Franchise Agreement Issues


Exclusive zones: Exclusive zones are often a means of encouraging a franchisee to enter into an agreement for a given territory, so that it is not subject to competition within the franchisee regime. These agreements can become muddy if the territory is not clearly defined or if the franchisor introduces new brands. The Federal Trade Commission (FTC) intervened and created a franchise rule for disclosure of territories. It is important to see how these different laws can influence a franchising business in India and the problems that might arise. 1. compliance with the explicit terms of the agreement; 2. Authorized amendment to the agreement; 3. Enough notification; 4. An explicit right of extension; 5) discriminatory measures; and six. Constructive resignation. The brand of a franchise system is an important intellectual property right and creates added value in the franchise system.

Investing in a registered trademark should therefore be a priority. It is necessary to ensure that trademark registration includes all classes of required products and services that encompass the franchise system. Brand protection should also be a central feature of any international expansion strategy, to ensure that a franchisor can develop in important strategic markets. They say imitation is a form of flattery, but some international jurisdictions operate a “first-to-file” system, meaning that if a franchisor implements it prematurely, it may have to pay a hefty fee to remove an established filer. In addition, the trademark application process should indicate the existence of third-party rights, which means that a franchisor can then consult an opinion on entry into that market or whether the system needs to be negotiated under another name – all of this is very important before engaging in discussions with a franchise partner. A number of budget brands have encountered this problem – for example, Burger King must act as Hungry Jacks in Australia. Choice of law: a franchisor chooses the applicable law in a particular dispute. Does it cover legal or unauthorized rights? Is it contrary to public order in the franchisee`s state? The first question to be answered is the relationship between the chosen jurisdiction and those parties and their relationship. Franchisors tend to choose their country of origin, but be aware that in some jurisdictions in which the franchisee can operate, the courts have refused to impose the choice of legislation because they are contrary to public policy.

Crossings and future franchisees should therefore ensure that they invest sufficiently in their franchise systems and management teams and that they use experienced franchise consultants to ensure that their networks are built on a solid foundation and that local legal risks and issues are identified, reduced and managed effectively. Penny wise and stupid. Exclusive – It is customary to grant an exclusive domain in franchise agreements; Franchisees who sell products or services on another site are thus stopped. However, franchisees should continue to be allowed to “passively” sell, i.e. to sales that have not been initiated by them. The European Commission refers to online sales as “passive sales” so a franchisor cannot prevent a franchisee from selling its products or services online.