Search Publication

Vol 5 (2007) - Issue 2

Changes to Australia's franchise law

Penny Ward, Partner, Baker & McKenzie, Sydney

The Trade Practices (Industry Code – Franchising) Regulations 1998, known as the "Franchising Code", has regulated franchising in Australia since 1998. Changes to the Code have been announced. They are expected to be introduced in mid 2007 and to commence in mid to late 2007.

China – New franchising regulations

Wendy Lee, Head of Translation and Information, Eversheds LLP, Shanghai and Andrew Halper, Partner, Head of China Business Group, Eversheds LLP, London

Unofficial translation of the Administrative Measures for the Information Disclosure of Commercial Franchises and the Administrative Measures for the Archival Filing of Commercial Franchises

Franchising: “From whence we cometh to where we goeth”

Alex Konigsberg QC, Lapointe Rosenstein, L.L.P., Montreal

Although franchising, both domestically and internationally, has experienced what can only be characterized as spectacular growth over the last 20 to 30 years, all is nevertheless, not well. One only has to look at the multiplicity of lawsuits that are occurring on a daily basis between Franchisees and Franchisors, the failure of certain franchise systems, especially “start ups”, the lack of transparency in many franchise systems, and the palatable mistrust that exists between Franchisees and Franchisors. In addition, the constant threat of legislation specific to franchising, that can only negatively impact on franchising, even though this threat does not always result in actual legislation being adopted, does not bode well for the business of franchising. Although, as was pointed out above, there are numerous explanations for the malaise affecting franchising, it is suggested that there are really two fundamental reasons which will be the subject matter of this article.

Labour laws and franchising in Argentina

Osvaldo J. Marzorati, Of Counsel, Allende & Brea, Buenos Aires

In Argentina the distributor, concessionaire, agent and franchisee represented merchants who contracted freely with their counterparts. Their contracts provided that the responsibilities for their employees bound only them, as they are for purposes of the labour laws autonomous employers. Their employees therefore had no action against their counterparts in the commercial distribution such as principals and franchisors. Furthermore, as distributors, concessionaires, agents and franchisees are not covered by the old Commercial Code, general contract regulations are applicable. However, the labour courts have always attempted to protect the employees of the distributors, agents, concessionaires and franchisees in case of bankruptcy of their employers by recourse to a protective device contained in the labour laws.

2006: The franchising litigation year in review

Richard Little, Associate and Solicitor Advocate & Tom Strange, Solicitor, Eversheds LLP, London

It is perhaps unusual to have felt it was necessary to write a review of franchising litigation in the English Courts over a period of only a year. In the past, a combination of the application of the Civil Procedure Rules which seek to make parties examine settling their dispute at every stage prior to trial and the franchising community’s approach to resolving disputes (enshrined in the British Franchise Association’s Code of Ethics) has resulted in very few franchisor versus franchisee disputes being decided upon by the Courts. Last year however, proved to be exceptional, with a number of cases being determined by the Courts. This article reviews the key cases of last year, aims to identify what can be learned from them and summarises the considerations of wider importance that flow from them.

A convenience store chain’s franchise manager may be held liable for discrimination if considered a “franchisor” under California law

Michael G. Brennan, Partner and Lauren J. Murov, Associate, DLA Piper US LLP, Chicago

A California court denied the defendant’s motion to dismiss a claim that defendant, a franchise manager for 7-Eleven, Inc., acted discriminatorily by failing to grant a franchise to two immigrants from East Africa. According to the court’s decision, Steven Bonnville, the franchise manager for 7-Eleven may be held liable as a franchisor under the meaning of the California law prohibiting discrimination in the granting of franchises based on race, color, national origin and other characteristics.