18 February 1994

Doc. 7028

COMMUNICATION FROM THE COMMITTEE OF MINISTERS

Reply to Recommendation 1182 (1992)

on franchising

(adopted by the Committee of Ministers on 14 January 1994

at the 508th meeting of the Ministers' Deputies)

      The Committee of Ministers, after having consulted the European Committee on Legal Co-operation (CDCJ) and recalling its interim reply given in March 1993, makes the following reply to the Parliamentary Assembly:

1.       The Committee of Ministers recalls that the International Institute for the Unification of private law (UNIDROIT) is studying franchising agreements since 1985.

2.       Following its note of 1992 on the examination of franchising areas which would lend themselves to international treatment, UNIDROIT decided to co-operate with the International Bar Association in preparing a guide to master franchise agreements. The guide, which could be ready within two years, would cover the situation in some forty States. The aim of the guide would be to provide information on the legislation and case law of these countries on this topic. It would also propose a number of standard clauses for master franchise contracts.

3.       At its meeting of June 1993, the Governing Council of UNIDROIT also decided to set up a working party on franchising. The task of the working party, which could begin work in May 1994, is to examine the different aspects of franchising, in particular the disclosure of information to the parties to the franchise agreement before and after the agreement is signed. In the case of international franchises, this study calls for the examination of all the disciplines making up the legal systems of the countries concerned. The working party will also consider questions related to the termination of master franchise agreements (cancellation, expiry of term), particularly with regard to sub-franchising agreements and the selection of the applicable law and competent courts. UNIDROIT's work could also lead to the drafting of an international instrument on this matter.

4.       To avoid duplicating the work already under way in another international organisation, the CDCJ believes that it would not be advisable at the present time to undertake a study of franchising within the Council of Europe. However, it is desirable that the Council of Europe should follow the development of UNIDROIT's work on the question.