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Vol 4 (2006) - Issue 4

Entry into the U.S. Market: Agency, distribution or franchising

John R.F. Baer, Sonnenschein Nath & Rosenthal LLP, Chicago, Illinois U.S.A.; John A. Barrett, Jr., University of Toledo,Toledo, Ohio U.S.A.; Gaylen L. Knack, Gray Plant Mooty, Minneapolis, Minnesota, U.S.A.; John E.Young,Warner Norcross & Judd LLP, Southfield, Michigan U.S.A., and; Luiz Henrique O. do Amaral, Dannemann Siemsen Advogados, Rio de Janeiro, Brazil

The focus of this paper is on various methods of entry into the U.S. market. Foreign companies thinking of entering the U.S. market for the first time often are intimidated by the seeming complexity of the U.S. legal system and many are reluctant to enter the U.S. market as a result. Doing business in the U.S. from a legal standpoint is not as difficult as it seems. This paper will discuss the various alternative methods of distribution that a foreign company might explore to sell its goods or services in the U.S.

New China franchise regulations - replacement of approvals by registration?

Andrew Halper, Partner, Eversheds, London

The long-awaited Regulations on the Administration of Commercial Franchise Operations were promulgated by the State Council of the PRC on 6 February 2007, and will take effect on 1 May 2007. They apply equally to foreign-invested and domestic Chinese franchisors; in this note, we comment only on the key developments affecting foreign invested franchisors.

China – Judicial and legislative update 2005–2006

Paul Jones, Barrister, Solicitor & Trade-mark Agent, Jones & Co., Toronto, Canada

This article is a review of recent legislative and administrative developments affecting franchising in China, and a review of some significant trade-mark and franchising cases primarily as decided by China’s courts since the coming into force of the new Measures for the Regulation of Commercial Franchises in early 2005.

EU Report - Comments on the European Court of Justice Judgement in Volkswagen

John Grayston, Partner, Eversheds, Brussels

In order to infringe Article 81 (or its equivalents in national competition laws of the EU Member States), it is necessary to show that an anti-competitive agreement between companies has been entered into. Traditionally the European Commission has concluded that where there is an existing commercial agreement between parties, eg a distribution or franchise agreement, it will not be possible to argue that actions which seem to be in breach of Article 81 are merely unilateral acts of eg the principal and do not form part of the overall agreement. In its judgement of 13 July 2006 Volkswagen, the European Court of Justice confirmed that the Commission cannot make such an assumption and that it needs to pay more attention to determining and proving whether apparently unilateral acts in fact involve a bi-lateral agreement.

India – Retailing & franchising: The mall boom

Preeti Mehta, Partner, Messrs Kanga & Co, Mumbai, India

This article considers the rapidly growing retail sector in India and the opportunities it offers for international franchisors. India has been declared as the second most attractive destination for retailers among 30 emerging markets.

Italy – Law No. n. 173 of 17 August 2005 prohibiting pyramid selling

Professor Aldo Frignani, University of Turin, Frignani e Associati,Turin and Milan, Italy

On 17 August 2005, law n. 173, on doorstep selling and pyramid selling, was enacted in Italy. The original bill on “pyramid selling and infinite chains” was presented by Members of Parliament on March 2002. It was composed of one single article, that was limited to introducing a prohibition on pyramid selling schemes. This original bill was incorporated into subsequent bills introducing, besides the prohibition on pyramid selling schemes, also a regulation on doorstep selling activities, which is now contained in articles 1–4 of the approved text of the law.

UK Case report

Kate Stendahl, Legal Advisor, Eversheds, London

A decision by the UK Court of Appeal confirmed that a non-compete injunction imposed against franchisee discharged where the franchisor was in repudiatory breach of the franchise agreements.

Ukraine – Civil Code chapter on commercial concessions


Unofficial translation provided by the USAID Commercial Law Center Project implemented by the Emerging Markets Group (

US Report

Lauren J. Murov,Associate and Michael G. Brennan, Partner, DLA Piper Rudnick Gray Cary LLP, Chicago

An analysis of recent US case law concerning restraint of trade and termination of a franchise agreement following breach by the franchisee.