Franchise Law

Franchising is internationally accepted as one of the most successful business formats, and is becoming increasingly popular in South Africa. The practitioners in MacRobert Attorneys’ Franchise Law division are strategically positioned as leaders in this field.

The members of our Franchise Law team are expert franchise and intellectual property lawyers and skilled litigators, with the added benefit of having personal knowledge of the operation of a franchise business.  MacRobert Attorneys is a member of the legal panel of the Franchise Association of South Africa (‘FASA’) as well as at the National Consumer Commission (‘NCC’).

Our clients are franchisors and franchisees of some of the best-known franchise brands in South Africa and abroad. We have also been successful in precedent-setting High Court franchise litigation.

The Consumer Protection Act (‘CPA’) prescribes demanding prerequisites for franchises, including strictly prescribed terms and provisions for franchise and related agreements. Along with providing expert advice to our franchisor clients, we assist with the drafting of franchise agreements and disclosure documents, in accordance with CPA requirements. We make it a priority to ensure that your intellectual property and franchise business system are protected.

The CPA also provides considerable rights for franchisees – a unique feature of franchise agreements. We take our franchisee clients through every important aspect of their franchise agreement and ensure there is a thorough understanding of the franchise business before any contracts are signed. We assist franchisees to deal with the challenges of unfair franchise agreements and a lack of support by the franchisor, through mediation, and litigation where necessary.  Franchising is an extremely complex area of law involving intellectual property, contract and labour concerns, and our franchise law specialists will guide you through every step of the way expertly and professionally.

We can advise you on all legal aspects of franchises.

When the CPA came into effect in 2011 it significantly changed the franchise landscape. Prior to its promulgation, franchise agreements (and the inevitable disputes that followed) were governed solely within the framework of the franchise agreement. The CPA granted extensive new statutory rights to both franchisees and franchisors, who are now faced with considerable additional obligations.

We can provide you with franchise agreements that comply with the provisions of the CPA.

The CPA prescribes both the form and content of franchise agreements. It compels express pre-contractual disclosures and representations from franchisors, allows for cooling-off periods and even directs that franchise agreements should not be ‘unfair’. The CPA also created demanding contractual prerequisites that relate to franchise renewal terms, marketing and franchise fees (or royalties), and exclusive franchise territories. While franchisees are concerned with unfair franchise agreements, improper training, redundancy of the franchise brand and restraints of trade, franchisors, on the other hand, seek to protect their intellectual property and franchise business system.

We can assist you in the drafting and structuring of your franchise Disclosure Document.

In terms of regulation 3 of the CPA, a franchisor must provide a prospective franchisee with a ‘Disclosure Document’ at least 14 (fourteen) days prior to the signing of a franchise agreement.  This Disclosure Document must contain a number of financial projections, among other, regarding the franchisee’s future business. Failure by a franchisor to provide a Disclosure Document in the required manner constitutes a misrepresentation and may result in the whole of the agreement being declared void, exposing the franchisor to both considerable damages claims and possible administrative fines imposed by the competent authorities.