Field Fisher Waterhouse

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Latvian plans for franchise regulation

May 2007

Field Fisher Waterhouse LLP

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European Franchising Network

EuropeanFranchising.com is an online information resource service for businesses considering using franchising as a way of developing their market in Europe.

Europeanfranchising.com offers a seamless one stop online service for all franchising matters within all EU Member States. It aims to save franchisors time, money and aggravation by making available to them relevant commercial and legal information on franchising in the EU. It is operated by Field Fisher Waterhouse LLP, the EU's leading franchise lawyers. It is edited by Mark Abell, Chairman of the European Franchising Network ("EfN"), who is recognised by Chambers and Partners Guide to the legal profession as the No1 legal adviser for the franchising sector.

Comments

The Latvian Parliament has indicated that it plans to adopt a franchise regulation from September of this year.

This will have an important impact on all Franchisors looking to franchise their businesses in Latvia.

Currently there is no specific legal regulation for franchise agreements in Latvia. The proposed franchise regulation will have no retrospective effect.

Franchisors looking to franchise in Latvia after the implementation of the regulation will, amongst other requirements, be obliged to comply with pre-contractual disclosure requirements.

The time period for disclosure has yet to be finalised. The information which Franchisors are likely to be obliged to supply will include:

A general description of the franchise;

Evidence of the validity of the rights to be granted pursuant to the franchise;

Information on the franchise network;

Information on the term of the franchise agreement and payment terms.
In addition, where the franchise agreement contains non-competition restrictions on a Franchisee, the draft regulation currently provides an obligation on the Franchisor to pay compensation to the Franchisee for compliance with these non-competition provisions.

Whilst the draft is at an early stage, there will be concerns for Franchisors who seek to impose non-competition obligations on their Franchisees as to the levels of compensation that they will have to pay.

We will keep you informed of all developments so please watch this space...

For more information please contact Mark Abell or Graeme Payne.

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