Perhaps the most fundamental change affecting this industry is that any franchise agreement must now contain a clause stating that a franchisee may terminate a franchise agreement without charge or penalty within 10 business days of signing such a contract by notifying the franchisee in writing. The impact of the CPA on the franchise industry in South Africa is considerable, as it provides that the threshold set, which determines whether or not a transaction falls within the scope and scope of the law, does not apply to franchise agreements. It is immediately clear how problematic this would be for a foreign franchisee who wants to expand into the South African market. You may understand the market conditions and the track record of a franchise`s performance in other countries, but it would take a considerable amount of presumptions to be able to predict the potential sales, revenues or profits that the franchise might expect. However, it would be excessively laborious to justify so many things. It is clear that, in this situation, it is not possible to comply with the rules. Under the common law, there was a previous perception that franchisors dictated the terms of the agreements they entered into and that the franchisee had the choice either to accept those terms or to seek opportunities elsewhere. This perceived lack of bargaining power seemed to indicate that franchise agreements are ideal candidates to enter the CPA. The questions that arose before the introduction of the CPA in the consumer context were important, but most importantly involved – the franchise agreement is the cornerstone of any franchise system. It should take due account of all aspects of the franchise relationship, while protecting the franchise system and allowing the franchisee to use the franchise system for its commercial profits. We help franchisees prepare their franchise agreement in a way that allows their franchise system to operate efficiently, while ensuring that the franchise system and the franchisee`s rights are properly protected in full compliance with the CPA.
In addition, a franchise agreement renewed after the general expiry date is considered a new franchise agreement and must be amended upon its extension to ensure that the conditions prescribed by the CPA are included. In accordance with the CPA`s requirement, the franchise agreement must be signed in simple and understandable language, in writing and by both parties. In accordance with Rule 2 concerning the CPA, it must also contain the exact words: “A franchisee may terminate a franchise agreement without charge or penalty within ten working days of signing such a contract by informing the franchisee in writing. (Article 7(2) of the Consumer Protection Act 2008) “. 1. grant a franchisee the right to carry on the transfer of goods or services under a marketing plan or system imposed by a franchisee; The entire franchising process is also governed by the PCA and its detailed rules. Your relationship with the franchisees must comply not only with the CPA, but the franchise agreement that governs the relationship must contain mandatory clauses and information to comply with the law….