The Challenge of Disclosure Documents and Compliance with Franchise
Sales Laws
A variety of questions come into play in making the international
franchise sales law compliance analysis. These include:
- Are the same documents to be included in all disclosure documents—for
example, do some countries’ laws require disclosure of
the prospect at the letter of intent stage, and others not?
- Are there common disclosure requirements?
- To the extent disclosure requirements differ, are the disclosure
requirements conducive to a uniform document and compatible?
What issues are raised?
- Are all jurisdictions’ laws consistent as to whether
a specific transaction is to be described in a disclosure document—i.e.,
are deal points or further, additional negotiated changes required
to be included?
- To what extent are market differences (e.g., as to initial
investment or market conditions) required to be included in the
disclosure document?
- What considerations affect how a given franchisor should structure
its global disclosure obligations?
- Is it reasonable for a franchisor to have a single international
disclosure document for use in all countries (with international
addenda or “wrap” document to supplement it), or
must it have a separate document for each country?
- If a single international disclosure document were used, how
would one deal practically with differences in various countries’ disclosure
requirements—for example, would it be permissible to remove
and/or replace inappropriate disclosure for Country B to that
given in Country A? Would this be construed as confusing or misleading
to a prospective franchisee?
- Is it preferable to have separate disclosure documents for
each country?
All of these are factors to be considered in structuring a program
for disclosure and the answers are likely to vary for different
companies.
More information about the book International
Franchise Sales Laws
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