Editing Franchising (section)

==Regulations==
===Australia===
In 2016 there were an estimated 1,120 franchise brands operating in Australia and an estimated 79,000 units operating in business format franchises, with a total brand turnover of approximately $146 billion and a sales revenue of approximately $66.5 billion.<ref name="FA2016">{{cite web|title=Franchising Australia 2016|url=https://www.franchise.org.au/research.html|website=Franchise Council Of Australia|access-date=2 April 2018|archive-date=2 April 2018|archive-url=https://web.archive.org/web/20180402225652/https://www.franchise.org.au/research.html|url-status=dead}}</ref> In 2016 the majority of franchise brands were retailers with the largest segment being non-food retailing, accounting for 26 percent of brands, a further 19 percent of brands were involved in food retailing, 15 percent of franchisors operated in administration and support services, 10 percent in other services, 7 percent in education and training and 7 percent in rental, hire and real estate services.<ref name=FA2016/>

Franchising in Australia commenced in a significant way in the early 1970s under the influence of the franchised US fast food systems such as [[KFC]], [[Pizza Hut]], and [[McDonald's]].<ref>{{cite web|title=Franchising: An Introduction|url=https://www.franchise.org.au/franchising--an-introduction.html|website=Franchise Council Of Australia|access-date=2 April 2018|archive-url=https://web.archive.org/web/20180402225521/https://www.franchise.org.au/franchising--an-introduction.html|archive-date=2 April 2018|url-status=dead}}</ref> It was however underway prior to this and a decade earlier in 1960 [[Leslie Joseph Hooker]], considered a pioneer of franchising, created Australia's first national real estate agency network of [[LJ Hooker|Hooker]] real estate agencies.<ref>{{cite web|title=L J Hooker, the man behind the brand|url=http://www.abc.net.au/radionational/programs/lifematters/lj-hooker-the-man-behind-the-brand/3007464|website=ABC|date=17 March 2011|access-date=2 April 2018}}</ref><ref>{{cite web|title=LJ Hooker's Heritage, History and Brand|url=https://www.ljhooker.com.au/about-us/lj-hookers-heritage-history-and-brand|website=LJ Hooker|access-date=2 April 2018}}</ref>

In Australia, franchising is regulated by the Franchising Code of Conduct, a mandatory [[code of conduct]] concluded under the [[Trade Practices Act 1974]].<ref>{{cite web|url=https://www.legislation.gov.au/Details/F2008C00090%7Ctitle=Trade|title=Federal Register of Legislation – Australian Government|website=Legislation.gov.au|access-date=11 August 2017}}</ref>
The ACCC regulates the Franchising Code of Conduct, which is a mandatory industry code that applies to the parties to a franchise agreement.<ref>{{Cite web |title=Competition and Consumer (Industry Codes—Franchising) Regulation 2014 |url=https://www.comlaw.gov.au/Details/F2014L01472 |url-status=dead |archive-url=https://web.archive.org/web/20150607140933/http://www.comlaw.gov.au/Details/F2014L01472 |archive-date=2015-06-07 |access-date=2015-08-17 |website=Australian Government: ComLaw}}</ref>
This code requires franchisors to produce a disclosure document which must be given to a prospective franchisee at least 14 days before the franchise agreement is entered into.

The code also regulates the content of franchise agreements, for example in relation to marketing funds, a [[Standstill period|cooling-off period]], termination, and the [[resolution of disputes]] by [[mediation]].

On 1 January 2015, the old Franchising Code was repealed and replaced with a new Franchising Code of Conduct.<ref>{{Cite web |last= |title=Competition and Consumer (Industry Codes—Franchising) Regulation 2014 |url=http://www.legislation.gov.au/Details/F2014L01472/Html/Text |access-date=2022-11-05 |website=www.legislation.gov.au}}</ref> The new Code applies to conduct on or after 1 January 2015.

The new Code:
* introduces an obligation under the Code for parties to act in good faith in their dealings with one another
* introduces financial penalties and infringement notices for serious breaches of the Code
* requires franchisors to provide prospective franchisees with a short information sheet outlining the risks and rewards of franchising
* requires franchisors to provide greater transparency in the use of and accounting for money used for marketing and advertising and to set up a separate marketing fund for marketing and advertising fees
* requires additional disclosure about the ability of the franchisor and a franchisee to sell online
* prohibits franchisors from imposing significant capital expenditure except in limited circumstances.

