A GJ Topics article.

Abstract

Franchising contract is one method to distribute goods and service. By making a franchising contract the franchisor allows the franchisee to open a shop under his trademarks, trade name, signs, etc. The shop will be his own and the business will be his business, through subject to the discipline of the franchise. The franchisor imposes on franchisee certain qualitative standards; moreover franchisor grants franchisee the use of his trademarks. The franchisee will pay royalties on the clothes sold, but he has the assurance that he is going to sell a product well known by consumers. Franchising is a relatively new form of contract. It is atypical in that it cannot be fitted into the traditional list of nominate contracts. This article will show that it is not a sub-form of any member of that list. It is also atypical in being a mode of wealth creation which lies between hierarchy and market. That is to say, a franchisor does not trust his product directly to the market and does not set up a strong hierarchy under his control as does an entrepreneur who sets up a corporation. This characteristic of being between hierarchy and market will also be a theme of this article. This article will concern the franchise distribution contract, and in particular the so called business format franchising. The article will therefore be to define the franchising contract and describe the several ways in which this contract can assume a juridical form. The aspect on which the article concentrates is differentiation. A franchising contract is a distribution contract which cannot classified as a dealership, as a partnership, as an employment contract, as a commercial agency contract, but it is an “atypical contract”. This understanding the contract has to be achieved by making the effort to distinguish the franchising contract from the other similar contracts. The useful features of the franchising contract are one of the main reasons why European legislation is especially concerned with franchising.

Originally published in Global Jurist Topics.

Recommended Citation

Rosboch, Amedeo (2005) "Franchising as an ‘Atypical Contract’: English and Italian Models," Global Jurist Topics: Vol. 5 : Iss. 2, Article 1.
Available at: http://www.bepress.com/gj/topics/vol5/iss2/art1