Editing Franchising (section)

===Europe===
Franchising has grown rapidly in Europe in recent years, but the industry is largely unregulated.  The European Union has not adopted a uniform franchise law.<ref>{{Citation |title=Commission Regulation (EEC) No 4087/88 of 30 November 1988 on the application of Article 85 (3) of the Treaty to categories of franchise agreements |date=1988-12-28 |url=http://data.europa.eu/eli/reg/1988/4087/oj/eng |issue=31988R4087 |access-date=2022-11-05}}</ref> Only six of the 27 member states have a pre-contract disclosure law. They are France (1989), Spain (1996), Romania (1997), Italy (2004), Sweden (2004) and Belgium (2005).<ref>{{cite web |last=Perala |first=Jon K. |date=2007 |title=Franchise Disclosure Laws in the European Union |url=http://www.peralaw.com/franchise_disclosure.html |url-status=dead |archive-url=https://web.archive.org/web/20200731191544/http://www.peralaw.com/franchise_disclosure.html |archive-date=2020-07-31 |access-date=22 March 2015 |website=Perala Law Office}}</ref> Estonia and Lithuania have franchise laws that impose mandatory terms on franchise agreements.  In Spain there is also mandatory registration on a public registry. Although they have no franchise specific laws, Germany and those countries with a legal system based upon that of Germany, such as Austria, Greece and Portugal, probably impose the greatest regulatory burden on franchisors due to their tendency to treat franchisees as quasi consumers in certain circumstances and the willingness of the judiciary to use the concept of good faith to make pro-franchisee decisions. In the UK, the recent{{when|date=February 2015}} Papa John case shows that there is also a  need for pre-contractual disclosure and the Yam Seng case shows that there is a duty of good faith in franchise relationships.

The European Franchising Federation's Code of Ethics has been adopted by seventeen national franchise associations. However this has no legal force and enforcement by the national associations is neither uniform of rigorous. Commentators like Dr Mark Abell, in his book ''The Law and Regulation of Franchising in the EU'' (published in 2013 by Edward Elgar, {{ISBN|978 1 78195 2207}}) consider this lack of uniformity to be one of the greatest barriers to franchising realising its potential in the EU.

When adopting a European strategy, it is important that a franchisor takes expert legal advice. Most often one of the principal tasks in Europe is to find retail space, which is not so significant a factor in the US. This is where the franchise broker, or the master franchisor, plays an important role. Cultural factors are also relevant, as local populations tend to be heterogeneous.

====France====
France is one of Europe's largest markets. Similar to the United States, it has a long history of franchising, dating back to the 1930s. Growth came in the 1970s. The market is considered difficult for outside franchisors because of cultural characteristics, yet McDonald's and Century 21 are found everywhere. There are some 30 U.S. firms involved in franchising in France.<ref>{{cite web |last=Faria |first=Rose Marie |title=France Serves as a Gateway to Europe – International Franchise Association |url=http://www.franchise.org/franchise-news-detail.aspx?id=33190 |url-status=dead |archive-url=https://web.archive.org/web/20140410071408/http://www.franchise.org/Franchise-News-Detail.aspx?id=33190 |archive-date=10 April 2014 |access-date=30 December 2017 |website=International Franchise Association}}</ref>

There are no government agencies regulating franchises. The Loi Doubin Law of 1989 was the first European franchise disclosure law. Combined with Decree No. 91-337, it regulates disclosure, although the decree also applies to any person who provides to another person a corporate name, trademark or trade name or other business arrangements.  The law applies to "exclusive or quasi-exclusive territory". The disclosure document must be delivered at least 20 days before the execution of the agreement or any payments are made.

