10 Int'l J. Franchising L. 3 (2012)

handle is hein.journals/intjoflw10 and id is 1 raw text is: 

RECENT TRENDS IN FRANCHISE RELATIONSHIP LAWS


RECENT TRENDS IN FRANCHISE


RELATIONSHIP LAWS


John Sotos, Partner, Sotos LLP, Toronto, Canada



The global franchise regulatory landscape is dominated by legislation setting out
franchisors' pre-contractual disclosure and registration obligations. As such legislation
offers no remedies for franchisees beyond contract formation, some jurisdictions,
including priority markets for international franchisors, have enacted relationship
legislation laws regulating the parties' continuing business relationship in addition to or as
an alternative to disclosure and registration laws. This article provides a unique overview
and analysis of franchise relationship laws around the world and of the aspects of the
franchise relationship these laws typically address. These laws generally do not impose
requirements that are so burdensome they would deter a franchisor from entering into
franchise agreements, but franchisors must take them into account when drafting their
agreements.


Introduction123

Beginning in the 1950s, with franchisors such as
McDonald's, Midas Muffler, and Holiday Inn, the
franchise business model has become a popular
growth  vehicle  in both  North  America   and
worldwide. That said, the coming of age of business
format franchising in the United States during the
mid-20th century brought with it abuses by some
opportunistic franchisors seeking to line their
pockets at the expense of their franchisees. During
the late 1950s and throughout the 1960s aggrieved

 This article was originally prepared as a paper given at the
Annual Conference of the International Bar Association in
Dubai, October/November 2011, and is reproduced by kind
permission of the International Bar Association-
2 1 wish to express my sincere appreciation to Christine A.
Jackson, an associate of Sotos LLP, for her invaluable
assistance and contribution in drafting this paper.
3 I further wish to extend great thanks to Professor Karsten
Metzlaff (Noerr LLP), Anna Tsirat (Jurvneshservice), and
Tao Xu (DLA Piper), for their exceptional editorial
contribution and assistance with this paper.


franchisees sought to restrain this opportunistic
behaviour by bringing actions for redress based on
various theories of contract, tort, unjust enrichment,
and fiduciary law, and on statutory anti-trust law and
securities law.

The franchisees and the regulators, however, found
the  results largely unsatisfactory, leading to
intervention by certain of the states in the U.S., the
U.S. Federal Trade Commission, and the Province of
Alberta in  Canada in the form    of franchise
disclosure  and   registration legislation and
regulations in the early 1970s. This initial attempt at
franchise regulation was directed at the franchise
granting process, and  attempted to level the
information playing field. Pre-contractual disclosure
regulations  require  franchisors  to  provide
prospective franchisees with certain information
about the franchisor, its affiliates, existing and
former franchisees, the franchise business, the
franchise contracts, the money, and other matters to
enable the prospective franchisee to make an


International Journal of Franchising Law
          Volume 10   Issue 1 -2012
           Claerhout Publishing Ltd.

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