Marketing (Beograd. 1991) (Jan 2010)
The essential elements and the legal structure of master franchise agreement: How to draft a good contract?
Abstract
The creation of the draft and other legal documents in franchising transaction emanates the one of the most stressful challenge for the civil law lawyer. There are many reasons which create big obstacles in process of successfully drafting master franchise agreement. One of the main difficulties faced by the parties engaged in international trade is the lack of uniformed rules for the franchising agreement as well as franchising being anonymous contract in the most of legal systems of the world. Besides that, the franchise (emanating goodwill) as the legal object of the franchising agreement is sui generis and fluid derives from the various numbers of rights and licence simmilar to right, such as trade names, trade marks and the shop signs, logos, utility models, designs, copyrights, know-how, etc. The legal structure of the mutual rights and obligations of the parties is extremely sophisticated not only because of the big number of obligations but because of their varieties and complexity. In most of the legal systems of common law as well as in the civil law countries the master franchise contract is not regulated neither with mandatory nor through dispositive norms of relationship laws but at the same time the franchise arrangements are subjected to a considerable number of laws and regulations from different areas of law, majority of which are regulated domestically and at the same time also at international legal context. Those areas of law are general contract law, agency law, leasing and security interests, intelectual property and competiton law, corporate law, insurance and labore law, consumer protection and product liability legislation and always important industry specific laws. In interantional legal practice there are many so-called template franchise agreement which are prepared from the franchisor in advance regulating all possible predictable legal solution and legislation. But, it is advisable for the civil law lawyer to treat those already formulated templates with big level of cautiousness. There are two intruments which could be very helpful for the domestic lawyers in process of drafting franchising agreements - first is the ICC Model International Franchising Contract issued in 2002 by the ICC (Paris) and another is Legal Guide on International Master Franchise Arrangements reissued by UNIDROIT (Rome) in 2007. First document is already published in Serbian language and the translation of UNIDROIT Legal Guide on Franchising into Serbian is in its final stage.
