Franchisors' disclosure duty: market transparency and franchisee protection

The franchisee is usually the most vulnerable part of the franchise relationship, and should therefore receive greater protection from the legal framework. In this regard, the franchisor's pre-contractual disclosure duty has evolved in its legal status. Whereas its original purpose was to ensure transparency in the market, it now serves to protect the franchisee. In this paper, we compare the franchisor's obligations established by the legal framework in Spain with those set out in the Model Law drawn up by The International Institute for the Unification of Private Law.Lapiedra-Alcami, R.; Reig Fabado, I.; Rueda Armengot, C. (2014). Franchisors' disclosure duty: market transparency and franchisee protection. Service Industries Journal. 34(9-10):788-795. doi:10.1080/02642069.2014.905917S788795349-10Chaudey, M., & Fadairo, M. (2010). Contractual design and networks performance: empirical evidence from franchising. Applied Economics, 42(4), 529-533. doi:10.1080/00036840701704428Collins, H. (2008). Principles, Definitions and Model Rules of European Private Law: Draft Common Frame of Reference (DCFR) Interim Outline Edition, prepared by the Study Group on a European Civil Code and the Research group on EC Private Law (Acquis group) by Christian von Bar, Eric Clive, Hans Schulte-Nöcke (eds). Modern Law Review, 71(5), 840-844. doi:10.1111/j.1468-2230.2008.00718.xPeris-Ortiz, M., Peris Bonet, F. J., & Rueda-Armengot, C. (2011). Vertical integration in production and services: development in transaction cost economics. Service Business, 5(1), 87-97. doi:10.1007/s11628-011-0103-0Perryman, A. A., & Combs, J. G. (2011). Who should own it? An agency-based explanation for multi-outlet ownership and co-location in plural form franchising. Strategic Management Journal, 33(4), 368-386. doi:10.1002/smj.1947Rondan-Cataluña, F. J., Navarro-Garcia, A., Diez-De Castro, E. C., & Rodriguez-Rad, C. J. (2012). Reasons for the expansion in franchising: is it all said? The Service Industries Journal, 32(6), 861-882. doi:10.1080/02642069.2010.550041Shane, S. (2001). Organizational Incentives and Organizational Mortality. Organization Science, 12(2), 136-160. doi:10.1287/orsc.12.2.136.10108Vázquez, L. (2008). Complementarities between franchise contract duration and multi-unit propensity in franchise systems. The Service Industries Journal, 28(8), 1093-1105. doi:10.1080/0264206080218794