BB partner Mark Abell claims EU businesses missing out on commercial value of franchising

03 July 2013

Dr Mark Abell, the newly appointed Global Head of Franchising, Licensing and Multi-Channel Strategies at  international law firm Bird & Bird, today claims in his new book that the development of a harmonised  franchise law in the European Union could help European companies unlock significant untapped business potential within the single market.  The regulatory solutions he proposes would help liberate small and medium-sized enterprises from the current oppressive and dysfunctional laws that regulate franchising in the EU, and enable them to expand their businesses across national boundaries into other member states, so promoting trade between member states.

The book, 'The Law and Regulation of Franchising in the EU', provides the first in-depth analysis of the regulatory environment for franchising across the EU and offers a practical guide to the law not only in the main European jurisdictions, but  also in other markets where franchising is well developed, such as the USA and Australia. In his book, Mark concludes that franchising in the EU has not achieved its full commercial potential. He points to a lack of regulatory consistency and a dearth of legal measures to actively promote the use of franchising across the 28 member states as two of the main causes of this failure.

"Franchising helps enable businesses to unlock commercial value and apply their intellectual property rights in domestic and international markets. It is a huge part of the economy in Europe, with nearly 10,000 franchised brands and over €215 billion (US$300 billion) turnover a year, but in both the USA and Australia it is used much more frequently by businesses looking to grow. In Europe, franchising as a percentage of GDP amounts only to 1.86%, which is a stark contrast to 5.95% in the USA and 10.83% in Australia.  I believe we need a more consistent, enlightened and commercial approach to the way franchising is regulated across Europe to help businesses, especially small and medium sized businesses, grow effectively.  This is particularly so given the challenges many businesses face in raising funds for investment and developing appropriate managerial infrastructure."

The book concludes by arguing for the adoption of a new EU Franchise Directive, a draft of which Mark has produced and included in the book. The Directive would actively promote the use of franchising and provide a mandatory framework which will promote market confidence in it as a way of re-engineering and internationalising businesses.

Mark added: "I am generally not in favour of adding more regulation for businesses.  However, this Directive is designed to underpin the commercial drivers that make franchising attractive and, in this case, I think a European directive would provide much greater certainty for businesses using franchising across Europe. And, of course, franchised businesses are already subject to significant regulation in different countries so, by applying a more consistent approach, businesses will find it easier to navigate the regulatory environment."