Chapter 3: DOES THE CONTRACTUAL AND REGULATORY ENVIRONMENT SUPPORT AND PROMOTE FRANCHISING?
This chapter suggests that franchising does need regulating and that the economic determinants and the interparty dynamics of the franchisor/ franchisee relationship lead to a contractual environment that transcends sectoral divergence and the differing legal traditions of EU member states. This contractual environment tends to support and re-enforce the economic drivers that encourage franchisors to become involved in franchising and reduces their consequential inherent risk to a reasonable level. However, although it tends to re-enforce some of the economic drivers that encourage franchisees to become involved in franchising it does not re-enforce them all and it fails to reduce all the consequential inherent risks for franchisees to an adequate level. The regulatory environment in the EU within which franchising operates (which comprises a series of legal eco-systems) does not adequately protect and reinforce the economic attractions that drive franchisors and franchisees to become involved in franchising. Nor does it adequately reduce the consequen- tial risks. It is therefore to some extent responsible for the underachievement of franchising in the EU.
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