The specific and important disclosures to be made are:<ref name="EUFD">{{Cite web |last=Perala |first=Jon K. |date=2007 |title=EU Franchise Disclosure |url=http://www.peralaw.com/EU_Franchise_Disclosure.html |url-status=dead |archive-url=https://web.archive.org/web/20110715063805/http://www.peralaw.com/EU_Franchise_Disclosure.html |archive-date=2011-07-15 |website=Perala Law Office}}</ref>

#  The date of the founding of the franchisor's enterprise and a summary of its business history and all information necessary to assess the business experience of the franchisor, including bankers,
#  A description of the local market for the goods or services,
#  The franchisor's financial statements for the previous two years,
#  A list of all other franchisees currently in the network,
#  All franchisees who have left the network during the preceding year, whether by termination or non-renewal, and
#  The conditions for renewal, assignment, termination and the scope of exclusivity.

Initially, there was some uncertainty whether any breach of the provisions of the Doubin Law would enable the franchisee to walk away from the contract.
However, the French supreme court ({{Lang|fr|Cour de cassation}}) eventually ruled that agreements should only be annulled where missing or incorrect information affected the decision of the franchisee to enter into the agreement. The burden of proof is on the franchisee.<ref>{{cite web |date=October 2009 |title=Franchise disclosure items in Europe |url=http://www.ffw.com/pdf/Franchise-disclosure-in-Europe.pdf |url-status=dead |archive-url=https://web.archive.org/web/20110710235841/http://www.ffw.com/pdf/Franchise-disclosure-in-Europe.pdf |archive-date=10 July 2011 |access-date=30 December 2017 |website=Field Fisher Waterhouse}}</ref>

Dispute settlement features are only incorporated in some European countries. By not being rigorous, franchising is encouraged.

====Italy====
Under Italian law franchise<ref>{{cite web |date=2007 |title=Franchising in Europe: comparative survey |url=http://www.eurofranchiselawyers.com/pdf/Comparative_Table_08_06_09%20printable.pdf |url-status=dead |archive-url=https://web.archive.org/web/20110710204622/http://www.eurofranchiselawyers.com/pdf/Comparative_Table_08_06_09%20printable.pdf |archive-date=2011-07-10 |access-date=2010-02-28 |website=Eurofranchise Lawyers}}</ref> is defined as an arrangement between two financially independent parties where a franchisee is granted, in exchange for a consideration, the right to market goods and services under particular trademarks.  In addition, articles dictate the form and content of the franchise agreement and define the documents that must be made available 30 days prior to execution. The franchisor must disclose:

:a)  A summary of the franchise activities and operations,
:b)  A list of franchisees currently operating in the franchise system in Italy,
:c)  Year-by-year details of the changes in the number of franchisees for the previous three years in Italy,
:d)  A summary of any court or arbitral proceedings in Italy related to the franchise system, and
:e)  If requested by the franchisee, copies of franchisor's balance sheets for the previous three years, or since start-up if that period is shorter.

====Norway====
There are no specific laws regulating franchising in Norway. However, the Norwegian Competition Act section 10 prohibits cooperation which may prevent, limit or diminish the competition. This may also apply to vertical cooperation such as franchising.<ref>{{Cite web |date=2018-09-03 |title=Ulovlig samarbeid - § 10 - Konkurransetilsynet |url=https://konkurransetilsynet.no/ulovlig-samarbeid/ |access-date=2023-02-16 |language=nb-NO}}</ref>

====Russia====
In Russia, under chapter 54 of the Civil Code (passed 1996), franchise agreements are invalid unless written and registered, and franchisors cannot set standards or limits on the prices of the franchisee's goods. Enforcement of laws and resolution of contractual disputes is a problem:{{citation needed|date=November 2024}} [[Dunkin' Donuts]] chose to terminate its contract with Russian franchisees who were selling vodka and meat patties contrary to their contracts, rather than pursue legal remedies.<ref>{{Cite journal |last1=Anttonen |first1=Noora |last2=Tuunanen |first2=Mika |last3=Alon |first3=Ilan |date=2005 |title=The International Business Environments of Franchising in Russia |journal=Academy of Marketing Science Review |volume=5 |pages=1–18}}</ref>

====Spain====
The legal definition of franchising in Spain is an activity in which an undertaking, the franchisor, grants to another party, the franchisee, for a specific market and in exchange for financial compensation (either direct, indirect or both), the right to exploit an owned system to commercialize products or services already exploited by the franchisor with enough success and experience.

