The Franchise Agreement is legally unregulated and categorized as a modern-type contract of autonomous business law, designed as a result of business practice needs. Franchise associations have successfully took over the legislator’s tasks and have, with their codes of conduct, regulated certain aspects of the Franchise Agreement.
With the Franchise Agreement the close and lasting relationship of business cooperation is created with a purpose to supply the market with goods or services. The franchisee becomes a part of franchise network, composed of all the franchisees, which have already entered into the Franchise Agreement with the franchisor or will enter into in the future. The peculiarity of the franchise network and the franchising in general is that the franchisees are conducting the business under the joint distinctive features, with the same goods or services, based on the use of common knowledge, experiences and goodwill.
To ensure a comprehensive understanding of the subject in matter, a development and few definitons of franchising are provided. The essential elements of Franchise Agreement are explained and selected topics are discussed. One of the latter is a delivery of a disclosure document in the pre contractual phase, which is legally regulated as it is of a significant value to the franchisee, being the weaker contractual party. Also, the sui generis legal nature of the agreement is discussed and certain elements of similar contracts are found. The liability of the franchisor for the acts of franchisee is explained as well, noting it rarely exists.
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