Franchising Legal Frameworks
- C. Sriporm
- Thursday 22 June 2023
2311 GJ Leiden
- Prof.dr. Jac. Hijma
- dr. I.S.J. Houben
A franchise relationship is usually asymmetrical because a franchisor exclusively possesses information about the franchisor and the franchise system and holds superior bargaining power over a franchisee. In this respect, a franchisee is susceptible to franchisor opportunism that could inflict financial loss on the franchisee. Therefore, this book aims to propose guidelines for formulating private law rules in comprehensive franchise legislation to protect a franchisee against the franchisor’s potentially unfair conduct in a franchise life cycle. This book compares the franchise legal framework of the European Draft Common Frame of Reference (DCFR), the United States of America (USA), and Australia, leading to the following conclusions. First, comprehensive franchise law should contain rules requiring a franchisor to provide a prospective franchisee with complete, current, and accurate pre-contractual information. Second, the law should contain rules regulating the franchisor’s encroaching conduct and the franchisor’s duty to provide the franchisee with initial and ongoing assistance. Third, the law should contain rules regulating the franchisor’s unfair conduct concerning transfer, non-renewal, and termination of a franchise contract. Fourth, the law should establish a remedial system that provides an aggrieved franchisee with mechanisms to compel the franchisor’s performance of the duties, claim damages, and cancel a franchise agreement.
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