The Spanish Retail Trading Act regulates franchising.<ref>The offer and sale of franchises are governed in Spain by the Retail Trade Act 7/1996 of January 15 as amended by [http://www.boe.es/boe/dias/2010/03/02/pdfs/BOE-A-2010-3365.pdf Act 1/2010 of March 1]. Particularly Article 62 is applicable to franchise agreements. The Act is completed by the [http://www.boe.es/boe/dias/2010/03/13/pdfs/BOE-A-2010-4175.pdf Royal Decree 210/2010 of February 26 on Franchise Agreements].</ref> The contents of the franchise must include, at least:
* The use of a common name or brand or any other intellectual property right and a uniform presentation of the premises or the transport means included in the agreement.
* The communication by the franchisor to the franchise of certain technical knowledge or substantial and singular know-how that has to be owned by the franchisor, and
* Technical or commercial assistance or both, provided by the franchisor to the franchisee during the agreement, without prejudice to any supervision faculty to which the parties could freely agree in the contract.

In Spain, the franchisor submits the disclosure information 20 days prior to signing the agreement or prior to any payment made by the franchisee to the franchisor. Franchisors are to disclose to the potential franchisee specific information in writing. This information has to be true and not misleading and include:
* Identification of the franchisor;
* Justification of ownership or license for use of any trademark or similar sign and judicial claims affecting them as well as the duration of the license;
* General description of the sector in which the franchise operates;
* Experience of the franchisor;
* Contents and characteristics of the franchise and its exploitation;
* Structure and extension of the network in Spain;
* Essential elements of the franchise agreement.

Franchisors (with some exceptions) should be registered in the Franchisors' Register and provide the requested information. According to the regulation in force in 2010 this obligation has to be met within three months after the start of its activities in Spain.<ref>{{Cite book |last=Alonso |first=Ignacio |url=http://www.gettingthedealthrough.com/ |title=Getting the Deal Through |year=2011 |chapter=Franquicia. España}}</ref>

====Turkey====
Franchising is a [[sui generis]] contract which bears the characteristics of several explicitly regulated contracts such as; agency, sales contract and so forth. The regulations concerning these kinds of contracts in Turkish Commercial Code and in Turkish Code of Obligations are applied to franchising. Franchising is described in doctrine and has several essential components such as; the independence of the franchisee from the franchisor, the use of know-how and the uniformity of product and services, standard use of the brand and logo, payment of a royalty fee, increasement of sales by the franchisee and continuity.
Franchising may be for a determined or undetermined period of time. The undetermined one can only be annulled either by a notice before a reasonable amount of time or by a just cause. The franchising agreement with a determined time period ends within the end of the time period if not specified otherwise in the agreement. However, termination based on just cause is also foreseen for franchising agreement with a determined time period.

====United Kingdom====
In the United Kingdom there are no franchise-specific laws, and franchises are subject to the same laws that govern other businesses.<ref>{{cite journal |last1=Adams |first1=John |title=Franchising and antitrust in the United Kingdom and European Community |journal=The Antitrust Bulletin |date=December 1981 |volume=26 |issue=4 |pages=815–837 |doi=10.1177/0003603X8102600408|s2cid=240424713 }}</ref> Even without direct legislation, judicial decisions indicate that a franchisor is expected to provide a clear disclosure of relevant facts before the franchisee enters into a franchise, and that franchisors have a duty of good faith.<ref>{{cite journal |last1=Gusarov |first1=Kostyantin |last2=Diadiuk |first2=Anastasiia |title=Economic and Legal Aspects of the Franchise Agreement in the United Kingdom |journal=Baltic Journal of Economic Studies |date=1 August 2019 |volume=5 |issue=3 |pages=44 |doi=10.30525/2256-0742/2019-5-3-44-49|s2cid=201436368 |doi-access=free }}</ref> The Trading Schemes Act, which governs arrangements in which participants may receive a benefit or reward for introducing other participants to a scheme or sell goods or services provided by the person who is promoting the scheme, may apply to multi-tiered franchises.<ref>{{cite journal |last1=Pratt |first1=Jojn |title=Franchising in the United Kingdom |journal=Franchise Law Journal |date=Fall 2012 |volume=32 |page=95}}</ref> The industry engages in some self-regulation through the British Franchise Association (BFA) and the Quality Franchise Association (QFA).

