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COMING SOON TO A COURT NEAR YOU?

by Simon Lord,
last updated 23/07/2009

Will growing concerns in US franchising affect the types of disputes we see in New Zealand?

At the recent symposium on franchise law, Professor Tim Hazeldine shared some ‘hot button issues' in franchising in the US. These were provided by Professor Francine Lafontaine of the University of Michigan, who is co-author with Roger D Blair of the highly-regarded book The Economics of Franchising. Will these become issues in NZ too?

1. The role of brokers and commission sellers in franchise sales. What is the moral hazard? This is a growing concern following the sub-prime mortgages debacle, where brokers were not around to pick up the pieces or take responsibility for their actions.

2. Termination and non-renewal. What is fair and reasonable?

3. Encroachment. Are franchise chains increasingly putting outlets too close together?

4. Resale price maintenance. How far can franchisors insist on the prices franchisees charge?

5. Tied suppliers. What types of arrangements are fair and reasonable?

6. Advertising budgets. How should they be used, how should they be distributed geographically?

7. Support. How much should be provided and what form should it take?

 

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