Mark Abell Partner, Field Fisher Waterhouse LLP, London 5-6 November 2008

Current Position  The European Union 27 Member States Diversity of specific franchising laws; and developments on a national level  Therefore: It is difficult to define common trends and each Member State has to be examined independently.

United Kingdom  Brand owner’s new right to object “bad faith” company name registrations Company name that is the same as a name in which a brand owner has goodwill or Is sufficiently similar to such name that its use within the UK would be likely to mislead by suggesting connection between company and brand owner  No overreaching duty of good faith in franchise agreements Jani King v Pula Enterprises Limited (2007) EWHC 2433 (QBD)

United Kingdom  Franchisor’s duty to pay damages for pre- contractual misrepresentation High Court in London ordered franchisor to pay £ as part of a counter-claim in respect of fraudulently made pre-contractual misrepresentations about expected turnover and profit, level of franchisee failure in the business and availability of certification by relevant trade associations- Peart Stevenson Associates Limited v Brian Holland (2008) EWHC 1868 (QBD) Non-reliance clause found to be unreasonable under Unfair Contracts Terms Act 1977

Germany  Uniform presentation and the franchisor’s liability risk Federal Supreme Court decision- X ZR 137/04, Dec Risk remains for franchisor to become contractually bound by contracts between franchisee and customer if the franchisee does not point out its legal independence  Exclusive purchase obligation under review The Court has tightened requirements for admissibility under antitrust law of a 100% purchase tie lasting more than 5 years  OLG Düsseldorf, 11 April 2007 (‘Body Shop’)  ECJ ‘Ponuptia decision’, 1986

Germany  Online Sales within franchising context  Court held that held that a manufacturer had no right to make the delivery of its products subject to the restriction of not selling them via an internet auction platform. A contractual provision to this effect was found to violate anti-trust law. Judgment by the regional court of Berlin on July , Case No 16 O 412/07 Kart, unpublished Article 4 of the EU Regulation on Vertical Agreements (2790/1999): threshold for an exemption is a market share of 30% on the relevant market.

Spain  Draft Distribution Agreements Act proposes compensation payment to franchisees Will apply to all types of franchising but ‘industrial franchising’ Key provisions: Authority to terminate franchise agreements against payment of 2 years earnings as liquidated damages Entitlement of franchisees to same indemnity payment as commercial agents Duty to put all amendments to franchise or distribution contracts in writing  Green Paper on the Draft Distribution Agreements Act

Italy and France Italy  Uncertainty as to what happens in case of bankruptcy  Franchising and subcontracting in public tenders  Recent court decisions France:  Franchisor ordered to compensate franchisee for non–renewal of a franchise agreement by the French Supreme Court Franchisor owns national customer base, whereas franchisee owns local customer base

OUTLOOK  Should franchising be regulated at an EU or member state level?  What should an EU Directive comprise? Removal of all hindrances to enhance the efficient functioning of the market and to encourage free enterprise, without stifling innovation and competition In order to do this an EU Franchise Directive should: Maintain market confidence in franchising Educate everyone about franchising, incl. encouraging companies and individuals to use franchising Provide adequate franchise protection