{"id":150124,"date":"2026-10-07T11:19:59","date_gmt":"2026-10-07T11:19:59","guid":{"rendered":"https:\/\/www.legal500.com\/guides\/?post_type=comparative_guide&#038;p=150124"},"modified":"2026-10-09T14:14:08","modified_gmt":"2026-10-09T14:14:08","slug":"south-africa-franchise-licensing","status":"publish","type":"comparative_guide","link":"https:\/\/www.legal500.com\/guides\/chapter\/south-africa-franchise-licensing\/","title":{"rendered":"South Africa: Franchise &amp; Licensing"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-150124","comparative_guide","type-comparative_guide","status-publish","hentry","guides-franchise-licensing","jurisdictions-south-africa"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Webber Wentzel<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/12\/WW-Logo.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Webber Wentzel<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/12\/WW-Logo.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Franchise &amp; Licensing laws and regulations applicable in South Africa<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a legal definition of a franchise and, if so, what is it?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. Section 1 of the Consumer Protection Act, 68 of 2008 (CPA) defines a &#8220;franchise agreement&#8221; as:<\/p>\n<p>&#8220;an agreement between two parties, being the franchisor and franchisee, respectively:<\/p>\n<p>(a) in which, for consideration paid, or to be paid, by the franchisee to the franchisor, the franchisor grants the franchisee the right to carry on business within all or a specific part of the Republic of South Africa under a system or marketing plan substantially determined or controlled by the franchisor or an associate of the franchisor;<\/p>\n<p>(b) under which the operation of the business of the franchisee will be substantially or materially associated with advertising schemes or programmes or one or more trade marks, commercial symbols or logos or any similar marketing, branding, labelling or devices, or any combination of such schemes, programmes or devices, that are conducted, owned, used or licensed by the franchisor or an associate of the franchisor; and<\/p>\n<p>(c) that governs the business relationship between the franchisor and the franchisee, including the relationship between them with respect to the goods or services to be supplied to the franchisee by or at the direction of the franchisor or an associate of the franchisor.&#8221;<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any structuring considerations for foreign franchisors (e.g. use of master franchisees, local presence requirements)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under section 23 of the Companies Act, 71 of 2008 (Companies Act), a foreign company conducting business in South Africa must register as an external company with the Companies and Intellectual Property Commission (CIPC) within 20 business days. A company is regarded as doing so if it is party to South African employment contracts or has engaged in conduct over six months that would lead a reasonable person to conclude it intended to continue. In our view, concluding a franchise agreement with a South African franchisee would not, on its own, amount to conducting business here.<\/p>\n<p>If the franchisor operates through a South African subsidiary, the financial assistance rules in sections 44 and 45 of the Companies Act may apply to intra-group funding, and local ownership requirements may apply depending on the nature of the franchised business.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any requirements that must be met prior to the offer and\/or sale of a franchise? If so, please describe and include any potential consequences for failing to comply.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes:<\/p>\n<ul>\n<li>The franchisor must provide the franchisee with the prescribed disclosure document at least 14 days before signature (see Question 5).<\/li>\n<li>The franchise agreement must be in writing and signed by or on behalf of the franchisee.<\/li>\n<li>The franchise agreement must comply with the CPA, including its plain-language requirements and prescribed minimum information.<\/li>\n<li>The franchise agreement must reproduce the exact text of section\u00a07(2) of the CPA at the top of its first page:<\/li>\n<\/ul>\n<p><em>\u00a0<\/em>\u201cA franchisee may cancel a franchise agreement without cost or penalty within 10\u00a0business days after signing such agreement, by giving written notice to the franchisor.\u201d<\/p>\n<p>Non-compliance could render the franchise agreement void in part or entirely (see Question 5).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any registration requirements for franchisors and\/or franchisees? If so, please describe them and include any potential consequences for failing to comply. Is there an obligation to update existing registrations?  If so, please describe.  Are there any practical or timing implications (e.g. typical registration timelines, delays in practice)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any disclosure requirements (franchise specific or in general)? If so, please describe them (i.e. when and how must disclosure be made (is there a minimum disclosure period before signing or payment (e.g. cooling-off period)), is there a prescribed format, must it be in the local language, do they apply to sales to sub-franchisees) and include any potential consequences for failing to comply.   Is there an obligation to update and\/or repeat disclosure (for example in the event that the parties enter into an amendment to the franchise agreement or on renewal)? What are the consequences of late or incomplete disclosure?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes.