Focus on Franchising

This posting was written by Pete Reap, Editor of CCH Business Franchise Guide, and John W. Arden.

News and notes on franchising and distribution topics:

□ Manitoba has proposed a franchise disclosure and relationship statute that would require franchisors to make presale disclosures to prospective franchisees, prohibit presale misrepresentations, and impose a duty of good faith and fair dealing on parties to franchise agreements. The proposal would also guarantee franchisees the right to associate and a right of rescission. As with franchise legislation enacted by Prince Edward Island and New Brunswick within the past five years, the Manitoba bill is based on the Uniform Franchises Act (CCH Business Franchise Guide ¶7021), a model law that was adopted by the Uniform Law Conference of Canada. Text of the Manitoba proposal appears at CCH Business Franchise Guide ¶14,378.


□ The ABA Forum on Franchising has announced the program for its 33rd annual Forum, to be held October 13-15, 2010 at the Hotel Del Coronado, San Diego, Calfornia. “Franchising: Some Like It Hot” will feature two half-day intensive workshops on Wednesday, October 13, followed by the two-day regular program, consisting of two plenary sessions and 24 workshops. The plenary sessions are “Strategic and Tactical Decision- Making: What Do Your Peers Think of Your Decisions” (presented by Kerry L. Bundy, Dr. Melissa M. Gomez, Harris J. Chernow, and Joesph Schumacher) and the Annual Franchise and Distribution Law Developments program (presented by Bethany L. Appleby and William K. Whitner). Co-Chairs of the meeting are Deb Coldwell and Kathy Kotel. Further information—and the meeting brochure—appear here at the Forum on Franchising website.

□ Provisions of South Africa’s Consumer Protection Act (Act No. 68 of 2008) that apply to franchise agreements came into effect on April 24, 2010. The Act requires franchise agreements to be in writing and signed by or on behalf of the franchisee. The agreement must include any prescribed information and comply with the Act’s plain language requirements. Regulations detailing franchise disclosure requirements are expected to be promulgated in the near future, but are not in the Act itself. The Act authorizes franchisees to cancel a franchise agreement without cost or penalty within ten business days after the agreement’s execution by the provision of written notice to the franchisor. Full text of the Consumer Protection Act appears at CCH Business Franchise Guide ¶7245. According to an alert posted by DLA Piper, “there has been some confusion about the scope of South Africa’s Consumer Protection Act (whether the whole Act or only parts of the Act would apply to franchising) . . . It is important to keep in mind that the Act, while imposing some consumer protection-type requirements in franchise transactions in some places (e.g., the right to be treated equally), specifically excludes franchise transactions from other provisions that apply to consumer transactions (e.g., the right with respect to the goods or services supplied).” Alert authors Philip F. Zeidman and Tao Xu advise franchisors to “carefully examine the Act and consult with counsel to determine which provisions are applicable to a franchise transaction.”