Franchise Law Research Articles

Legal Analysis of the Success of Mixue Franchise Schemes in Singapore, South Korea, and Japan Linked to the Success of Mixue Franchise Schemes in Indonesia and Vietnam

Franchising is a system of marketing goods and services and technology, which is based on closed and continuous cooperation between independent actors (meaning the franchisor and individual franchisee) and is separated both legally and financially, where the franchisor grants rights to the individual’s franchisee and imposes an obligation to carry out its business following the franchisor’s concept. The franchise business that is currently going viral is the Mixue franchise, which offers luxury ice cream at very cheap prices. Mixue became a franchise that had very rapid growth during the 2020 pandemic. In the 2020–2023 period, its outlets reached 1000 in Indonesia. So it is called the angel that takes away empty shophouses because the rapid development of Mixue also helps the property business. Even though it targets third and fourth-ranked cities, Mixue dominates provincial capitals in Indonesia. Mixue’s phenomenal success in Indonesia, after having had great success in Vietnam since 2018, has caused Mixue to expand to Singapore, South Korea, and Japan. In this research, the author will analyze the franchise laws from a legal perspective and compare them with those of the three countries, which may be a factor in the success of the Mixue franchise, which was previously achieved in Indonesia and Vietnam. This research is normative juridical research that uses secondary data in the form of primary legal materials, namely various relevant laws and regulations, and secondary legal materials, namely books and legal literature. The approaches used are statutory and conceptual. Results from research are hoped to provide one-stop article input for entrepreneurs, businesspeople, and legal academics regarding the comparison of franchise law, especially in Singapore, South Korea, and Japan, which Indonesia and Vietnam also complement.

Juridical Analysis of Franchise Law in terms of Civil Law Aspects

Franchising arises due to the impact of the advancement of the global economic system. In the business world, especially in the world of trade, Indonesia is dominated by trade in goods which is the result of cooperation between Indonesian and foreign entrepreneurs. There are many forms of franchising in our environment, including fast food businesses such as those from outside and within the country such as Mc Donald, KFC, Pizza Hut, Simple RM, Mbok Berek, Mrs. Suharti and many other brands that are familiar to businesses. home furnishings and office furniture such as Ace Hardware and Ikea. In Indonesia, the legal basis governing franchising is basically not listed in the Criminal Code, but is regulated in Government Regulation No. 42 of 2007 concerning Franchising and also in Regulation of the Minister of Trade of the Republic of Indonesia Number 53/M-DAG/PER/8/2012. Basically the franchise agreement is a type of agreement that is born and grows in the community whose arrangements can be seen in the previous explanation, therefore the franchise agreement is classified as an innominate type of agreement. As referred to in Article 3 of Government Regulation No. 42 of 2007 concerning Franchising, basically aspects of intellectual property rights play a very important role in it. The forms of legal protection contained in a franchise can be classified into two types of legal protection, namely protection in the form of preventive and repressive protection, while the forms of sanctions that can be applied are in the form of administrative sanctions, written warnings or can also be subject to revocation of STPW for Franchisor and Franchisee. who violate the provisions. As a social institution in the field of franchising, or what we are more familiar with as franchising, it is certainly not free from all its weaknesses, even so, this system still has various principles of benefit and advantages in it.

Vietnam’s Franchising Law: Critical Assessment and Comparisons with the Legal Framework of Franchising in the Republic of Korea and Thailand

Franchising occurred in Vietnam during the implementation of government policy for economic reform and openness in the mid-1990s. The Vietnam-specific franchise law was passed in January 2006 to create a stable growth in the franchise sector in Vietnam. The legal framework in Vietnam generally follows international legal frameworks. However, the legal framework of franchising businesses is still uncertain. This paper explores Vietnam’s franchising law and displays a comparison to the legal framework of Thai franchising law and the Republic of Korea franchising law. The paper concludes that while Vietnam’s franchising law generally conforms to international standards, some legal issues should be addressed for further development of the Vietnamese franchising sector.

Comparison of South African and Tunisian Franchising Laws Regarding Disclosure and their Implications for Algeria

The first step to starting a franchise business is to provide disclosure documents. How disclosure documents are regulated in Tunisia and South Africa, which information must be disclosed, the time of disclosure and the remedies. The main objective is to compare and analyse the existing franchising law in selected countries to explore and analyse the law relating to disclosure documents in franchising. Also, to help design essential features of an Algerian franchise law regarding disclosure. The doctrinal legal method complemented with comparative research was used. The armchair library approach was employed to collect data. The findings show that: regarding the information required to be disclosed, Tunisian law provides the most comprehensive list; regarding the required disclosure period, the Algerian proposed law should follow the Tunisian franchise law, and regarding the remedies in case of a failure to comply with disclosure requirements should be the invalidate of the contract and ask for compensation and impose penalties.

