December News
FRANCHISE EXHIBITIONS OF THE MONTH
Printable version
List of franchise legislation by country
Regulation in Europe affecting franchising
Legislation specific to franchising is very limited in Europe (in the EU and in non EU countries) for the very good reason that issues arising about contractual terms in franchising agreements are in effect fully and adequately covered by the national laws of each country, notably contractual law, the general principles of law (civil or common law), commercial, social, and fiscal law, as well as by national or European jurisprudence.
Regulation at a national level : laws on pre-contractual information disclosure
Four countries in the EU have adopted legislation whose objective is to require that the franchisor (the party offering franchises for sale) disclose – fully and unequivocally – specified information to the prospective franchisee before the signing of the franchise contract.
List of franchise legislation by country
| Albania | a) 1994 | a) 1994 Civil Code (Kodi Civil i Republikës së Shqipërisë (Miratuar me ligjin nr. 7850, datë 29.7.1994) | |
| b) 1997 | b) Lege pentru aprobarea Ordonantei Guvernului N° 52/1997 privind regumul al franchisei | ||
| c) 1997 | c) Decret privind promulgarea Lege pentru aprobarea Ordonantei Guvernului N° 52/1997 privind regumul al franchisei | ||
| Australia | 1998 Amended 2001 | A mandatory Franchising Code of Conduct was adopted on July 1,1998; amended in 2001; The Code is a Regulation prescribed under the Trade Practices Act, 1974 (Industry Codes – Franchising) Regulations 1998, Statutory Rules 1998 No. 162 as amended) | Covers disclosure, registration and some relationship provisions |
| Belgium | 2006 | Law relative to pre-contractual information in the framework of agreements of commercial partnership. Law adopted on December 19, 2005, modified on December 27, 2005; came force on February 1, 2006. | Covers disclosure; Foresees an Arbitration committee to report in Oct. 2006 on the impact of the law; |
| Brazil | 1995 | Lei n. 8.955 de 15 de dezembro de 1994 -(enacted in 1995) Dispõe sobre o contrato de franquia empresarial (“franchising”), e dá outras providências | Covers disclosure |
| Canada | a)1995 | a) Province of Alberta: Franchises Act, R.S.A. 2000, Chapter F-17-23, assented to May 17, 1995, effective November 1, 1995, which revised the 1980 Franchises Act. The Ministerial Regulation detailing the information to be disclosed was adopted in September 1995 | No federal legislation; Only in 2 provinces |
| b) 2000 | b) Province of Ontario: Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, Chapter 3 | b) and c): disclosure and relationship provisions | |
| c) 2000/2001 | c) Province of Ontario: Regulations containing provisions on what should be disclosed were adopted in October 2000 and amended in November 2000 Whereas the Sections dealing with such matters as fair dealing came into force on 1 July 2000, those relating to disclosure of information to prospective franchisees came into force only on 31 January 2001. | ||
| China (Republic) | a)1997 | a) 14th November 1997: Measures for Administration of Franchise Operations, Domestic Trade Xing-Zi (1997) No. 124 | |
| b) 2004 | b) 16th April 2004: Administrative Measures: Foreign Investment in Commercial Sectors | ||
| c) 2005 | c) December 31st 2004– effective February 1st 2005: Measures for the Regulation of Commercial franchising | The regulations enacted in February of 2005 require that a foreign franchisor operate two pilot locations for a minimum of one year before offering franchises in China. Also, the foreign franchisor must be registered with the Chinese government. | |
| European Union | a) 1999 | a) Commission Regulation (EC) N° 2790/1999 of 22 Dec. 1999 on the application of Article 81(3) of the Treaty of Amsterdam to categories of vertical agreements and concerted practices OJ L 336, 29/12/1999 p. 0021 - 0025 and its Guidelines : Commission Notice: Guidelines on Vertical Restraints. OJ C 291, 13/10/2000 p. 01 – 44 |
This EU legislation relates to the domain of Competition specifically (inter-State competition within the Single Market); in so far as certain contracts may contain clauses that are by nature restrictive of this competition, they fall in principle under the prohibitions of Art. 81 of the Treaty. However, if in economic terms (market share) these clauses can be shown not to restrict competition, they can benefit from “block” exemptions. |
| b) 2001 | b) Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article 81(1) of the Treaty establishing the European Community (“de minimis notice”) Official Journal C 368, 22.12.2001, pages 13-15 |
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| c) 2002 | c) Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle sector OJ L 203, 01.08.2002, pages 30-4 + its explanatory brochure |
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| d) 2003 | d) EC Council Regulation 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty | ||
