International Franchising Arrangements and Problems in Their Negotiation

Pengilley, Warren | January 1, 1985

Franchising is little understood in legal circles. Almost certainly the reason for the lack of any common jurisprudential approach to franchising is that franchising relationships simply do not fit neatly into any of the common law moulds with which we are all familiar. Franchising typically partakes of a number of these relationships while not totally embracing any of them. For example, it partakes of, but does not totally embrace, the concepts of (1) employer and employee; (2) distributorship; (3) licensor and licensee; (4) agency; or (5) vendor and purchaser, to varying degrees, depending upon individual transactions. Because of the scope of franchising, and particularly of international franchising, the basic problems involved in negotiation of franchising agreements are most frequently not inherently legal in nature. They are more likely to be problems of business, psychology, politics, and culture or problems of a technical and scientific kind. Above all, they are likely to be problems of tact, diplomacy, strategy, and tactics.