9 Int'l J. Franchising L. 3 (2011)
The Regulation of Franchising around the World

handle is hein.journals/intjoflw9 and id is 89 raw text is: 



Mark Abell, Partner, Field Fisher Waterhouse LLP, London, UK

There  are 30 countries  that have  franchise specific laws  and although  the  influence of US
regulation  can  be detected  in  much  of  it, there is a strikingly heterogeneous approach
which  can  make  the international roll-out of franchising  somewhat   more  complicated   than
it need be. This article seeks to analyse and  categorise all 30 laws  and identify the ways   in
which  they  seek to regulate  franchising. The  analysis  identifies three basic  categories of
franchise  regulations   and  shows   that the  content   of franchise  regulations   is clearly
determined   by  their overriding  purpose,  with the  foreign trade/investment,   antitrust and
pure  franchise regulations showing   clear and obvious  differences  from each  other.

Franchise laws can be divided up into three separate
types,  each  with  a   distinct purpose  and
characteristics. These are:

(i)   Anti-trust regulations;

(ii)  Foreign trade/investment regulations;

(iii) Pure franchise regulations.

National franchise laws can be placed into these
categories by reference not only to their substantive
content but also their origins.

Anti-trust regulations are aimed at preventing
restraint of trade and generally focus upon classical
competition law issues such as tying, full line
forcing, retail price maintenance, exclusivity and so
on. These are found in Japan' and Venezuela2. The

I Japan Fair Trade Commission Guidelines, April 2002 -
These provide for disclosure and offer guidance on vertical
2 The Venezuelan Pro-Competition Agency's Guidelines for
the Evaluation of Franchise Agreements, January 7, 2000 -
These are based upon the previous EU Franchise Block
Exemption (Reg EU 4087/88).

EU has this type of regulation in the form of Article
101  of the Treaty on  the Functioning of the
European Union and the Vertical Restraints Block

Foreign trade/investment regulations are typical of
developing markets with  either a protectionist
economic policy or distinct political aims, such as
the distribution of wealth. These are found in China,
Indonesia, Kazakhstan, Korea, Moldova, Russia,
Ukraine, Belarus, Barbados and Vietnam. Typically
they seek to regulate the entry into their domestic
market of foreign business systems that escape the
restraints placed upon direct foreign investment.

Pure franchise regulations focus upon areas of
potential abuse  in  franchising, namely pre-
contractual disclosure and the in-term relationship
between the franchisor and its franchisees. These are
generally symptomatic of more developed markets
and are found in the USA, Australia, Canada, Brazil,
Taiwan, Mexico, France, Spain, Italy, Belgium and

International Journal of Franchising Law
           Volume 9 - Issue 3 - 2011
           C Claerhout Publishing Ltd.


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