<\/p>\n<p><strong>Disclosure &#8211; franchise disclosure document:<\/strong><\/p>\n<p>Regulation 3 requires every franchisor to give a prospective franchisee a signed, dated disclosure document at least 14 days before signature, in no prescribed form but setting out at minimum:<\/p>\n<ul>\n<li>the number of outlets franchised;<\/li>\n<li>growth in the franchisor\u2019s turnover, net profit and number of outlets for the prior financial year;<\/li>\n<li>confirmation of no significant adverse change in financial position since the last accounting officer\/auditor certificate, and reasonable grounds to believe debts can be paid as they fall due; and<\/li>\n<li>written projections of potential sales, income or profits, with supporting assumptions.<\/li>\n<\/ul>\n<p><strong>This must be accompanied by:<\/strong><\/p>\n<ul>\n<li>an auditor&#8217;s certificate on official letterhead confirming that the franchisor is a going concern able to meet its current and contingent liabilities, and that its latest audited financial statements comply with South African GAAP and the Companies Act, are consistent with prior-year accounting policies (except as stated), and fairly reflect its financial position;<\/li>\n<li>a list of current franchisees and franchisor-owned outlets (name, representative, address, email and phone number), noting that the prospective franchisee may contact or visit any outlet to assess the opportunity; and<\/li>\n<li>an organogram of the franchisor\u2019s support system for franchisees.<\/li>\n<\/ul>\n<p><strong>Disclosure &#8211; franchise agreement:<\/strong><\/p>\n<p>Regulation 2 requires every franchise agreement to: contain the exact text of section 7(2) of the CPA at the top of its first page (see Question 3); include provisions against unreasonable or overvalued fees and unnecessary or unreasonable conduct; and confirm the franchisor has no undisclosed benefit from suppliers unless disclosed in writing. At minimum, it must also set out:<\/p>\n<ul>\n<li>the goods or services the franchisee may provide, produce, render or sell, named and described;<\/li>\n<li>the franchisor\u2019s and franchisee\u2019s respective obligations;<\/li>\n<li>the franchise business system;<\/li>\n<li>the consideration payable by the franchisee to the franchisor;<\/li>\n<li>any territorial rights granted;<\/li>\n<li>the site, premises and location for the franchise;<\/li>\n<li>conditions for transferring or assigning rights and obligations under the franchise;<\/li>\n<li>any trade mark or other IP owned by or licensed to the franchisor and used in the franchise, and its conditions of use;<\/li>\n<li>the master franchisor\u2019s identity for a master franchise;<\/li>\n<li>initial training and assistance particulars and the franchisor\u2019s main training obligations, with confirmation that further particulars will follow for ongoing training;<\/li>\n<li>the agreement\u2019s duration and renewal terms, consistent with the purpose and policy of the CPA;<\/li>\n<li>the amount or calculation method; an annual financial statement within six months of year-end and three-monthly management accounts; no use of fund monies to advertise franchises for sale; audit certificates on request; a separate, fund-only account; the franchisor\u2019s own contribution, if any; and no undisclosed benefit to the franchisor or its associates for an advertising or marketing fund;<\/li>\n<li>the effect of the termination or expiry, renewal or extension terms (or confirmation that none exist), and related goodwill and assignment terms;<\/li>\n<li>on written request, a written explanation of any term the franchisee does not fully understand;<\/li>\n<li>the franchisor&#8217;s legal and trading names, registered office, business office and contact details;<\/li>\n<li>the franchisor\u2019s directors\u2019 or equivalent officers\u2019 names, identity numbers, town of residence, job titles and qualifications;<\/li>\n<li>details of any non-director proprietor, member or shareholder, unless the franchisor is listed on a stock exchange;<\/li>\n<li>restrictions imposed on the franchisee, and the franchisor\u2019s role in the site selection;<\/li>\n<li>that deposits are held in a separate account, and how they will be dealt with; and<\/li>\n<li>the franchisee\u2019s financial obligations in full: the initial fee and its purpose; funds needed to establish the business (property, site conversion, d\u00e9cor, signage, equipment, furniture, staff recruitment and training, opening stock and legal and financial charges); initial working capital and its basis; total investment; whether expenses, salaries and loan servicing sit within the purchase price; any franchisor funding and conditions; the amount payable before borrowing; and ongoing amounts (fixed or variable, when due, and any management services fee).<\/li>\n<\/ul>\n<p>Section 49 further requires that any provision limiting the supplier&#8217;s liability, imposing risk or an indemnity on the consumer, or recording an acknowledgement of fact, be drawn to the consumer\u2019s attention conspicuously, before the consumer contracts or is required to provide any consideration, with adequate opportunity to understand it.<\/p>\n<p>Cooling off period: see Question 3.<\/p>\n<p>Language requirements: see Question 32.<\/p>\n<p>Updated disclosure: a renewed franchise agreement is treated as new, so all disclosure and content requirements apply afresh.<\/p>\n<p>Consequences of non<em>&#8211;<\/em>compliance: a franchise agreement provision conflicting with Regulation 2 is void. Depending on the nature and extent of non-compliance, the franchisor may face enforcement action from the National Consumer Commission (NCC), including compliance notices or consent orders confirmed by the National Consumer Tribunal (NCT). The NCC may issue summons, interrogate employees under oath, and search premises under warrant. The NCT may award damages, impose fines or imprisonment, and levy an administrative fine of up to 10% of annual turnover or ZAR 1\u00a0million, whichever is greater.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If the franchisee intends to use a special purpose vehicle (SPV) to operate each franchised outlet, is it sufficient to make disclosure to the SPVs' parent company or must disclosure be made to each individual SPV franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Disclosure must be made to each franchisee, ie each individual SPV.