Franchising legal frameworks: a comparative study of the DCFR, US law and Australian law regarding franchise contracts
Abstract
A franchise relationship is usually an asymmetrical relationship because a franchisor exclusively possesses essential information about the franchisor and the franchise system and holds superior bargaining power over a franchisee. Accordingly, a franchisee is susceptible to franchisor opportunism that could inflict financial loss to the franchisee. This book aims to propose guidelines for formulating private law rules in comprehensive franchise legislation to protect a franchisee against the franchisor’s unfair conduct. This book compares the franchise legal framework of the European Draft Common Frame of Reference (DCFR), the United States of America (USA), and Australia. The main conclusions of the comparative study are as follows. 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.
