Tag: Company law

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Further developments in franchising restraint of trade clauses

After a hiatus in the number of decisions dealing with the issue of enforceability of restraint of trade clauses in franchising, there have now been two in quick succession. The decisions had opposite outcomes for the franchisees. Both franchise systems involved are substantial New Zealand franchise systems, having been in operation…

Update on restraint of trade clauses in franchising

Restraint of trade clauses are a common commercial tool by which franchisors protect their brand, goodwill and system, following the termination of the franchise agreement. If franchises did not have the control of a restraint of trade clause, ex-franchisees could readily take and use all know-how and goodwill gleaned from…

The impact of risk and compliance on cross border sales and franchising agreements

The impact of risk and compliance to a franchisor looking to expand and sell their brand/franchise overseas is seen in two ways: A franchisor looking to expand into a foreign territory must conduct significant and thorough risk and compliance assessments. A franchisor cannot import the system they have into another country…

What remedies are available to franchisees when the franchisor does not perform?

It is a characteristic of franchise agreements that they are top heavy on franchisee obligation and light on franchisor obligation. Having the ability to draft the franchise agreement enables franchisors to cast franchisor obligations in largely discretionary terms and, conversely, the franchisee’s role as a set of non-negotiable cast iron…

Good Faith in franchising

Instances of lack of good faith by franchisors are a common complaint made by franchisees. A franchisee complains they are being singled out for a breach notice procedure when other franchisees are also in breach. A franchisor repeatedly declines prospective purchasers of a franchisee’s business because they want the franchisee…

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