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Vol 15 (2017) - Issue 1

Avoiding common mistakes in international franchising

Carl E. Zwisler, Gray Plant Mooty, Washington, D.C., USA and Beata Krakus, Greensfelder, Hemker & Gale, Chicago, USA

This is the fourth article in the series “Avoiding Common Mistakes in International Franchising.” In the following pages, the authors continue their discussion of planning for international expansion, focusing on issues surrounding the establishment and enforcement of development schedules, multi-country territory issues, structuring agreements to address changes in fees and financial statement issues.

Data protection and international franchising

James Mullock and Gabe Maldoff, Bird & Bird, London, UK

Data-driven technologies, online sales, electronic and mobile marketing, and advances in data analytics present franchisors with enormous potential benefits, but equally significant challenges. Franchised brands can lose customer trust at the click of a mouse if brand owners or their franchisees fail to protect data adequately or to comply with privacy laws. At the same time, many countries are strengthening privacy regulations that aim to have global reach and fundamentally alter the way customers engage with service providers. This article explores the concept of personal information and addresses the most important data protection pitfalls franchisors need to pay attention to, particularly in light of Europe's new General Data Protection Regulation (GDPR), which will come into effect in May 2018.

Legal perspective of the regulatory framework and challenges for franchising in the EU

Graeme Payne, Bird & Bird LLP, London, UK

This article summarises a report of the European Parliament's Internal Market and Consumer Protection Committee on how franchising should be regulated in the European Union. The report analyses the dysfunctionality of current franchising regulation and proposes that this can best be rectified through a European Legal Act promoting the interests of franchisors, franchisees and consumers in a harmonised and constructive manner. The proposed regulation should focus on promoting franchising and market confidence, ensuring pre-contractual hygiene, balancing the interests of franchisors and franchisees and reconciling the priorities and concerns of different types of franchise regulation.

Legal issues for consideration when terminating franchise relationships in Korea

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

The Fair Transactions in Franchise Business Act of Korea primarily regulates the franchise relationship between a franchisor and its franchisees, with the aim of ensuring fairness in the franchise business and its attendant transactions. As such, protection is given to franchisees in relation to, among other things, ensuring a certain time period for the franchisee to continue its business – in which the franchisee’s investment lies – and limiting the franchisor from unilaterally ending the franchise relationship. While the franchisee is not subject to any particular statutory restrictions regarding termination and governed only by its contractual obligations, the franchisor is subject to many restrictions regarding termination or renewal.