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3 J. F. Comm. Franchising 1 (1983-1984)

handle is hein.journals/fchlj3 and id is 1 raw text is: jouna of th fru comte on n hi0n Volume 3, Number 1 ABA Forum Committee on Franchising International Franchising- A Brief Introduction by Paul A. Lester* Miami, Florida. Franchising in the United States sped through the 1950s and 1960s, slowed somewhat in the 1970s and is again picking up in new areas. It is a dynamic industry in a dynamic process, where often the franchise concept itself seems like mercury- very attractive but difficult to grab. This article notes a number of ob- servations on what a franchise is and what activity has occurred based upon international experience. Paul A. Lester While a staff attorney at the Federal Trade Commission from 1974 to 1977, my tellows and I grappled with the defi- nition of the term franchise.' The FTC's Trade Regulation Rule entitled Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures defines this intellectual concept' even though many U.S. and foreign commentators say that franchising is such a broad, generic concept that it defies precise definition as a term of art. 3 What Is a Franchise? To paraphrase a former Supreme Court Justice, I can't define a franchise but I know one when I see one. Our foreign colleagues can attest to that. Perhaps a functional analysis identifying key elements of franchising is the place to start in seeking to define the concept. The British Franchising Association has defined a fran- chise as: A contractual license granted by one person (the franchisor) to another (the franchisee) which: (a) Permits or requires the franchisee to carry on, during the *Partner, Broad and Cassel, Miami, Florida. period of the franchise, a particular business under or using a specific name belonging to or associated with the Franchisor, and (b) Entitles the Franchisor to exercise continuing control during the period of the franchise over the manner in which the Fran- chisee carries on the business which is the subject of the fran- chise, and (c) Obliges the Franchisor to provide the Franchisee with assistance in carrying on the business which is the subject of the franchise (in relation to the organization of the franchisee's business, the training of staff, merchandising, management or otherwise), and (d) Requires the Franchisee periodically, during the period of the franchise, to pay the Franchisor sums of money in consideration for the franchise, or for goods or services provided by the Fran- chisor to the Franchisee, and (e) Is not a transaction between the holding company and its sub- sidiary (as defined in Section 154 of the Companies Act 1948) or between subsidiaries of the same holding company, or between an individual and a company controlled by him.' (continued on page 14) Elsewhere in This Issue Chairman's Column ........................................... 2 Foreign Franchisors in the United States ..................... 3 Franchising Currents ........................................... 9 (Including: Tying Gasoline Purchase Requirements to Grant of Leases: Trademark Rights May Be Unlawful; Distribution Rights Not Terminable without Reasonable Term and Notice in the Absence of Agreement; Fran- chisors Experiencing Increased Exposure to Franchisees' Customers Based on Vicarious Liability; Absolute Right to Disapprove Transfer Upheld; and others.) Copyright © 1983 American Bar Association Produced by the ABA Press Summer 1983 Produced by the ABA Press Copyright @ 1983 American Bar Association

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