These are significant changes and it is important that franchisors, franchisees and potential franchises understand their rights and responsibilities under the Code.

For further information about the changes to the Code, please see the updated Franchisor Compliance Manual and the Franchisee Manual.

The Code explanatory materials are available from the ComLaw website (link is external).<ref>{{cite web|url=https://www.accc.gov.au/business/industry-codes/franchising-code-of-conduct|title=Franchising Code of Conduct|first=Australian Competition and Consumer|last=Commission|date=11 September 2012|website=Accc.gov.au|access-date=11 August 2017}}</ref>

===New Zealand===
New Zealand is served by around 423 franchise systems operating 450 brands, giving it the highest proportion of franchises per capita in the world. Despite (or because of) the 2008–2009 recession, the total number of franchised units increased by 5.3% from 2009 to 2010.<ref>{{cite web |last=Lord |first=Simon |date=1 July 2011 |title=survey finds franchise sector RESILIENT & GROWING |url=http://www.franchise.co.nz/article/view/1167-survey-finds-franchise-sector-br-resilient-growing |url-status=dead |archive-url=https://web.archive.org/web/20150324210019/http://www.franchise.co.nz/article/view/1167-survey-finds-franchise-sector-br-resilient-growing |archive-date=24 March 2015 |access-date=22 March 2015 |website=Franchise New Zealand}}</ref> There is no separate law covering franchises, so they are covered by normal commercial law. This functions very well in New Zealand and includes law as it applies to contracts, restrictive trade practices, intellectual property, and the law of misleading or deceptive conduct.<ref>{{cite web |last1=Lord |first1=Simon |last2=Munn |first2=David |date=1 August 2011 |title=Legislation: Help Or Hindrance? |url=http://www.franchise.co.nz/article/view/195-legislation-help-or-hindrance- |access-date=22 March 2015 |website=Franchise New Zealand}}</ref>

The Franchise Association of New Zealand introduced a self-regulatory code of practice for its members in 1996. This contains many provisions similar to those of the Australian Franchising Code of Practice legislation, although only around a third of all franchises are members of the association and therefore bound by the code.<ref>{{cite web |last=Lord |first=Simon |date=25 January 2022 |title=An introduction to franchising in New Zealand |url=http://www.franchise.co.nz/article/view/117-an-introduction-to-franchising-in-new-zealand |access-date=22 March 2015 |website=Franchise New Zealand}}</ref>

A case of fraud in 2007 perpetrated by a former master franchisee of the country's largest franchise system<ref>{{cite web |last=Lord |first=Simon |date=23 July 2009 |title=Green Acres master charged with fraud |url=http://www.franchise.co.nz/article/view/731-green-acres-master-charged-with-fraud |access-date=22 March 2015 |website=Franchise New Zealand}}</ref> led to a review of the need for franchise law by the Ministry of Economic Development.<ref>{{cite web |last=Lord |first=Simon |date=23 July 2009 |title=Regulation Off the Agenda? |url=http://www.franchise.co.nz/article/view/831 |access-date=22 March 2015 |website=Franchise New Zealand}}</ref> The New Zealand Government decided there was no case for franchise-specific legislation at that time.<ref>{{cite web |last=Lord |first=Simon |date=23 July 2009 |title=Government Decides AGAINST Franchise Regulation |url=http://www.franchise.co.nz/article/view/838-government-decides-against-franchise-regulation |access-date=22 March 2015 |website=Franchise New Zealand}}</ref> This decision was criticised by the opposition,<ref>{{cite web |date=23 July 2009 |title=National's failure to act on franchise regulation 'disappointing' |url=http://www.franchise.co.nz/article/view/839-national-s-failure-to-act-on-franchise-regulation-disappointing- |url-status=dead |archive-url=https://web.archive.org/web/20150402121938/http://www.franchise.co.nz/article/view/839-national-s-failure-to-act-on-franchise-regulation-disappointing- |archive-date=2 April 2015 |access-date=22 March 2015 |website=Franchise New Zealand}}</ref> which had initiated the review when in power, and the review process was questioned by a leading academic.<ref>{{cite web |last1=Gunasekara |first1=Gehan |last2=Lee |first2=Tiffany |date=13 May 2011 |title=franchise regulation REVIEWING THE REVIEW |url=http://www.franchise.co.nz/article/view/1226-franchise-regulation-br-reviewing-the-review |access-date=22 March 2015 |website=Franchise New Zealand}}</ref> The Franchise Association originally supported the positive regulation of the franchise sector<ref>{{cite web |last=Lord |first=Simon |date=13 February 2008 |title=Franchise Association Calls For Positive Regulation |url=http://www.franchise.co.nz/article/view/576-franchise-association-calls-for-positive-regulation |access-date=22 March 2015 |website=Franchise New Zealand}}</ref> but its eventual submission to the review was in favour of the status quo of self-regulation.<ref>{{cite web |last=Lord |first=Simon |date=29 July 2009 |title=Ministry receives submissions on regulation |url=http://www.franchise.co.nz/article/view/746-ministry-receives-submissions-on-regulation |url-status=dead |archive-url=https://web.archive.org/web/20150402145758/http://www.franchise.co.nz/article/view/746-ministry-receives-submissions-on-regulation |archive-date=2 April 2015 |access-date=22 March 2015 |website=Franchise New Zealand}}</ref>

