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Vol 10 (2012) - Issue 2

U.S. report – California scheming

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

The Level Playing Field for Small Business Act of 2012 was introduced in the California Assembly on 24 February 2012. The pending bill, which would amend California’s franchise registration/disclosure law and franchise relationship law, is deeply threatening to domestic and international franchisors’ ability to intelligently administer their networks. This article analyses the provisions of the bill and their likely impact on franchisors in detail, and assesses the future of the bill in the context of the political landscape in California.

The regulation of franchising in EU Member States

Dr. Mark Abell, Partner, Field Fisher Waterhouse, LLP, London

This article examines how franchising is regulated by EU member states providing a detailed comparison of the legal framework in those countries which have specific franchising laws. The analysis covers the definition of franchising, disclosure obligations, regulation of the franchising relationship and registration requirements. The author considers to what extent legislation has benefited franchising and concludes that the lack of heterogeneity between member states’ franchise laws creates a barrier to franchisors seeking to expand into the EU.

State franchise regulation and the Contract Clause of the U.S. constitution: unresolved issues concerning American federalism

Alexander M. Meiklejohn, Professor of Law, Quinnipiac University School of Law, Hamden, Connecticut, United States

In the U.S., franchise sales and franchise relationships are regulated at both the federal level and the state level. A number of states maintain franchise or dealership laws that purport to apply to agreements formed before their effective dates. “Retroactive” application of state regulatory laws is subject to challenge under the Contract Clause of the U.S. Constitution. That Clause limits the authority of the states to enact laws that impair contractual obligations that exist when the laws take effect. This article analyses the complex interaction between U.S. federal and state law in cases decided under the Clause. The U.S. Supreme Court has failed to resolve important questions concerning the interaction – questions that create uncertainty for parties to franchise agreements and their counsel. The Court should resolve the questions, thereby reducing litigation risks in Contract Clause cases.

The Province of Manitoba enacts franchise disclosure legislation

Debi M. Sutin, Partner, Gowling Lafleur Henderson LLP, Toronto, Canada

The Province of Manitoba’s Franchises Act, passed in June 2010, will come into force on October 1, 2012. Although substantially similar to the disclosure requirements under those provinces in Canada which regulate franchising, a franchisor wishing to grant franchises in Manitoba effective October 1, 2012 must amend their disclosure document in order to comply with the specific, and sometimes unique, requirements of Manitoba’s franchise disclosure legislation. This article analyses these ‘Manitoba-specific’ requirements.