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Vol 8 (2010) - Issue 1

Brazil – In term and post term restraints on competition

Cândida Ribeiro Caffé, Partner and Mariana Reis Abenza, Attorney, Dannemann Siemsen Bigler & Ipanema Moreira, Rio de Janeiro

Law no 8.955/94 defines franchising and regulates the offer of franchises in Brazil. The contractual relationship between franchisor and franchisee is regulated by the Brazilian Civil Code. In addition, the legality and enforceability of non-compete clauses in franchising agreements are governed by provisions of the Antitrust Law and Industrial Property Law. Non-compete provisions are generally held to be legal and enforceable if they are reasonably limited in time and geographical scope.

New Zealand – In term and post term restraints on competition

Stewart Germann, Stewart Germann Law Office, Auckland, New Zealand

Restraint on competition clauses are common in franchise agreements and can generally be enforced provided the restrictions they impose are reasonable as regards duration and geographical area. If a court considers a non-compete clause to be unreasonable, the Illegal Contracts Act 1970 gives it the authority to delete or modify the provision in question or indeed to decline to enforce the contract.

Austria – Recent decisions of the Supreme Court related to distribution relationships

Dr. Benedikt Spiegelfeld, Partner and Mag. Mark Krenn, Senior Attorney, CHSH Cerha Hempel Spiegelfeld Hlawati, Vienna

The Austrian Supreme Court has clarified the boundaries between employment relationships and independent contractor relationships such as commercial agency and franchising agreements, an important distinction when an agency or franchising agreement is terminated. The Austrian courts do however consider employment related case law in respect of premature termination of such agreements, including cases involving contributory negligence by the franchisee

EU - Legislative and caselaw developments

Cathy McKenna, Associate, Field Fisher Waterhouse LLP, London

This report provides an overview of the changes brought about by the entry into force of the Treaty on the Functioning of the European Union (“Lisbon Treaty”) at the end of 2009 and an update on recent courtroom reviews of restrictions on internet selling in France and Germany.

Sweden – Termination of master franchise agreements

Anders Fernlund, Partner, Advokatfirman Nova, Sweden

Sweden does not have a legal framework governing the termination of multi-level agreements such as master franchise agreements, but guidance is provided by contract and procedural law. This article provides a detailed account of the forms of agreement and termination, and the consequences of termination for the master franchisee and local franchisees under Swedish law.

The impact of the UK bribery bill on franchising

Mark Abell, Partner and Tony Lewis, Partner, Field Fisher Waterhouse LLP, London

The UK government’s proposed corporate corruption clampdown is likely to result in a period of uncertainty for UK franchisors and non UK franchisors with a network in the UK. If the Draft Bribery Bill becomes law, as is likely, franchisors will have to be proactive in ensuring that they have robust anti-corruption procedures in place in both their domestic UK and international operations. This article considers in detail the impact of the Bill's provisions and the Parliamentary committee's recommendations on franchisors and franchisees.

The state of New Jersey expands reach of franchise relationship law to include coverage of distributorships – business format franchises are spared

David W. Oppenheim, Partner, Kaufmann Gildin Robbins & Oppenheim LLP, New York

On 16 January 2010, the state of New Jersey amended its franchise relationship law, The New Jersey Franchise Practices Act1 (the “Act”), to broaden its scope to govern distributorships, which had previously not been covered by the Act. As a result, franchisors and licensors with distributorships in New Jersey must comply with the Act and its limitations on termination or non-renewal of the franchise, approval of transfers and the imposition of standards of performance.