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What actions can a franchisee take in the event of mis-selling by the franchisor?  What are the main legal grounds for such claims (e.g. misrepresentation, statutory disclosure breaches, unfair commercial practices)?  To what extent can liability be excluded or limited by non-reliance or entire agreement clauses or disclaimers in the franchise agreement, disclosure document or sales material?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>\u201cMis-selling\u201d is not a defined concept in South African law. We take it to mean the intentional or negligent sale of goods or services involving misrepresentations.<\/p>\n<p>Mis-selling by a franchisor would most likely arise in the disclosure document, though this is improbable given the required auditor confirmations and disclosed assumptions underlying projections (see Question 5). Relevant CPA provisions include:<\/p>\n<ul>\n<li>section 4(5), which prohibits conduct contrary to the CPA&#8217;s purposes, including unconscionable, misleading or deceptive conduct, or representations without reasonable grounds for believing them true;<\/li>\n<li>section 40, which prohibits the use of force, coercion, undue influence, pressure, duress, harassment or unfair tactics in connection with marketing, supply, negotiation, conclusion, enforcement, payment or recovery, and makes it unconscionable to knowingly exploit a consumer&#8217;s inability to protect their own interests.<\/li>\n<li>section 41, which prohibits false, misleading or deceptive representations about material facts, including by exaggeration, ambiguity or failing to correct a misapprehension;<\/li>\n<li>section 48, which prohibits unfair, unreasonable or unjust supply terms, prices or conduct, and presumes a term unfair if it is excessively one-sided or based on misleading representations; and<\/li>\n<li>section 49 (see Question 5).<\/li>\n<\/ul>\n<p>Mis-selling could also constitute a prohibited transaction if it is intended, among other things, to mislead the franchisee, avoid the franchisor\u2019s CPA obligations, or falsely record that no representations were made; the relevant terms, and possibly the whole agreement, would then be void.<\/p>\n<p>Depending on the circumstances, mis-selling may also give rise to common law claims (civil, criminal, contract or delict) in court or another dispute resolution forum.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Would it be legal to issue a franchise agreement on a non-negotiable, \"take it or leave it\", basis?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Non-negotiable, standard-form franchise agreements are not unlawful, provided they comply with applicable laws, including the CPA.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are trademarks, know-how, trade secrets and copyright protected in your country?  Are there any specific requirements or risks relating to the licensing of know-how and trade secrets in a franchise context?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Registered trade marks are protected under the Trade Marks Act, 1993, administered by the CIPC. Registration confers the exclusive right to use the mark for the goods or services covered and a statutory basis for infringement action. Unregistered marks are protected under the common law of passing off, provided the owner can show reputation, misrepresentation and damage or its likelihood.<\/p>\n<p>Copyright arises automatically under the Copyright Act, 1978, and protects original literary, artistic, musical and other qualifying works, including operations manuals, marketing and training materials, software and branding collateral, provided the requirements for originality and fixation are met.<\/p>\n<p>Patents and designs: where a franchise system incorporates patentable inventions or registrable designs these may be protected under the Patents Act, 1978, and the Designs Act, 1993, each requiring registration with the CIPC.<\/p>\n<p>Know-how and trade secrets: South African law has no distinct statutory cause of action for misappropriating trade secrets or confidential know-how. Protection derives from the common law of unlawful competition and, more practically, contractual confidentiality and non-use obligations.<\/p>\n<p>Since common law protection is difficult and costly to enforce, franchisors rely on confidentiality obligations surviving termination; restrictions on copying, disclosing or reverse-engineering; restrictive covenants limiting the risk a former franchisee\u2019s post-termination use of know-how; and provisions requiring the return or destruction of confidential materials on termination.<\/p>\n<p>Risks in licensing know-how and trade secrets: the principal risks are the practical difficulty of proving misappropriation absent a registered right; overly broad confidentiality or restraint provisions being found unreasonable, unfair or unjust and void under the CPA; and disclosed know-how being used post-termination despite contractual restrictions, particularly where the franchisee has built local goodwill or customer relationships.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any franchise specific laws governing the ongoing relationship between franchisor and franchisee? If so, please describe them, including any terms that are required to be included within the franchise agreement.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No franchise-specific legislation governs the ongoing relationship, though certain CPA provisions may apply. See Question 5 for required franchise agreement terms.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any aspects of competition law that apply to the franchise transaction (i.e. is it permissible to prohibit online sales or use of online marketplaces (e.g. Amazon, third-party platforms), insist on exclusive supply, fix or set maximum retail prices, operate dual distribution\/hybrid franchisor models)? If applicable, provide an overview of the relevant competition laws.