FranChat: October 2021
Written By
Welcome to the October 2021 edition of our international franchising newsletter
We're delighted to share the October 2021 edition of our international franchising update. The newsletter focuses on legal developments impacting franchise businesses across the globe. In this edition we are delighted to include a guest article from Danny Kobrata (Partner, K&K Advocates) which looks at a new regulation introduced in Indonesia that will have a major impact on those who have franchises or licences in Indonesia for international retail brands.
The newsletter will also keep you informed of any news and events from our Franchising team and other groups across Bird & Bird that we think may be of interest.
Keeping in touch
Please do get in touch with the authors or your usual contact if you would like to discuss any of the issues raised in these articles, or visit our webpage for more information about Bird & Bird's Franchising team.
Visit our webpage here.
Australia
7-Eleven to pay $98 million to settle class actions brought by franchisees
In August, 7-Eleven Stores Pty Ltd agreed to pay $98 million to settle two class actions filed against it in the Federal Court of Australia by franchisees.
The applicants in the class actions alleged that 7-Eleven had engaged in misleading or deceptive conduct under section 18 of the Australian Consumer Law, violated the Franchising Code of Conduct and another industry code, breached various contractual provisions, breached an equitable obligation to account in respect of rebates, and engaged in unconscionable conduct.
The settlement is currently pending Court approval. The application for Court approval will take place at a hearing on 16 November 2021. In determining the approval application, the Court will consider whether the settlement is fair and reasonable.
Indonesia
No more direct importation for local franchisees
With thanks to Danny Kobrata (Partner, K&K Advocates) for contributing this article.
There has been an important new regulation introduced in Indonesia that will have a major impact on those who have franchises or licences in Indonesia for international retail brands.
Following the issuance of the Job Creation Law, the government issued Government Regulation No. 29 of 2021 concerning the Implementation of the Trade ("GR 29/2021"). This GR 29/2021 was issued to implement the changes brought by the Job Creation Law. While GR 29/2021 mainly deals with the simplification of procedures to trade in Indonesia, it also stipulates new rules that require trading companies in Indonesia to adjust their business practice.
Read more >
The Netherlands
After the entry into force of the Dutch Franchise Act on 1 January 2021, the first case law is now starting to appear
A recent court judgment on precontractual disclosure, the mandatory standstill period and the role of precontractual reservations vis-à-vis the potential franchisee shows that franchisors need to take due care when making such reservations. If not, franchisors run the risk of being unexpectedly contractually bound.
UAE
Arbitration changes in the UAE: time to review your dispute resolution clauses in any Middle East franchise and related commercial/IP agreements
In the UAE, the Government of Dubai recently introduced new legislation which could have a significant impact on the arbitration clause in franchise agreements covering the UAE or the Middle East more broadly.
The introduction of Decree No. 34 of 2021 is intended to: (i) channel all arbitrations into a new Dubai International Arbitration Centre; and (ii) abolish both the Emirates Maritime Arbitration Centre (“EMAC”) and DIFC Arbitration Institute (“DAI”). This also likely means that the DIFC-LCIA – which was set up by the DAI in conjunction with the London Court of International Arbitration – will itself be abolished.
Considering this legislative development, we recommend clients review existing franchise agreements and associated agreements (such as trademark licences, deeds of guaranty, confidentiality and non-compete agreements etc.) to see if jurisdiction for disputes was granted to the DIFC-LCIA. If so, the arbitration provisions may need to be updated. For more details see our article "Decree No. 34 of 2021 – another step forward for arbitration in Dubai", or get in touch with Melissa Murray or Eddie Chiu in our UAE Franchising team.
Franchising in the UAE
There is a strong history of international businesses expanding their brand through the franchise model in the United Arab Emirates. Due to the relative ease of doing business, and a Western friendly culture, the UAE is often seen as a “hub” for the Middle East region, and a starting point for expanding into surrounding countries such as the Kingdom of Saudi Arabia, Kuwait, Bahrain, Oman, and Qatar.
This article was published in The Franchise Law Journal Summer 2021, by the American Bar Association. Reproduced with permission.
UK
UK: Your European franchising hub?
The UK’s franchise scene is brimming with both domestic and international brands that have successfully caught the attention of its discerning consumers. But in a post-pandemic and post-Brexit world, is there room for further competition?
Partner, Graeme Payne, recently spoke to Global Franchise Magazine about the impact of Brexit on the growth of franchise brands in the UK.
News & Events
Our UK team celebrates Tier 1 ranking for Franchising in Legal 500 guide
We are delighted that our UK team has maintained its Tier 1 ranking for Franchising in the Legal 500 UK guide for 2022, and is recognised for being "adept at advising high-profile global clients on sophisticated strategies to support their international expansion". Many thanks to our clients for their support and for taking the time to provide feedback on their experience of working with us. The full write-up about our team can be found here.
Our international team contributes to the Mondaq Comparative Guide to Franchising
The Guide provides an overview of some of the key points of law and practice, allowing users to compare regulatory environments and laws across multiple jurisdictions.
As well as editing the Guide, members of our international Franchising team have also authored the chapters on the UK, UAE, Czech Republic, Poland and Slovakia.
When using the Guide, relevant regions can be selected and the content refined to show the exact franchising subjects on which you are seeking clarity. You will find a detailed analysis on subjects such as franchising models, disclosure and due diligence, operational standards, disputes, and trends and predictions, among others, provided by internationally recognised experts. The guide can be accessed here.
Webinar series: Internationalising your franchise
We’re delighted to be collaborating with the Association of Spanish Franchisors on a series of webinars on “Internationalising your Franchise”. The webinars, held in English, will explore a number of international markets, including Italy, France and the Middle East.
We will guide you through the legislation and comment on upcoming changes in European competition legislation that will significantly affect franchises throughout Europe.