Franchise Law

The 2022 Annual Texas Survey on Franchise Law presents an assortment of novel and familiar legal issues in Texas state and federal courts. This year’s Survey period contains decisions favorable to franchisors, franchisees, and third parties associated with franchised businesses on disputes involving intellectual property rights, enforceability of forum selection clauses, the essential elements of common law and statutory claims, and remedies available to franchise parties involved in litigation, among other issues. As in prior years, the Survey showcases developments in franchise law that serve as helpful reminders to practitioners advising parties involved in any stage of a franchise relationship.

The New Saudi Arabia’s Franchise Law

The New Saudi Arabia’s Franchise Law

Franchise Law

Franchise Law

Integrating Global Online Legal Education with an On-Campus Franchise Course: A Role for MOOCs

Abstract This article profiles a MOOC on International Franchise Law offered by UNSW Sydney in 2016. The IFL MOOC is an example of an open access legal education course that was successfully integrated in real time into an on-campus curriculum for students majoring in business law. Opportunities, and future challenges that emerged for legal education are addressed.

Saudi Arabia: An Overview of its Commercial Franchise Law

As of 22 October 2019, the Kingdom of Saudi Arabia has published its Royal Decree No. M/22 dated 9/2/1441 (corresponding to 8 Oct 2019) for Law on Commercial Franchise System (CFL’19). If the Franchisor has made representations (or intends to make representations) to Franchisee, as to information on historical or anticipated financial performance of Franchise business owned by the Franchisor, then CFL’19 makes it mandatory for the Franchisor to include such information (on historical or anticipated financial performance) in the Disclosure Document - as required/specified under the Implementing Regulations of CFL’19. This article provides an overview of CFL’19, that aims for: (a) encouragement of franchise activities in KSA, (b) development of a legal framework to regulate relationship between Franchisor and Franchisee, (c) to afford certain protections to the Franchisee especially when a Franchise Agreement is terminated, (d) to ensure disclosure of rights, obligations and risks related to Franchise opportunities to assist prospective Franchisees in making informed investment decisions, and (e) to continuously improve the quality of goods and services offered in the Kingdom of Saudi Arabia.

Lessons About Franchise Risk From Yum Brands and Schlotzsky’s

This Article presents YUM! Brands, Inc. disclosure information and presents valuable insight into the risks of starting a business that shares intellectual property with another party. YUM! is the parent of entities such as KFC, Pizza Hut, and Taco Bell with locations around the world. YUM! is particularly useful because of its mature operating concepts. Sandwich shop franchisor and operator Schlotzsky’s, Inc. presents a different aspect of shareholder and franchisee risk. The facts leading up to Schlotzsky’s bankruptcy filing represents what can go wrong with undercapitalized franchise operations because franchising is inherently risky for anyone. This Article seeks to answer questions facing all seeking to use a franchise concept: “What are the major risks perceived by those engaged in the universe of franchise businesses? What potential risks, if they become reality, may cause substantial increases in operating costs or threaten the very survival of the enterprise?” This Article provides a roadmap for understanding franchise risk and an opportunity to understand, and reflect upon the multi-million-dollar research, investment, and documentation of perceived system risks. Relevant annual report disclosures from YUM!, along with other YUM! documents, are discussed. Descriptive language from YUM!’s regulatory filings with the Securities and Exchange Commission is utilized to show what the management personnel of this franchise powerhouse perceive to be its major categories of risk exposure. The primary point of this Article is to repackage the risk disclosure language from these enterprises so that franchise entrepreneurs, their lawyers, and other readers may benefit. Our goal is to have a meaningful and scholarly impact on readers who are now, or will be, creating jobs through their efforts in growing businesses. They will proceed into the chaos of the capitalistic marketplace with valuable lessons in franchise risks. This Article has five sections. First, we provide a background and overview of franchising. Second, a primer on franchise law. Third, we examine YUM!, and focus on its risk disclosure language. Fourth, we describe the history and circumstances leading up to the 2004 bankruptcy of Schlotzsky’s. Lastly, we conclude with our thoughts on the lesson gained from disclosure documents and a bankruptcy investigation.

A Legal Consideration on Purchasing Enforcement Act in Franchise Law

A Legal Consideration on Purchasing Enforcement Act in Franchise Law

Pengaturan Waralaba Di Indonesia: Perspektif Hukum Bisnis

The law arrangement of franchise law was first explicitly regulated by the Government Regulation No. 16 of 1997 which is then updated by Government Regulation No. 42 of 2007 to be created in an agreement that at least contains clauses as stipulated by Article 5 of the Government Regulation. However, franchise arrangements also associated with a variety of other laws and regulations applicable in Indonesia. This article is going to state that the importance of partnerships with small and medium enterprises as an effort to encourage the involvement of the wider economic community.

