TYPOLOGY OF DISTRIBUTION AGREEMENTS PRODUCER AGENT Agency agreement RESELLER (Wholesaler/retailer) DISTRIBUTOR FRANCHISEE Exclusive transfer of business method Exclusive purchasing Exclusive supplying Exclusive supply Selective distribution Exclusive distribution Franchising Master franchising CONSUMER © D. Ferrier

FRANCHISING DEFINITION FRANCHISOR - TRANSFERS INTELLECTUAL PROPERTY RIGHTS RELATING TO TRADE MARK AND KNOW-HOW FOR DISTRIBUTION - PROVIDES COMMERCIAL AND TECHNICAL ASSISTANCE EFFECT POSITIVE INCREASE COMPETITION (RULE OF REASON ?) NEGATIVE - RESTRICTION OF FRANCHISEE’S COMMERCIAL FREEDOM - EVICTION OF OTHER DISTRIBUTORS - RESTRICTION OF INTRA BRAND AND INTER BRAND COMPETITION © D. Ferrier

Assessment of appreciable restriction of competition FRANCHISING Assessment of appreciable restriction of competition Undertakings Turnover  (40 M €) Market share  (5% / 15% / 30%) Agreement Obligations and practices affecting trade between Member States or restricting competition (eg. : territorial exclusivity) Appreciable restriction Context (eg : cumulative effect of parallel networks) © D. Ferrier

FRANCHISING ECONOMIC APPROACH (BER 2790-99) MARKET POSITION NO PRESOMPTION OF ILLEGALITY SELF EXAMINATION (INDIVIDUAL EXAMINATION) [>50 %] [CUMULATIVE EFFECT: POSSIBLE DISAPPLICATION OF THE BER] 30 % « SAFE HARBOUR » 15 % « DE MINIMIS » [<5 %] [NO SIGNIFICANT CONTRIBUTION TO THE CUMULATIVE EFFECT] © D. Ferrier

FRANCHISING REGULATION HARD CORE RESTRICTIONS - ABSOLUTE TERRITORIAL EXCLUSIVITY - RESALE PRICE MAINTENANCE - RESTRICTION OF CROSS SUPPLY BETWEEN FRANCHISEES (?) EXCLUDED RESTRICTIONS - NON COMPETE OBLIGATION FOR PERIOD EXCEEDING FIVE YEARS (?) - OBLIGATION NOT TO RESELL AFTER TERMINATION GOODS OR SERVICES EXCEEDING : ▪ PREMISES, ▪ GOODS OR SERVICES CONTRACT ▪ PERIOD OF ONE YEAR AND NOT NECESSARY TO PROTECT KNOW HOW EXEMPTION OBLIGATIONS REQUIRED TO : - PROTECT IPR - MAINTAIN IDENTITY AND UNIFORMITY OF THE NETWORK © D. Ferrier

FRANCHISING IPR RELATED OBLIGATIONS EXEMPTED ARE COVERED BY THE BER OBLIGATION ON THE FRANCHISEE : NOT TO USE KNOW-HOW LICENSED BY THE FRANCHISOR FOR PURPOSES OTHER THAN THE EXPLOITATION OF THE FRANCHISE, SO: NOT TO ENGAGE IN ANY SIMILAR BUSINESS NOT TO ACQUIRE FINANCIAL INTERESTS IN THE CAPITAL OF A COMPETING UNDERTAKING NOT TO DISCLOSE TO THIRD PARTIES THE KNOW-HOW PROVIDED BY THE FRANCHISOR, SO : NOT TO ASSIGN THE RIGHTS AND OBLIGATIONS UNDER THE FRANCHISE AGREEMENT WITHOUT THE FRANCHISOR’S CONSENT TO COMMUNICATE TO THE FRANCHISOR ANY EXPERIENCE GAINED IN EXPLOITING THE FRANCHISE, SO : TO GRANT HIM AND OTHER FRANCHISEES A NON-EXCLUSIVE LICENCE FOR THE KNOW-HOW RESULTING FROM THAT EXPERIENCE TO INFORM THE FRANCHISOR OF INFRINGEMENTS OF LICENSED IPR, AND TO ASSIST THE FRANCHISOR IN ANY LEGAL ACTIONS AGAINST INFRINGERS   © D. Ferrier