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Andrew Terry, Cary Di Lernia and Rozenn Perrigot

The regulation of franchising presents real and significant challenges. Although most countries currently rely on underlying commercial laws of general application to all business activity to regulate their franchise sectors, there is a trend towards franchise-specific regulation to address the information and power imbalance that characterise the typical business format franchise relationship. While there is broad agreement that prior disclosure is the appropriate strategy to address the information imbalance, there is less consensus on the appropriate strategy to address the power imbalance. Good faith – an explicit obligation of most civil law jurisdictions, but not a principle of general application in common law jurisdictions – is increasingly proposed as an antidote to opportunistic conduct. This chapter addresses the development of good faith in civil law and common law jurisdictions and reviews current developments and research in relation to the efficacy of good faith as the appropriate tool to deliver equity and balance to the franchise relationship.