Franchising in the Middle East: The Example of Egypt

With the largest population in the Arab Middle East and a central location between Europe and East Asia, Egypt offers one of the biggest sources of franchising markets in the world for new business opportunities. Egypt, however, does not have specialized laws regulating franchising, which results in real challenges for investors who are seeking to franchise their businesses in Egypt, along with their legal advisors. It also creates problems for the courts who must rule on disputes arising from franchising transactions.Because of this lack of formal legal guidance in Egypt, other laws, including contract, commercial and agency laws, have had a substantial impact on franchising. This inconsistency in application can lead to contradictions as to the specific nature of franchising, which can make it difficult to negotiate and decide various issues arising under franchise agreements. Further, the variety of applications can impose heavy burdens on franchising parties.With all of these factors in place, it seems like a perfect time to discuss a new legal framework for franchising in Egypt. Such legal reform will be important for Egypt in order to recover from the economic impact of the January Revolution and subsequent political unrest, and also to improve the chances for foreign investment. A comprehensive Egyptian franchise law proposal should address various issues that are commonly dealt with in other franchise law frameworks around the globe, such as disclosure commitments, registration requirements, and substantive rights and obligations of the parties.

Collective intelligence applied to legal e-discovery: A ten-year case study of Australia franchise and trademark litigation

The purpose of this research is to develop a formal knowledge e-discovery methodology, using advanced information technology and decision support analysis, to define legal case evolution based on Collective Litigation Intelligence (CLI). In this research, a decade of Australia’s retail franchise and trademark litigation cases are used as the corpus to analyze and synthesize the evolution of modern retail franchise law in Australia. The formal processes used in the legal e-discovery research include a LexisNexis search strategy to collect legal documents, text mining to find key concepts and their representing key phrases in the documents, clustering algorithms to associate the legal cases into groups, and concept lattice analysis to trace the evolutionary trends of the main groups. The case analysis discovers the fundamental issues for retail modernization, advantages and disadvantages of retail franchising systems, and the potential litigation hazards to be avoided in the Australian market. Given the growing number of legal documents in global court systems, this research provides a systematic and generalized CLI methodology to improve the efficiency and efficacy of research across international legal systems. In the context of the case study, the results demonstrate the critical importance of quickly processing and interpreting existing legal knowledge using the CLI approach. For example, a brand management company, which purchases a successful franchise in one market is under limited time constraints to evaluate the legal environment across global markets of interest. The proposed CLI methodology can be applied to derive market entry strategies to secure growth and brand expansion of a global franchise.

Deconstructing the Franchise as a Legal Entity: Practice and Research in International Franchise Law

This article canvasses practice and research in international franchising law. The franchisor law's key concepts are introduced. I then identify aspects of franchising practice that are poorly accommodated by the law. These aspects offer opportunities for productive research. I identify these aspects as follows: franchising law's reliance on contracts to regulate the relationship through all its phases, the risk that a “franchisee” is an employee, good faith, governance, and insolvency. I continue with suggestions as to why these challenges exist. The article concludes with emerging themes in franchise practice and research: e-commerce, natural disasters, sustainability, micro-franchising, and social franchising.

개정 가맹사업법에 대한 주요규정 고찰

개정 가맹사업법에 대한 주요규정 고찰

가맹본부의 영업지역침해에 대한 규제: 문제점과 개선 방향*

Territorial encroachment problems are common to most franchise systems approaching maturity in their life-cycle. Encroachment, because of its destructive effects on franchisee sales, brings in serious conflicts between franchisor and its franchisees. It sometimes leads to time-consuming disputes incurring huge legal costs, damages the reputation of the franchise brand, and ultimately threats the stability and growth of the franchise system. For this reason, most franchisors seek to balance their desire for system growth and the negative effects on franchisee profitability and the system stability. This study purports to explore constructive solutions for the encroachment problem in Korean franchise industry. It undergoes enormous restrictions on the encroachment practices by the recently renewed Franchise Law of the Korea Fair Trade Commission(KFTC). The author discusses the various definitions and forms of encroachment, and reviews the judicial decisions addressing the illegality of encroachment practices, mostly in terms of the applicability of the implied covenant of good faith and fair dealing. Next the author raises some critics on current harsh restrictions imposed by the regulatory agency. Finally, based on the extant research and the legal theories, the author suggests some directions for resolving encroachment-related conflicts in a constructive way. Basically this study insists that legislative and regulatory approaches to the issue of encroachment are not desirable because the issue falls within the realm of franchisor’s strategic choice. It is believed that these approaches are not firm-specific, thus failing to protect franchisees effectively. Rather, it is recommended that franchisor’s institutionalized self-regulatory efforts are more appropriate for resolving encroachment problems. These efforts include the development of dispute settlement policies and operating programs, a clear and concrete specification of the exclusive territorial rights in the Franchise Disclosure Document, and the development of industry-wide self-regulation programs including the mediation and arbitration programs initiated by the franchise association. It is expected that these efforts will help franchisors resolve conflicts with minimal legal costs and franchisee complaints and maintain the systems with collaborative and successful relationships with their franchisees.