===Brazil===
By the end of 2012, about 2,031 franchise brands were operating in Brazil, with approximately 93,000 locations,<ref>{{cite web|last1=Geromel|first1=Ricardo|title=Franchising: The Best Way of Investing in Brazil|url=https://www.forbes.com/sites/ricardogeromel/2012/07/27/franchising-the-best-way-of-investing-in-brazil/#69289e3a51e5|website=Forbes|access-date=22 July 2017|date=27 July 2012}}</ref> making it one of the largest countries in the world in terms of number of units. Around 11 percent of this total were foreign-based franchisors.

The Brazilian Franchise Law (Law No. 8955 of December 15, 1994) defines the franchise as a system in which the franchisor licenses the franchisee, for a payment, the right to use a trademark or patent along with the right to distribute products or services on an exclusive or semi-exclusive basis.
The provision of a "Franchise Offer Circular", or disclosure document, is mandatory before execution of agreement and is valid for all of the Brazilian territory. Failure to disclose voids the agreement, which leads to refunds and serious payments for damages. The Franchise Law does not distinguish between Brazilian and foreign franchisors. The National Institute of Industrial Property (INPI) is the registering authority. Indispensable documents are a Statement of Delivery (of disclosure documentation) and a Certification of Recording (INPI). The latter is necessary for payments. All sums may not be convertible into foreign currency. Certification may also mean compliance with Brazil's antitrust legislation.

Parties to international franchising may decide to adopt the English language for the document, as long as the Brazilian party knows English fluently and expressly acknowledges that fact, to avoid translation. The registration accomplishes three things:

: * It make the agreement effective against third parties
: * It permits the remittance of payments
: * It qualifies the franchisee for tax deductions.

===Canada===
In Canada, recent legislation has mandated better disclosure and fair treatment of franchisees. The regulations also ensure their right to form associations and launch collective action, even if they signed contracts prohibiting such moves.  Franchising in Canada involves 1,300 brands, 80,000 franchise units accounting for about 20% of all [[consumer spending]].<ref>{{cite news|last1=Milner|first1=Brian|title=Pity the franchisees|url=https://www.theglobeandmail.com/report-on-business/rob-magazine/why-buying-a-franchise-isnt-as-funor-profitableas-youthink/article37029319/|access-date=22 November 2017|work=Report on Business|publisher=[[The Globe and Mail]]|date=21 November 2017}}</ref>

