Consumer Protection Act And Franchise Agreements

The effects of the CPA on existing franchise agreements are of great concern. While the CPA does not apply to existing franchise agreements in general, the rules governing the CPA provide that certain aspects of the CPA apply to all existing franchise agreements. To the extent that Parliament rightly believes that there is unequal bargaining power between franchisors and franchisees, this position is consistent with the underlying theoretical rationale for the inclusion of franchise agreements in the CPA. If franchisees were able to waive their rights to certain necessary information, the reason for the inclusion of franchise agreements in the CPA would have failed, as franchisors would only use their superior bargaining power to compel franchisees to relinquish their rights to information they did not wish to provide. It seems, therefore, that we must accept that this information should not be abandoned. The negotiation of franchise agreements with the franchisor, which is generally in a stronger negotiating position, has long been experiencing a power imbalance. Your most important document is your franchise agreement. Not only must it be formulated in clear terms, all unspeakable clauses are removed and all concepts that may pose a risk to consumers must be brought to the consumer`s attention, but the new regulations also have a list of requirements to meet. In addition, a franchise agreement renewed after general entry into force is considered a new franchise agreement and must be amended in the event of a renewal to ensure that the terms set out in the CPA are included. The Consumer Protection Act (“the law”) applies to franchise agreements and poses considerable challenges to the weakest franchisors, including those who do not respect best franchise practices or who provide adequate value to their franchisees. One of the requirements of a franchise agreement is that the contract must be written and at least signed by the franchisee. In addition, the franchisor must ensure that the necessary information is included in the agreement, as required by the regulations. It appears that the first restriction is due to the fact that parties who contract private sales to each other are presumed to be at the same or almost equal level of negotiation, and that their freedom to dictate the terms of their agreement should therefore not be compromised or dictated by legislation.

Similarly, the second restriction seems justified by the fact that the value of the consumer, once reached at a certain size, has certain capabilities and is adequately equipped to understand the effects of its actions and contractually attribute the risk associated with a trade agreement.