| France | a) 1989 | a),Loi n° 89-1008 du 31 décembre 1989 relative au développement des entreprises commerciales et artisanales et à l'amélioration de leur environnement économique, juridique et social (« Loi Doubin ») | a) the Loi Doubin affects franchising, but is not limited to franchising; it covers disclosure only, whose details are given in the décret (b) |
| b) 1991 | b) Décret n° 91-337 du 4 avril 1991 portant application de l'article 1er de la loi n° 89-1008 du 31 décembre 1989 relative au développement des entreprises commerciales et artisanales et à l'amélioration de leur environnement économique, juridique et social | ||
| Indonesia | a) 1997 | a) Regulation N° 16:1997 on Franchising (Regulation Nr. 16) | Disclosure and relationship provisions |
| b) 1997 | b) Decree No. 259/MPP/Kep/7/1997, of 30 July 1997of the Minister of Industry and Trade Concerning the Provisions on and the Procedure for the Implementation of Franchised Business Registration, | ||
| Italy | 2004 | Legge 6 maggio 2004 no. 129 : Norme per la disciplina dell’affiliazione commerciale | “commercial affiliation” refers in this law to franchising |
| Japan | a) 1973, amended in 2002 | a) Medium-Small Retail Business Promotion Act (Act No. 101) of 29 September 1973 | |
| b) 1973, amended in 2002 | b) Ministerial Order implementing the Medium-Small Retail Business Act (Ministerial Order No. 100) of the Minister of International Trade and Industry of 29 September 1973, both revised in April 2002 | ||
| c) 2005 (Nov) | c) Ord. on the Unfair trade practices in transactions by large retailers with its suppliers (replaces the Ord. on the Unfair trade practices in transactions by Department Stores) | c) the ordinance affects large retailers and, as the case may be, their franchisees | |
| Kazakhstan | 2002 | Law No. 330 of 24 June 2002 concerning the Integrated Business Licence (Franchise) | |
| Korea | a) 1997 | a) Fair Trade Commission Notice No. 1997- 4 | |
| b) 2002 | b) Act on Fairness in Franchise Transactions (in force 1 November 2002) | ||
| c) 2002 | c) Enforcement Decree of the Act on Fairness in Franchise Transactions (Enacted 6 November 2002 by Presidential Decree No 17773, Ministry of Government Administration and Home Affairs) | ||
| Lithuania | 2001 | 1 July 2001: In Chapter XXXVII, Vol. 6 of the new Civil Code of the Republic of Lithuania. Articles 6.766 – 6.779 relate to franchising. ( Civil Code of the Republic of Lithuania No 74 of 6 September 2000.) | This legislation is the exact copy of the Russian legislation for franchising (see below), except that in Lithuania, the CC speaks of “franchising” whereas in the Russian law, it refers to “commercial concession” |
| Malaysia | 1999 | Franchise Act, Act 590, given Royal Assent on 24 December 1998, enacted in 1999 | Includes registration |
| Mexico | a)1991 | a) Ley de la Propriedad Industrial, in Diario Oficial, 27 June 1991, effective as of 28 June 1991 | |
| b)1994 | b) Reglamento de la Ley de la Propriedad Industrial | ||
| Romania | 1997 | Ordinance of 1997 (Ordonance Nr. 52 din 28.8.1997 privind regimul juridic al francizei) | Covers disclosure |
| Russia | 1996 | Civil Code, Part II, Chapter 54, Articles 1027 – 1040- relates to franchising | Covers disclosure |
| South Korea | 1997 | Notice Nr. 1997-4 Of teh Fairi Trade Commission | Licensing laws that affect franchising |
| Spain | a) 1996 | a) Ley 7/1996, de 15 de enero, de Ordenación del Comercio Minorista, Boletín Oficial del Estado, 15 del 17 gennaio 1996 | Covers disclosure and registration; Decreto 2485/1998 is undergoing revision with the aim to improve the implementation of the registration rules for franchises and master-franchises |
| b) 1998 | b) Real decreto 2485/1998 de 13 de noviembre, por el que se desarrolla el artículo 62 de la Ley 7/1996, de 15 de enero, de Ordenación del Comercio Minorista, relativo a la regulación del régimen de franquicia, y se crea el Registro de Franquiciadores | ||
| Sweden | Law N° 2006:484 of May 24, 2006 | Law on the Duty of a Franchisor to provide pre-contractual information | |
| USA | a) 1979/2004 | a) at Federal level: 1979 Federal Trade Commission Rule on Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (reviewed in 2004) | The FTC has produced its UFOC guidelines (Uniform Franchise Offering Circular) in order to facilitate compliance to its disclosure requirements. |
| b) | b) at State level: a number of states have disclosure laws which often include a requirement for registration too; others have relationship laws. |
List of the countries in which franchise legislation is being considered
| South Africa | ? | A draft law is before the SA parliament. It has the support of the SA Franchise Association. It aims at protecting the investment of small new franchisees in the context of a nascent national commercial class. |
| Vietnam | ? | A draft law is in preparation. |
| Greece | ? | A draft law on pre-contractual information is in preparation. |
Note
If you have knowledge of changes to the list above, or are aware of pending or new legislation that may impact the franchising industry, please send details to:
Carol Chopra
Executive Director of the European Franchise Federation
info@eff-franchise.com
