Franchising

Institution Definition

A special type of agreement whereby one undertaking (the franchisor) grants to the other (the franchisee), in exchange for direct or indirect financial consideration, the right to exploit a package of industrial or intellectual property rights (franchise) for the purposes of producing and/or marketing specified types of goods and/or services. This package typically relates to trade marks, trade names, shop signs, utility models, designs, copyrights, know-how or patents. A franchise agreement usually contains obligations relating to (1) the use of a common name/shop sign and a uniform presentation of contract premises and/or means of transport, (2) the communication by the franchisor to the franchisee of know-how, (3) the continuing provision by the franchisor to the franchisee of commercial and technical assistance during the life of the agreement. European Commission

A special type of vertical relationship between two firms usually referred to as the "franchisor" and "franchisee". The two firms generally establish a contractual relationship where the franchisor sells a proven product, trademark or business method and ancillary services to the individual franchisee in return for a stream of royalties and other payments. The contractual relationship may cover such matters as product prices, advertising, location, type of distribution outlets, geographic area, etc. Franchise agreements generally fall under the purview of competition laws, particularly those provisions dealing with vertical restraints. Franchise agreements may facilitate entry of new firms and/or products and have efficiency enhancing benefits. However, franchising agreements in certain situations can restrict competition as well. (...) © OECD

Case Comments

Eric A. Posner, Cristina Volpin No-poach agreements: An overview of EU and national case law

No-poach agreements have received increased attention by competition authorities, especially in the United States, as part of a broader movement to address anticompetitive behavior by employers in labor markets. A no-poach agreement is an agreement between employers not to hire away each other’s employees. A no-poach agreement is actually just one of a family of related agreements among employers that have the purpose and effect of reducing competition in labor markets. Employers have also been accused of agreeing not to solicit or “cold call” one another’s employees, and of fixing wages and exchanging information about compensation. There are also vertical no-poach agreements, for example, between staffing agencies and the firms to which they supply workers.

Nicolas Ferrier Franchise: The Toulouse Court of Appeal assesses, in the light of the circumstances, the content and performance of the franchisor’s cooperation and assistance obligations (Dietales / Naturhouse)

SAS Naturhouse (the Franchisor) heads a network of stores operating under the "Naturhouse" brand, whose concept is based on free in-store consultations with a dietician and the sale of products, notably food supplements, under its own brand name. Some forty franchisees sued the Franchisor (...)

Nicolas Éréséo Franchising: The Paris Court of Appeal orders the termination of a franchise agreement as a result of the franchisee’s submission to obligations creating a significant imbalance (Pizza Center France ; Domino’s Pizza France et alii)

Facts. The Paris Court of Appeal has issued a series of rulings in a rather complex factual and procedural context. These decisions stem from an investigation conducted between 2013 and 2016 by the DGCCRF. The administration had targeted a dozen networks in the fast food sector and, on that (...)

Carmen Verdonck, Nina Methens The Belgian Brussels Court of Appeal rejects a supermarket’s request to suspend a merger between two of its rivals due to gun jumping (Carrefour / Intermarché / Mestdagh)

Introduction On 23 December 2022, the Brussels Court of Appeal (the Market Court) rejected Carrefour Belgium’s application for the suspension of the Belgian Competition Authority’s (BCA’s) decision of 9 November 2022, which authorised the concentration between Intermarché AB (ITM) and (...)

Jean-Louis Fourgoux Price transparency: The French Supreme Court approves the refusal of a central purchasing office to communicate the conditions of negotiation with suppliers in the absence of a mandate contract (JBB Market / Distribution Franprix)

The Paris Court of Appeal ruled in a case involving Franprix licensees and the network head on the transparency of commercial conditions. Franprix was, through the Sedifrais company, certainly a central purchasing agency but refused to reveal the exact conditions of negotiation with suppliers (...)

Nicolas Ferrier Obligation to inform: The Aix-en-Provence Court of Appeal criticises the franchisor for not having sufficiently informed the franchisee about the purpose of the territorial exclusivity it had granted him (Comme Ulysse)

Mr. NC signed a franchise agreement with Ulysse, a company specializing in the transportation of handicapped persons under the eponymous name, for the eastern part of the Oise department. of the Oise department. According to article 3-1 of the contract, the franchisee benefits, for the (...)

Lucas Bettoni Invalidity: The French Supreme Court decides that the limitation period for an action for nullity on the grounds of fraud in a franchise agreement does not run from the date of its conclusion but from the date of opening of the franchised outlet (Guy Hoquet L’immobilier)

Everyone knows that the franchisee is entitled to request the annulment of the franchise agreement in the event of fraudulent manoeuvres by the franchisor in the delivery of pre-contractual information, and that this action is prescribed by five years. But when does the five-year limitation (...)

US Federal Trade Commission The US FTC files an amicus brief in support of employees challenging a fast food company’s intra-franchise no-poach rules (McDonald’s / Deslandes and others)

FTC Joins Justice Department in Amicus Brief Supporting Workers’ Challenge to McDonald’s “No Hire” Franchise Restrictions* Brief argues that a provision in McDonald’s franchise agreement is per se illegal under U.S. antitrust law The Federal Trade Commission joined the Department of (...)

Umberto Monarca, Cesare Pozzi The Italian Competition Authority finds that a fast-food giant abused the economic dependence of franchisees and imposes contractual obligations to remedy the situation (McDonald’s)

The case concerns the franchising activity carried out in Italy by McDonald’s Development Italy LLC (hereinafter MCDI). MCDI - is a U.S. company, with registered office in Wilmington and branch office in Milan, member of the McDonald’s Group (a U.S. company based in Oak Brook, Illinois). The (...)

Anne-Cécile Martin Inseverability: The Paris Court of Appeal finds that a franchise agreement is null and void due to its inseverability from a non-renewable lease management contract that had expired (Pizza Center France)

An interesting decision rendered by the Paris Court of Appeal on June 29, 2022 reminds us of the virtues (and vices?) of good "contractual engineering". In this case, several companies of a group, respectively franchisor, central purchasing agency and lessor of goodwill, had entered into (...)

Articles

Charles Jarrosson, Jean-Baptiste Racine Arbitration and distribution

Arbitration in the distribution sector is often criticised, mainly by integrated distributors. Nevertheless, it is a common practice in this business sector. This paper will examine the different aspects of the relationship between arbitration and distribution, both in terms of the choice of (...)

Nicolas Ferrier The power of the promoter to evolve its distribution network

Since the promoter of a distribution network is free to organise its network as it sees fit, subject mainly to compliance with the competition rules, one could be tempted, by a kind of parallelism of forms, to adopt the same analysis when it comes to developing its network. However, this (...)

Jérôme Vidal Analysis of intra- and inter-brand competition in mergers within distribution networks: Review of the French Competition Authority’s decision-making practice in the retail sector

During the assessment of an acquisition by the head of the network of one of its members in the spring of 2018, in the food retail sector, the Autorité de la concurrence specified the manner in which it conducts the competitive analysis of this type of merger. Thus, even in the absence of a (...)

Events

Books

Chapters

a b c d e f g h i j k l m n o p r s t u v w