There are a number of franchise businesses which are not members of the BFA and many which do not meet the BFA membership criteria. Part of the BFA's role in self-regulation is to work with franchisors through the application process and recommend changes which will lead to the franchise business meeting BFA standards. A number of businesses that refer to themselves as franchises do not conform to the BFA Code of Ethics are therefore excluded from membership.

On 22 May 2007, hearings were held in the UK Parliament concerning citizen-initiated petitions for special regulation of franchising by the government of the UK due to losses incurred by citizens who had invested in franchises. The Minister for Industry and the Regions, Margaret Hodge, conducted hearings but saw no need for any government regulation of franchising with the advice that government regulation of franchising might lull the public into a false sense of security. Mr Mark Prisk MP suggested that the costs of such regulation to the franchisee and franchisor could be prohibitive and would in any case provide a system which mirrored the work already being completed by the BFA. The Minister for Industry and the Regions indicated that if due diligence were performed by the investors and the banks, the current laws governing business contracts in the UK offered sufficient protection for the public and the banks. The debate also made reference to the self-regulatory function performed by the BFA recognizing that the association "punched above its weight".<ref>{{cite journal |journal=Daily Hansard |date=22 May 2007 |pages= 363WH; [https://publications.parliament.uk/pa/cm200607/cmhansrd/cm070522/halltext/70522h0001.htm part 1], [https://publications.parliament.uk/pa/cm200607/cmhansrd/cm070522/halltext/70522h0002.htm part 2], [https://publications.parliament.uk/pa/cm200607/cmhansrd/cm070522/halltext/70522h0003.htm part 3] |title=Franchise Industry}}</ref>

In the 2010 case of ''MGB Printing v Kall Kwik UK Ltd.'', the [[High Court of England|High Court]] established that a franchisor may assume a duty of care to a franchisee in certain circumstances. Kall Kwik, a design and print franchisor, had incorrectly advised MGB, who was purchasing a franchise, of the costs of undertaking refit work needed to meet Kall Kwik's franchising requirements. In this particular case, Kall Kwik had stated that they would provide professional advice to potential franchisees, and because they had not provided details of the fitting standards which must be met, they had encouraged MGB to rely on the advice offered by themselves.<ref>England and Wales High Court (Queen's Bench Division), [https://www.bailii.org/ew/cases/EWHC/QB/2010/624.html MGB Printing and Design Ltd v Kall Kwik UK Ltd.] (2010), EWHC 624 (QB), published 31 March 2010, accessed 25 January 2021</ref>

On 3 June 2021, it was announced that the Approved Franchise Association (AFA) would merge with the British Franchise Association (BFA) and that both franchise associations would operate under the BFA umbrella.<ref>{{Cite web |last=Corness |first=Terence |date=2021-06-03 |title=British Franchise Association (bfa) and Approved Franchise Association (AFA) join forces to strengthen the UK franchise sector |url=https://www.thebfa.org/british-franchise-association-bfa-and-approved-franchise-association-afa-join-forces-to-strengthen-the-uk-franchise-sector/ |access-date=2022-12-13 |website=British Franchise Association |language=en-GB |archive-date=2022-12-13 |archive-url=https://web.archive.org/web/20221213144350/https://www.thebfa.org/british-franchise-association-bfa-and-approved-franchise-association-afa-join-forces-to-strengthen-the-uk-franchise-sector/ |url-status=dead }}</ref>