===China===
China has the most franchises in the world but the scale of their operations is relatively small. The average franchise system in China has about 45 outlets, compared to more than 540 in the United States. Together, there are 2600 brands in some 200,000 retail markets{{clarify|reason=the meaning of 'retail market' here is not clear|date=November 2020}}. KFC was the most significant foreign entry in 1987 and is widespread.<ref name="FIC">{{Cite web |url=http://www.franchise.org/uploadedFiles/Franchise_Industry/International_Development/franchising%20in%20China.pdf |title=Franchising in China |access-date=2010-03-06 |archive-date=2010-12-14 |archive-url=https://web.archive.org/web/20101214152311/http://www.franchise.org/uploadedFiles/Franchise_Industry/International_Development/franchising%20in%20China.pdf |url-status=dead }} ''Franchise.org''</ref> Many franchises are in fact joint-ventures, as at their forming the franchise law was not explicit. For example, [[McDonald's]] is a joint venture. [[Pizza Hut]], [[T.G.I. Friday's|TGIF]], [[Walmart|Wal-mart]], [[Starbucks]] followed not long thereafter. But total franchising is only 3% of retail trade, which seeks foreign franchise growth.

The year 2005 saw the birth of an updated franchise law,<ref name=FIC/> "Measures for the Administration of Commercial Franchise".<ref>[http://www.pfa.org.ph/images/stories/PFA/PDF/chinafranchiseregulations.pdf]{{dead link|date=October 2017|bot=InternetArchiveBot|fix-attempted=yes}}</ref> Previous legislation (1997) made no specific inclusion of foreign investors. Further updates were made in 2007, with the objective of increased clarity of the law.{{citation needed|date=November 2020}}

The laws are applicable if there are transactions involving a trademark combined with payments with many obligations on the franchisor. The law comprises 42 articles and eight chapters.

Among the franchisor obligations are:
* The FIE (foreign-invested enterprise) franchisor must be registered by the regulator
* The franchisor (or its subsidiary) must have operated at least two company-owned franchises in China (revised to "anywhere") for more than 12 months ("the two-shop, one-year" rule)
* The franchisor must disclose any information requested by the franchisee
* Cross-border franchising, with some caveats, is possible (2007 law).

The franchisor must meet a list of requirements for registration, among which are:
* The standard franchise agreement, working manual and working capital requirements,
* A track-record of operations, and ample ability to supply materials,
* The ability to train the Chinese personnel and provide long-term operational guidance,
* The franchise agreement must have a minimum three-year term.

Among other provisions:
* The franchisor is liable for certain actions of its suppliers
* Monetary and other penalties apply for infractions of the regulations.

The disclosure must take place 20 days in advance. It has to contain:
* Details of the franchisor's experience in the franchised business with scope of business
* Identification of the franchisor's principal officers
* Litigation of the franchisor during the past five years
* Full details about all franchise fees
* The amount of a franchisee's initial investment
* A list of the goods or services the franchisor can supply, and the terms of supply
* The training franchisees will receive
* Information about the trademarks, including registration, usage and litigation
* Demonstration of the franchisor's capabilities to provide training and guidance
* Statistics about existing units, including number, locations and operational results, and the percentage of franchises that have been terminated, and
* An audited financial report and tax information (for an unspecified period of time).

Other elements of this legislation are:
* The franchisee's confidentiality obligations continue indefinitely after termination or expiration of the franchise agreement
* If the franchisee has paid a deposit to the franchisor, it must be refunded on termination of the franchise agreement; upon termination, the franchisee is prohibited from continuing to use the franchisor's marks.

===India===
The franchising of foreign goods and services to India is in its infancy. The first International Exhibition was only held in 2009.<ref>{{cite web |title=Franchise laws in India |url=http://www.franchisebusiness.in/c/Franchising-Association-of-India/Franchise-laws-in-India-n863929 |url-status=dead |archive-url=https://web.archive.org/web/20150402101235/http://www.franchisebusiness.in/c/Franchising-Association-of-India/Franchise-laws-in-India-n863929 |archive-date=2015-04-02 |access-date=22 March 2015 |website=Franchising Association of India}}</ref>  India is, however, one of the biggest franchising markets because of its large middle-class of 300 million who are not reticent about spending and because the population is entrepreneurial in character. In a highly diversified society, (see [[Demographics of India]]) McDonald's is a success story despite its menu differing from that of the rest of the world.<ref>{{Cite book |title=Patterns of Internationalization for Developing Country Enterprises (Alliances and Joint Ventures) |publisher=United Nations Industrial Development Organization |year=2008 |isbn=978-92-1-106443-8 |location=Vienna}}</ref>

So far, franchise agreements are covered under two standard commercial laws: the Contract Act 1872 and the Specific Relief Act 1963, which provide for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract.

