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Vol 11 (2013) - Issue 1

Franchising in Ireland

Imelda Reynolds, Beauchamps Solicitors, Dublin, Ireland

Franchising in Ireland is in a growth phase, with the numbers participating in the industry increasing year on year, and some 80% of franchises originate outside of the country. This article provides an overview of the Irish legislative and regulatory framework which applies to franchising. Whereas the format of Irish franchise agreements follows that of such agreements in standard use in the UK and the US, franchisors need to take account of local law requirements. The author discusses the nature of franchise agreements, competition and intellectual property law, data protection, company law, governing law and jurisdiction, and recent case law.

Australia: Recent trends and current issues

Michael T. Schaper, Deputy Chairman, Australian Competition & Consumer Commission; Adjunct Professor, School of Management, Curtin University, Western Australia and Jason Gehrke, Director, Franchise Advisory Centre; Adjunct Lecturer, Griffith University Business School, Queensland, Australia; Deputy Chairman, Franchise Council of Australia

The Australian franchising sector consists of almost 1,200 different franchise systems and some 73,000 individual franchisee units. Since 1998, a mandatory national industry code of practice, the Franchising Code of Conduct, has spelt out certain prescribed minimum standards of information disclosure, dispute resolution and associated issues. Franchising is also subject to the Competition and Consumer Act. Both of these laws are enforced by the Australian Competition and Consumer Commission, which also has responsibility for educating the sector. This article broadly outlines the current state of Australian franchising, explains the key elements of both the Code and Act that are relevant to franchise systems, and gives a brief overview of the ACCC's enforcement and education work in the sector. It concludes by discussing some recent developments, including the introduction of Small Business Commissioners, possible pecuniary penalties for breaches of the Franchising Code, state-based franchising laws, and increasing international linkages between franchising regulators.

New franchise regulations in Indonesia

Graeme Payne and Gordon Drakes, Field Fisher Waterhouse LLP, London

Indonesia's recent economic growth and the increasing wealth and size of the local market has seen a growing demand for foreign brands and a corresponding increase in international businesses entering the market through franchising. Franchising in Indonesia has been regulated since 1997. In recent years, foreign and domestic franchise systems have spread across a number of sectors, including retail, F&B, healthcare and the services sector. All foreign and domestic franchisors are required to register with the authorities for a franchising licence prior to appointing a local franchisee. However, recent changes to the franchise regulations contain some controversial and prima facie protectionist rules which may have an adverse impact on foreign brands wishing to do business in this important market.

Financial performance representations

Ann Hurwitz and Paul Russell, Baker Botts, Dallas, Texas, USA

In most countries, franchisors that provide information about historical or projected future revenues are primarily cautioned to avoid making statements that could be construed as fraudulent claims or misrepresentations. In the United States, however, franchisors that give prospective franchisees “financial performance representations” must comply with mandated disclosure rules. Failure to comply with these rules and restrictions may subject the franchisor to governmental enforcement actions or private claims. International franchisors considering expansion into the US market must be especially cautious approaching prospective franchisees.