The impact of wine franchise laws on consumer choice and pricing

PurposeThe purpose of this paper is to compare and contrast wine sales in neighboring franchise law and non‐franchise law states in order to determine impact on wine price, consumer choice, consumer satisfaction, and stakeholder perception.Design/methodology/approachThe study used qualitative interviews with 14 wineries, distributors, and retailers, statistical analysis of Nielsen Scantrack data, and an online survey of 401 wine consumers in Georgia and Florida, USA.FindingsResults show statistical proof that Florida offers more wine selection and lower wine prices on matching brands than Georgia. Qualitative interviews indicate wineries, distributors, and retailers perceive differences in wine choice, price, and overall operating costs in these two states. However, there was no statistical difference between a sample of 401 consumers from Georgia and Florida when asked about their satisfaction level with wine choice and pricing within their state.Research limitations/implicationsFor practical purposes, the research was limited to only two US states. It would be useful to duplicate this study in other states.Practical implicationsPractical implications include the need for new wineries desiring to enter franchise law states to carefully research regulations and distributors before making a commitment, as well as the social issue of less wine choice and higher prices for consumers in Georgia versus Florida.Originality/valueThis is the first empirical study in the USA to focus on the impact of wine franchise laws on consumer choice and wine price. It yields useful information that contributes to the body of knowledge for wine and policy research.

Franchise Goodwill: Take a Sad Song and Make it Better

The end of a franchisor-franchisee relationship is often like a divorce, with the parties engaged in a heated battle over the ownership of the franchise goodwill. In this debate, the same franchisors or franchisees often change their positions on goodwill ownership depending on current needs. This Article analyzes cases in many areas of franchise law to determine why franchisors and franchisees engage in such inconsistent reasoning, what the consequences are for franchising, and if there are ways to produce a more logical and efficient form of analysis and debate. In addressing the most contentious issues of franchising, adherence by litigants and courts to a logical, systemic framework could improve the resolution process for individual cases and clarify standards of practice for all franchising matters. This Article proposes a standard intended to reduce major stresses in franchise relationships-the sad songs of franchising-by quickly and fairly resolving the ownership of goodwill.

Can Franchisee Associations Serve as a Substitute for Franchisee Protection Laws?

The most vital debate in franchise law over the last few decades has focused on whether state or federal law should protect franchisees from the potentially opportunistic behavior of franchisors. Several states, such as California, Massachusetts, and Vermont, are considering the adoption of laws protecting franchisees against franchisor opportunism. At the federal level, several franchisee protections laws have been introduced, but so far all have been rejected.Franchisor advocates suggest that franchisee protection laws are superfluous. Deeply ingrained in franchisor advocates’ opposition to such legislation is the belief that independent franchisee associations, namely trade associations formed by franchisees within a single franchise chain, serve as a sufficient barrier against franchisor opportunism. More specifically, franchisor advocates assume that by collectivizing a large percentage of the franchisees in the franchise system, an independent franchisee association improves the bargaining position of franchisees vis-a-vis franchisors. As a result, the association is assumed to succeed in negotiating contract terms that protect franchisees from franchisor opportunism and thereby eliminate the need for franchisee protection laws. This Article questions the idea that independent franchisee associations can prevent franchisor opportunism and otherwise serve as a substitute for franchisee protection laws. Focusing on the implicit assumption that such associations exist, or at least have the potential to exist, this Article argues that, in most cases, franchisees are unlikely to establish independent franchisee associations in the first place—mainly because under current law the expected costs borne by the franchisee in leading the establishment of an association exceed the expected benefits. That is, as federal and most state laws fail to adequately prohibit the franchisor’s retaliatory termination of the franchise or other reprisals against a franchisee association leader, the probability of such retribution is significant; conversely, the probability that the franchisee will form a successful and sustainable association is very low. First, franchisors often establish, fund, and control a competing franchisee committee, known as the franchisor advisory council, which is likely to reduce considerably the probability that an independent franchisee association will operate successfully. Second, franchisees normally have little incentive to join and actively participate in an already functioning independent franchisee association for several reasons, including franchisee free-riding, franchisee fear of retaliation by franchisors, and economic incentives provided by franchisors to franchisees for not joining such associations.