Franchisors' disclosure duty: market transparency and franchisee protection

Abstract

The franchisee is usually the most vulnerable part of the franchise relationship, and should therefore receive greater protection from the legal framework. In this regard, the franchisor's pre-contractual disclosure duty has evolved in its legal status. Whereas its original purpose was to ensure transparency in the market, it now serves to protect the franchisee. In this paper, we compare the franchisor's obligations established by the legal framework in Spain with those set out in the Model Law drawn up by The International Institute for the Unification of Private Law.

Keywords:

• franchising; duty of disclosure; franchisee protection

Funding

This work was supported by Universitat Politècnica de València [PAID-06-12 Sp 20120792].

Notes

1. UNIDROIT's member States are spread across all five continents and represent a variety of different legal, economic, and political systems, as well as different cultural backgrounds. Current member states are: Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Bulgaria, Canada, Chile, China, Colombia, Croatia, Cuba, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Holy See, Hungary, India, Indonesia, Iran, Iraq, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Mexico, The Netherlands, Nicaragua, Nigeria, Norway, Pakistan, Paraguay, Poland, Portugal, Republic of Korea, Republic of Serbia, Romania, Russian Federation, San Marino, Saudi Arabia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Tunisia, Turkey, UK of Great Britain and Northern Ireland, USA, Uruguay, and Venezuela.