Franchise Agreements South Africa

12.1 Intellectual property rights (IPRs) such as trademarks, patents, registered designs, know-how and technical assistance are generally included in franchising agreements. This is a complex subject and the best thing we can do in this brief article is to give you a fundamental understanding of the issues related to it. In a separate article, lawyer Eugene Honey provides detailed information on franchise agreements (see below). However, we must reiterate that before making a binding commitment, you should seek competent professional support. Franchise agreements are generally concluded for a period of five to ten years. It is customary to allow the franchisee to extend the agreement for a period similar to the expiry of the initial period, but this may be subject to certain conditions. For example, compliance with network operating procedures, satisfactory financial behaviour, achievement of performance objectives, willingness to update the unit in accordance with the company identity of the time, etc. 8.4 Nevertheless, a franchisee should not be prevented from purchasing goods or services from third parties without good reason if these products are of acceptable quality and do not harm the franchisee`s brand or reputation. For example, a franchisee should be able to purchase a similar product or similar service elsewhere, provided it does not affect the image, quality and goodwill of the franchisor. However, despite this balanced approach, it seems at first glance that the typical franchise agreement is, and is the case, focused on the interests of the franchisor. The franchisor is responsible for maintaining the integrity of the brand and the system.

This means that it must have the power to enforce agreed standards. It is also in the interest of all franchisees within the network, who are ultimately heavily invested in the brand and rely on the franchisor to protect their investments. Under the title Franchise-Conscience, franchisors are required to include in all disclosure documents and franchise agreements a notice indicating that they are bound by the provisions of the code and that any dispute between the parties may be referred to the FIO by both parties. 4.2 Section 5 (2) of the Act prohibits the practice of minimum resale price sustainability (RPM). The speed of rotation is bad because it prevents consumers not only from benefiting from lower prices, but also because it undermines competition within Mark 1. Worse, it could eventually settle on prices and business conditions among franchisees, practices that are not allowed, even within the meaning of the law.