Bird LLP, London

A recent decision of the Supreme Court of England and Wales has sounded a note of caution for franchise businesses regarding the role of 'commercial common sense' in interpreting business contracts under English law. It stressed that even where the parties have entered into a contract which clearly has an unduly 'alarming' outcome for one of the parties from a commercial perspective, the court will not intervene where the natural meaning of the words is clear. This decision will clearly be very influential. For franchisors, master franchisees, developers and unit franchisees alike, the decision reinforces the need to have well drafted unambiguous agreements.

Tax issues in international franchising

Tao Xu, DLA Piper LLP, Reston, USA, Kenneth S. Levinson, Faegre Baker Daniels LLP, Minneapolis, USA, Edward Levitt, Dickinson Wright LLP, Toronto, Canada and Hans van Walsem, Loyens & Loeff, New York , USA

International tax is a key element to consider when planning on franchising abroad. This article considers the many complex, and at times apparently inconsistent rules and structuring considerations affecting wishing to expand their brand abroad, with a particular focus on US outbound franchising. The analysis covers the application of double taxation rules in tax treaties, the crucial concepts of permanent establishment and transfer pricing, and the impact of withholding taxes. The authors also discuss a number of practical tax planning structures which can be employed by international franchisors.