FranChat: October 2022

The newsletter focuses on legal developments impacting franchise businesses across the globe. In this edition we are delighted to include two guest articles: Lee Lin Li and Chong Kah Yee of Tay & Partners, look at a change in the Malaysian franchising legislation under the Franchise (Amendment) Act 2020; and Vera Pellegrin, Senior Manager at Bird & Bird’s consulting arm, OXYGY, explores why franchisors should invest in a due diligence exercise.

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.

In this newsletter

• Australia
• Malaysia
• UK
• Belgium
• France
• Guest Article: OXYGY
• News & Events

Australia

A summary of Australia's Franchise Disclosure Register

On 3 March 2022, we published an article on draft Commonwealth legislation for the development of a publicly accessible Franchise Disclosure Register for the inclusion of information by franchisors about their franchise systems. On 1 April 2022, the Franchising Code of Conduct was amended by the Competition and Consumer (Industry Codes—Franchising) Amendment (Franchise Disclosure Register) Regulations 2022. The Regulations inserted part 5A into the Franchising Code of Conduct, which established the Register. On 15 November 2022, the Register will go live and will be freely accessible to everyone, including franchisees, prospective franchisees, and advisors. This article provides a high-level summary of the Register and the obligations which franchisors are required to meet.

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Malaysia

Change in franchising legislation under the Franchise (Amendment) Act 2020

With thanks to Lee Lin Li (Head of IP & Technology) and Chong Kah Yee (Senior Associate, IP & Technology), Tay & Partners, Malaysia, for contributing this article.

For those brands currently operating franchises in Malaysia or for those brands considering franchising in Malaysia, changes to the Malaysian franchise legislation means that brands will either need to re-register their franchise business or ensure that they are following the revised franchise registration process.

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UK

Dwyer (UK Franchising) v Fredbar Court of Appeal decision: The "end of franchising" in the UK?

When the UK Court of Appeal handed down its judgment in the case of Dwyer (UK Franchising) Limited v Fredbar Limited and Shaun Rowland Bartlett, the British Franchise Association sent out an update to its members titled “The end of franchising?”. Whilst that title was maybe designed to catch attention rather than the BFA’s reasoned position on the case, it is fair to say that the decision has caused surprise and concern in the franchising industry in the UK. But how important is the decision and what does it mean in practice for franchisors who operate in the UK?

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Belgium

New Belgian Civil Code: Revolution in contract law

As of 1 January 2023, Book 5 of the new Belgian Civil Code on contractual obligations enters into force. It will apply to all agreements executed as from this date, which are as of then subject to a considerably different set of rules under this new legislation. There are a significant number of changes to Belgian contract law, but the five most key changes specifically for franchise agreements are summarised in this article.

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France

Dark stores in France: Shop or warehouse? That is the question

Over the last few years, dark stores have popped up all across Europe. In France, the opening of dark stores has to be made in compliance with town planning regulations. However, in the absence of a legal qualification they have been either classified as warehouses or as shops. Such ambiguity had until now not prevented leading fast commerce operators from expanding in the largest French cities. Yet, in the hope of clarifying the regulatory framework and ease the development of this fast-growing business model, the French government was urged both by companies and local authorities to clarify the status of dark stores.

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Case update: Important court decision on franchise agreements in France

In a decision handed down on January 5, 2022, the Paris Court of appeal issued an important ruling regarding franchise agreements following the takeover of the Pizza Sprint franchise network widely located across western France by a well-known US pizza brand. In particular, the Paris Court of appeal ruled on a variety of issues further to proceedings brought by the French Minister for Economic Affairs which point to, inter alia, the existence of a significant imbalance in the rights and obligations of the parties to the franchise agreements as per Article L. 442-6, I, 2° of the French commercial code then in force (which is now Article L. 442-1, I, 2° of the French commercial code).

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Guest Article: OXYGY

Why franchisors should invest in a due diligence exercise

With thanks to Vera Pellegrin, Senior Manager at Bird & Bird’s consulting arm, OXYGY, for contributing this article.

According to a widely used definition, the objective of a due diligence is to ‘perform a sensible review’. With this definition in mind, there are several types of due diligence that respond to different needs. OXYGY’s international network can support franchise businesses with commercial, financial, leadership and reputational due diligence on prospective franchisees and developers, wherever in the world they are located. This article will focus on the kind of due diligence that can benefit brands and educational institutions moving into an international franchising space or widening their network.

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News & Events

Are you going to the ABA Forum on Franchising in San Diego, or the IBA Annual Conference in Miami? So are we!

Melissa Murray (Partner, UAE) and Nick Green (Associate, London), are looking forward to joining the ABA Forum on Franchising, 2-4 November in San Diego, where Melissa will be speaking in the Intensive 2 session "Expanding internationally: An overview of key issues and considerations". The session will consider how to practically navigate the various challenges franchisors will face when expanding into international markets.

Before the ABA Forum, Melissa will also be attending the IBA Annual Conference, 30 October - 4 November, alongside other Bird & Bird colleagues. Do get in touch with us if you are going to either of these conferences - we look forward to seeing you there!

Our Franchising team retains tier 1 ranking in Legal 500 UK

We are delighted to have been recognised in the latest edition of Legal 500 UK, where we have again been ranked in Tier 1. Partner Victoria Hobbs has been ranked as a Leading Individual, and Associate Nick Green as a Rising Star. Graeme Payne, Shelley Nadler and James Fowler have also been recognised as key lawyers.

The Legal 500 guide notes that our team is "notably skilled at developing hybrid strategies to support the global expansion of leading brands", with one of our client testimonials stating: "The team is extremely experienced and very practical in their approach, listening clearly to their client’s instructions, giving sound advice and not over complicating the process". Many thanks to all our clients who have provided feedback and helped us to maintain our top tier ranking.

Take a look at the full write-up here