The Legal Nature of a Franchise Agreement and the Liability Therein

Abstract

The franchise agreement is one of the most important forms of commercial transactions that facilitates and stimulates successful business operations. It is a legal contract that has existed since ancient times as a means of facilitating activities. It has been used as an independent commercial system and has played a significant role in achieving commercial freedom for owners of various businesses. It reduces the burdens, both financial and administrative, which has encouraged its widespread adoption. It enjoys a reputation and prestige that depends on the franchisor and other essential advantages. The franchise agreement is a means of achieving the interests of all parties involved, the franchisor and the franchisee. On the one hand, the franchisor achieves greater success through investment, and on the other hand, the franchisee benefits from the franchisor's reputation and standing, achieving significant success in their business activities. Therefore, this agreement has a significant role in the commercial growth of various businesses. The importance of this research lies in its significant contribution to the economies of many developing countries through the development of economic projects. It provides in-depth information for researchers about the significant role of the franchise agreement and its resulting effects. The researcher also adopted the comparative descriptive analytical method in deriving legal resources and concluded the research with several results, including that franchising represents a new technique for contractual relations based on providing a set of services related to industrial and commercial property rights to achieve the interests of both the grantor and the recipient, which ultimately makes the process extremely complex. Therefore, determining the legal nature of the contract in light of traditional contract templates is a process that does not align with the essence of the franchise contract. Several recommendations were made, including issuing special legislation to regulate the provisions of unfair competition, or adding provisions to the current Commercial Law to define the cases that are considered unfair competition.