Since the publication of the first edition of The Franchise Law Review, there have been some significant economic and geopolitical developments that have had a significant impact on world trade. However, the apparently inexorable march towards the globalisation of commerce has again continued unabated despite, or perhaps even because of, these changes.
Brexit, the elections of Donald Trump and Emmanuel Macron, the installation of Xi Jinping into the pantheon of Chinese Communist Party gods and the potential fall of Chancellor Merkel in Germany well illustrate the depth and importance of the political changes buffeting the global economy.
Talk of the BRICs is a thing of the past and businesses are often presented with little choice other than to look to more vibrant markets in Asia, the Middle East and Africa for their future growth.
At the same time, trade in the South is on the increase, perhaps at the expense of its North–South counterpart. All of this and the unstable wider geopolitical landscape present business with only one near certainty: there will be continued deleveraging of businesses in the coming years and therefore growing barriers to international growth for many of them. All but the most substantial and well-structured of businesses may find themselves facing not only significant difficulties because of reduced access to funding to invest in foreign ventures, but also challenges arising from lack of managerial experience and bandwidth.
Franchising, in its various forms, continues to present businesses with one way of achieving profitable and successful international growth without the need for either substantial capital investment or a broad managerial infrastructure. In sectors as diverse as food and beverage, retail, hospitality, education, healthcare and financial services, it continues to be a popular catalyst for international commerce and makes a strong and effective contribution to world trade. We are even seeing governments turning to franchising as an effective strategy for the future of the welfare state as social franchising gains still more traction as a way of achieving key social objectives.
Given the positive role that franchising can play in the world economy, it is important that legal practitioners have an appropriate understanding of how it is regulated around the globe. This book provides an introduction to the basic elements of international franchising and an overview of the way that it is regulated in a large number of jurisdictions.
As will be apparent from the chapters of this book, there continues to be no globally homogenous approach to the regulation of franchising. Some countries specifically regulate particular aspects of the franchising relationship. Of these, a number try to ensure an appropriate level of pre-contractual hygiene, while others instead focus on imposing mandatory terms upon the franchise relationship. Some do both. In certain countries, there is a requirement to register certain documents on a public register. Others restrict the manner in which third parties can be involved in helping franchisors meet potential franchisees. No two countries regulate franchising in the same way. Even those countries that have a well-developed regulatory environment seem unable to resist the temptation to continually develop and change their approach to regulation – as is well illustrated by the new changes to the Australian regulations.
Many countries do not have franchise-specific regulation but nevertheless strictly regulate certain aspects of the franchise relationship through the complex interplay of more general legal concepts such as antitrust law, intellectual property rights and the doctrine of good faith. This heterogeneous approach to the regulation of franchising presents yet another barrier to its use as a catalyst for international growth.
This book certainly does not present the reader with exhaustive answers to all the questions he or she may have about franchising in all the countries covered – that would require far more pages than it is possible to include in a single volume. It does, however, try to provide the reader with a high-level understanding of the challenges involved in international franchising in the first section and then, in the second section, explain how these basic themes are reflected in the regulatory environment within each of the countries covered.
It is hoped that this fifth edition will prove to be a useful and often consulted guide to all those involved in international franchising, but needless to say it is not a substitute for taking expert advice from practitioners qualified in the relevant jurisdiction.