Many franchisors may welcome the use of the internet by their franchisees as a means of reaching a wider range of customers and increasing sales revenue. Others may wish to control or limit the extent or way in which their franchisees use the internet. In either case, EU and UK competition rules impose strict limits on the extent to which a supplier can prevent its franchisees and other retailers from selling the franchise or contract products online. Both franchisors and franchisees need to know the extent to which restrictions on online selling infringe the rules. A franchisor should avoid a situation in which restrictive clauses in the franchise agreement are not valid or enforceable against franchisees.
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This article was originally published in the International Journal of Franchising Law