Information Is Franchisees’ Best Friend In Agreement With Franchisors

Business Report:

The proposed Consumer Protection Bill needed to be specific about the information that a franchisor had to disclose to ensure that franchisees were not abused, Tanya Woker, a professor of law at the University of KwaZulu-Natal, said this week.

Woker, who has researched franchising for five years, said the local industry was completely unregulated and franchisees were heavily dependent on the franchisor, which had a lot of power.

“It’s all about the contract that you sign,” she said. “Although the law treats the franchisor and the franchisee as equal… there is only one person who is in charge.”

The bill, which introduces various requirements that will change the way consumers are treated in business dealings – such as disclosure of material information – is before parliament and should be passed before the end of the year.

The Franchising Association of SA (Fasa) suggests that its franchisor members use its disclosure document, but it does not compel them to do so.

Franchising is seen as a safe way to enter business, particularly for first-time entrepreneurs, who buy into tried and tested business models instead of starting from scratch.

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