===Kazakhstan===
In Kazakhstan franchise turnover for 2013 is US$2.5 billion per year.  Kazakhstan is the leader in Central Asia in the franchising market. A special law on franchising came into effect in 2002. There are more than 300 franchise systems and the number of franchised outlets approaches 2000.<ref>{{Cite web |last=Kissikov |first=B. |title=Franchising in Kazakhstan |url=http://www.kazfranch.kz/ |url-status=dead |archive-url=https://web.archive.org/web/20181026140815/http://kazfranch.kz/ |archive-date=2018-10-26 |website=Kazakhstan Franchise Association}}</ref> Kazakhstan franchising began with the emergence of a Coca-Cola factory, opened to sublicense a Turkish licensor of the same brand.  The plant was built in 1994. Other brands that are also present in Kazakhstan through the franchise system include Pepsi, Hilton, Marriott, Intercontinental, and Pizza Hut.

===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>

===United States===
[[Isaac Singer]], who made improvements to an existing model of a sewing machine in the 1850s, began one of the first franchising efforts in the United States, followed later by [[Coca-Cola]], [[Western Union]],<ref>{{cite journal |last1=Dant |first1=Rajiv P. |last2=Grünhagen |first2=Marko |last3=Windsperger |first3=Josef |title=Franchising Research Frontiers for the Twenty-First Century |journal=Journal of Retailing |date=September 2011 |volume=87 |issue=3 |pages=253–268 |doi=10.1016/j.jretai.2011.08.002}}</ref><ref>{{cite journal |last1=Lewandowska |first1=Lucyna |title=Franchising as a Way of Creating Entrepreneurship and Innovation |journal=Comparative Economic Research. Central and Eastern Europe |date=3 October 2014 |volume=17 |issue=3 |pages=163–181 |doi=10.2478/cer-2014-0028|s2cid=153901249 |doi-access=free |hdl=10419/184326 |hdl-access=free }}</ref> and by agreements between automobile manufacturers and dealers.<ref>{{cite journal |last1=Marx |first1=Thomas G. |title=The Development of the Franchise Distribution System in the U.S. Automobile Industry |journal=Business History Review |date=1985 |volume=59 |issue=3 |pages=465–474 |doi=10.2307/3114007|jstor=3114007 |s2cid=153565786 }}</ref>

Modern franchising came to prominence with the rise of franchise-based food service establishments. In 1932, Howard Deering Johnson established the first modern restaurant franchise based on his successful Quincy, Massachusetts [[Howard Johnson's]] restaurant founded in the late 1920s.<ref>{{Cite periodical |last=Allen |first=Robin Lee |date=January 1998 |title=Foodservice's theory of evolution: Survival of the fittest |url=http://findarticles.com/p/articles/mi_m3190/is_n4_v32/ai_20199526 |magazine=Nation's Restaurant News |volume=32 |issue=4 |pages=14–17 |access-date=2021-11-07 |archive-date=2012-07-15 |archive-url=https://archive.today/20120715222511/http://findarticles.com/p/articles/mi_m3190/is_n4_v32/ai_20199526 |url-status=bot: unknown }}</ref><ref>{{Cite journal|author=Howard, T. |year=1996 |title=Howard Johnson: Initiator of franchised restaurants |url=http://findarticles.com/p/articles/mi_m3190/is_nSPEISS_v30/ai_18091886 |archive-url=https://archive.today/20120711092735/http://findarticles.com/p/articles/mi_m3190/is_nSPEISS_v30/ai_18091886 |url-status=dead |archive-date=2012-07-11 |journal=Nation's Restaurant News |volume=30 |issue=2 |pages=85–86 }}</ref> The idea was to let independent operators use the same name, food, supplies, logo and even building design in exchange for a fee. The growth in franchising accelerated in the 1930s when such chains as [[Howard Johnson's]] started to franchise motels.<ref>{{cite web|title=Franchising: A Brief History|url=http://www.wdfi.org/fi/securities/franchise/history.htm|website=State of Wisconsin Department of Financial Institutions|access-date=22 July 2017|archive-url=https://web.archive.org/web/20170730213741/http://www.wdfi.org/fi/securities/franchise/history.htm|archive-date=2017-07-30|url-status=dead}}</ref> The 1950s saw a boom in franchise chains in conjunction with the development of the U.S. Interstate Highway System and the growing popularity of [[fast food]].<ref>{{Cite web|url=http://www.franchise-law.com/franchise-law-overview/a-brief-history-of-franchising.shtml#|title=A Brief History of Franchising – American Franchise Attorney {{!}} Washington D.C., U.S. {{!}} Franchise Law|website=Franchise-law.com|language=en-US|access-date=2017-06-06}}</ref>

