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Insight

European Parliament Resolution on franchising in the retail sector

The resolution cites statistics from a recent study on the regulatory framework for franchising in the EU, commissioned by its Internal Market and Consumer Protection Committee (IMCO), which argues that franchising is under-performing in the EU compared with other countries. Please click here for more detail on the study.

Inconsistent legislation between member states and an absence of any EU-level mechanism to collect information on potentially unfair contract terms in franchise arrangements are cited as creating technical barriers which may discourage both franchisors and franchisees from expanding across borders.

The Resolution calls on the European Commission and member states to introduce measures to deal with these issues, including non-binding best practice guidelines on franchising contracts, and more systematic data collection about franchising in the EU, particularly in relation to possible problems such as unfair trading practices. The growing importance of online sales should be reflected by the inclusion of specific model terms in franchising contracts.

The Resolution requests the Commission to open a public consultation in order to obtain unbiased information as to the real situation in franchising, and to produce non-legislative guidelines by January 2018. It also invites the Commission to complete an analysis of existing self-regulatory and legislative practices of member states, including recommendations on how to further develop the franchising sector in the EU. Finally, the Commission is asked to review the application of the Vertical Agreements Block Exemption Regulation (330/2010/EU) to franchising agreements across member states and consider whether it should be revised.