The Regulation of Franchising in the New Global Economy

The Regulation of Franchising in the New Global Economy

Elizabeth Crawford Spencer

While franchising promotes economic and social welfare objectives, Elizabeth Crawford Spencer argues that monitoring and regulation are needed to address potential areas of abuse of the form that can result in costly market inefficiencies.

Chapter 5: Worldwide Survey of Franchise-specific Regulation

Elizabeth Crawford Spencer

Subjects: law - academic, intellectual property law

Extract

135 Americas after the United States, and the second largest economy in the developing world after China.10 There are about 1013 franchise networks, with more than 62 500 franchised outlets. Based on number of franchised units Brazil is one of the most important franchising countries in the world.11 Brazil is a civil law jurisdiction. On 15 December 1994 Brazilian Law No. 8.955/94 relating to franchising contracts was adopted. This summary of the provisions of the legislation is based on a translation provided by the Brazilian Franchise Association. Article 2 of the Brazilian Franchise Law defines franchising as ‘the system by which a franchisor grants to franchisee the right of trademark or patent use, associated to the right to exclusive or semi-exclusive distribution of products or services and, eventually, also the right of use of technology of implantation and administration of business or operational system developed or detained by franchisor against direct or indirect remuneration, however, without characterising an employment relationship’.12 The Brazilian law applies to franchising contracts and franchise systems established and operated on Brazilian national territory and to master franchises.13 The franchise law makes no distinction between Brazilian and foreign franchisors; the requirement of delivery of the document, as established in Article 3, is mandatory for all franchisors intending to operate in Brazil.14 International franchise agreements, even those governed by foreign law and electing foreign jurisdiction, are advised to comply with the local law.15 Brazil’s law requires pre-sales disclosure. Article 4 requires that a disclosure document be provided to...

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