Wednesday, April 16, 2014

Franchises under the Consumer Protection Act

In practice the Consumer Protection Act, since implementation in 2011, has not had the effect of levelling the playing fields between franchisees and franchisors, according to Ben Whitelaw, writing in De Rebus the Attorneys' magazine this month.

Franchise agreements are generally entered into between two business entities who are informed and ought to take their agreement more serioulsy than a casual consumer purchasing goods in a store - the parties are able to contract and may agree to terms which favour the franchisor. The Consumer Protection Act in general protects consumers who may be uneducated and the law helps them more than the Act helps franchisees who may be sufferring from limits and procedures laid down by the franchisor.

Disclosure document

One area in which the franchisee is protected is the requirement that the franchisor furnish a prospective franchisee with a disclosure document - this sets out full information that would be material to the franchise and enables the prospective franchisee to make a more informed decision whether to go the franchise route or not.

Franchise agreements can be quite complex and require legal interpretation and it is always a wise move to consult your attorney for the correct legal advice before signing into one. Mc Naught and Company are on hand to guide you through this process and reduce the risks of taking on obligations you perhaps did not understand.

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