At the start of 2021, The Netherlands passed a specific law which regulates franchising. In doing so, it has become one of a growing number of countries choosing to formally regulate franchising.
In contrast the franchising industry is not regulated in Scotland. So, what is Franchising Law in Scotland?
In Scotland, “Franchising Law” is made up of the following:
General Commercial Law
- Contract Law – which governs the Franchise Agreement and the relationship between the Franchisor and Franchisee;
- Corporate Law – which concerns the internal operation of the Franchisor and Franchisee companies;
- Property Law – which is important for any premises-based franchise; and
- Intellectual Property Law – which affects the use of the Franchisor’s brand and trade marks.
Specific Acts of Westminster or Holyrood
Occasionally specific acts of parliament will apply directly to franchise relationships, such as the Trading Schemes Act 1996 which prohibits franchisees from sub-franchising, unless certain conditions are met.
UK rules on anti-competitive practices will apply to franchise relationships. By way of example, Competition Law prohibits a Franchisor fixing minimum prices at which a franchisee may sell the products.
From time to time disputes between franchisors and franchisees end up in court. When they do, the judgement of that court then shapes the law going forward.
The European Code of Ethics for Franchising
The Code of Ethics is not a binding source of law. If the Franchisor choses to ignore it, they are not in breach of any laws. However, it is a softer form of guidance as to what good franchising is and should be. Franchisees should always ensure that the Franchise Agreement that they are being asked to sign complies with this Code of Ethics.
British Franchise Association Guidance and Rules of Membership
All members of the BFA are obliged to abide by the Rules of Membership and the occasional Technical Briefings issued by the Association. Again, this is not a binding source of law as it only applies to BFA members and the penalty for non-compliance would simply be expulsion from membership. However, it still helps to shape best-practice for franchising in Scotland.
Biography – Andy Fraser, Albany Fraser Solicitors
Andy Fraser is the founder of Albany Fraser Solicitors, a commercial law firm with franchising at its heart. He set up Albany Fraser in 2019 with a view to helping franchisors and franchisees of all shapes and sizes make smarter franchising decisions. Andy is accredited by the British Franchise Association as a ‘Qualified Franchise Professional’ and is one of only a small number of lawyers in the UK to have been awarded this status. In addition to being a solicitor, Andy originally trained as a franchise consultant with one of the UK’s leading franchise consultancy practices where he worked on franchising projects for brands such as Ralph Lauren, American Eagle Outfitters, Esprit and Whittard of Chelsea.