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15 May 2001, Spain

Dr. Ecommerce,

I would like to know what would happen if a traditional (not on the
net) franchisee (with exclusivity) wants to start publicity on the net.
Could he be allowed to do this? Can the Franchisor prohibit him from doing so?

Is there any answer to this problem?

Many thanks,

Alex

Dear Alex:

This really depends on the contract the franchisee has with the franchiser. The contract should stipulate clearly what kind of marketing the franchisee can do and cannot do. There may also be territorial issues.

That said, any franchise agreement drawn up more than six or seven years ago would probably not have anticipated e-commerce and, as a result, it may not be clear whether or not the franchisee can sell or market on-line. On the other hand, most franchise contracts give the franchiser the right to approve any marketing communications material the franchisee wishes to use. In other words, the franchiser can probably approve or disapprove of any Internet marketing plans you may have.

The franchisee should also be aware that if she promotes her local franchise on the web, she is probably promoting other branches of the franchise at her expense.

Conclusion? If you are a franchisee and keen to adopt the Internet in your business, why not discuss it with your franchiser? You both stand to benefit and co-operation is clearly the path to take. If you are thinking about becoming a franchisee, then you certainly need to discuss the Internet before signing any contract.

Good luck.

Dr. Ecommerce