The [[Federal Trade Commission]] has oversight of franchising via the FTC Franchise Rule.<ref>{{cite web|url=http://www.ftc.gov/os/fedreg/2007/march/070330franchiserulefrnotice.pdf#page=102 |archive-url=https://web.archive.org/web/20080922191259/http://ftc.gov/os/fedreg/2007/march/070330franchiserulefrnotice.pdf |archive-date=2008-09-22 |url-status=live|title=Disclosure Requirements and Prohibitions Concerning Franchising & Disclosure Requirements Concerning Business Opportunities – 16 CFR Parts 436 and 437|website=Ftc.gov|date=5 July 2013 |access-date=22 March 2015}}</ref>

The FTC requires that the franchisee be furnished with a [[Franchise Disclosure Document]] (FDD) by the franchisor at least fourteen days before money changes hands or a franchise agreement is signed.<ref>{{Cite web|url=https://www.ecfr.gov/|title=Electronic Code of Federal Regulations (eCFR)|website=Electronic Code of Federal Regulations (eCFR)|language=en|access-date=2019-12-05}}</ref> Whereas elements of the disclosure may be available from third parties, only that provided by the franchisor can be depended upon. The U.S. Franchise Disclosure Document (FDD) is lengthy (300–700 pp +) and detailed (see Franchise Disclosure Document, above), and generally requires audited financial statements from the franchisor in a particular format, except in some circumstances, such as where a franchisor is new. It must include such data as the names, addresses and telephone numbers of the franchisees in the licensed territory (who may be contacted and consulted before negotiations), estimate of total franchise revenues and franchisor profitability.

Individual states may require the FDD to contain their own specific requirements, but the requirements in state disclosure documents must be in compliance with the federal rule that governs federal regulatory policy. There is no [[private right of action]] of action under the FTC rule for franchisor violation of the rule, but fifteen or more of the states have passed statutes that provide this right of action to franchisees when fraud can be proven under these special statutes. The majority of franchisors have inserted mandatory arbitration clauses into their agreements with their franchisees, some of which the U.S. Supreme Court has dealt with.

In response to the implementation of [[California Assembly Bill 5 (2019)]] which limits the use of classifying workers as independent contractors rather than employees in California, the [[United States Court of Appeals for the Ninth Circuit]] reinstated its decision in Vazquez v. Jan-Pro <ref>{{cite web |title=Vazquez v. Jan-Pro Franchising International, Inc., No. 17-16096 (9th Cir. 2019) |url=https://law.justia.com/cases/federal/appellate-courts/ca9/17-16096/17-16096-2019-09-24.html |website=Justia.com |access-date=27 September 2019}}</ref> which impacts California franchise law and California independent contractor law<ref>{{cite news |last1=Solish |first1=Jonathan |title=A Dark Day for Franchising: Ninth Circuit Reinstates its Misguided Vazquez Decision, Undermining the Franchise Business Model |url=https://www.natlawreview.com/article/dark-day-franchising-ninth-circuit-reinstates-its-misguided-vazquez-decision |access-date=27 September 2019 |work=The National Law Review |publisher=Bryan Cave Leighton Paisner LLP}}</ref> by making it unclear that if a franchisor licenses its trademark to a franchisee, whether the franchisor incurs the liabilities of an employer for a franchisee's employees.

There is no federal registry of franchises or any federal filing requirements for information. States are the primary collectors of data on franchising companies and enforce laws and regulations regarding their presence and their spread in their jurisdictions.

Where the franchisor has many partners, the agreement may take the shape of a business format franchise – an agreement that is identical for all franchisees.