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Franchise agreements are generally treated as vertical agreements and are assessed under section 5 of the Competition Act, 89 of 1998. Most restrictions are not automatically unlawful and are evaluated based on their effect on competition and any legitimate business justification; the main exception is minimum resale price maintenance, which is prohibited outright. Online sales restrictions and marketplace bans may be permissible where justified by brand protection or quality control but could raise concern if they unduly restrict competition or consumer choice. Exclusive supply obligations are generally permissible where necessary for product quality, consistency and brand standards, though they may attract scrutiny if they foreclose competitors or go further than necessary. Recommended and maximum resale prices are generally permissible provided they do not amount in practice to fixed or minimum pricing. Dual distribution or hybrid models, where the franchisor also operates company-owned outlets, are generally permissible but require careful management of competitive interactions and information exchanges.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any ESG, compliance or supply chain-related legal requirements impacting franchise systems?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>South Africa has no dedicated ESG legislation and ESG disclosure remains largely voluntary, but three areas create compliance risk: extended producer responsibility (EPR), greenwashing, and human rights due diligence (HRDD) expectations in the business and human rights (BHR) context.<\/p>\n<p>EPR, enforced under the National Environmental Management: Waste Act, 2008, makes producers financially or physically responsible for end-of-life product management under sector-specific notices. A &#8220;producer&#8221; broadly includes brand owners and persons manufacturing, converting, distributing or importing identified products, though the precise definition varies by notice.<\/p>\n<p>Producer status is not always clear-cut in franchise systems. A franchisor supplying packaging is typically the &#8220;producer&#8221; despite the franchisee&#8217;s operational independence, while a franchisee sourcing identified products directly may be a &#8220;producer&#8221; in its own right. More than one party can independently meet the definition, and one party&#8217;s registration does not discharge another&#8217;s so franchisors and franchisees should clarify their roles against the applicable notice.<\/p>\n<p>Although not directly legislated, greenwashing carries civil, consumer protection, director liability and reputational risk for overstated sustainability claims, particularly relevant where a franchisor\u2019s brand standards cascade ESG marketing claims to every franchisee&#8217;s point of sale.<\/p>\n<p>South Africa also has no dedicated HRDD legislation, but BHR expectations under the UN Guiding Principles increasingly feature in transaction agreements, financing terms and supplier protocols. A franchisor&#8217;s contractual and operational control over franchisees is &#8220;leverage&#8221; that can embed responsible business conduct into the relationship; that same control may also be relevant in assessing the franchisor&#8217;s exposure where a franchisee&#8217;s conduct causes adverse human rights, labour, environmental or consumer impacts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are in-term non-compete and non-solicitation clauses enforceable and are there any limitations on the franchisor's ability to impose and enforce them?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Such clauses are treated as \u201crestraint of trade\u201d clauses under the common law and are presumed valid and enforceable unless proven not to protect a legitimate proprietary interest, or unreasonable in scope or purpose.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there an obligation (express or implied) to deal in good faith in franchise relationships?  If so, what practical effects does this have on the relationship between franchisor and franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While the CPA imposes no statutory duty of good faith, it aims to establish a consumer market based on fairness, and various provisions prohibit unfair, unreasonable, unjust, unconscionable or deceptive conduct by the franchisor. Under the common law of contract, good faith is an underlying value or guiding principle, but is not a free-standing, binding rule against which the parties\u2019 conduct is assessed, unless the contract expressly requires them to act in good faith.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any employment or labour law considerations that are relevant to the franchise relationship? Is there a risk that the staff of the franchisee could be deemed to be the employees of the franchisor? What level of operational control may a franchisor exercise without creating employment or agency risk?  What steps can be taken to mitigate this risk?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A franchisee\u2019s labour law non-compliance can cause reputational damage disproportionate to the franchisor&#8217;s involvement. Franchise agreements should require the franchisee to comply with minimum employment standards (including UIF, COIDA and national minimum wage obligations); confirm it is the sole employer responsible for statutory compliance; and indemnify the franchisor against employment-related claims.<\/p>\n<p>Whether a franchisee&#8217;s staff could be deemed employees of the franchisor depends on separating brand control from people management. The more a franchisor dictates hours, discipline, remuneration, schedules or performance targets, or supervises day-to-day work, hiring and firing, the greater the risk. Franchisors can safely retain brand-protection functions: operating manuals, quality audits, product specifications, training and site approvals, without crossing into employer territory.<\/p>\n<p>A less obvious risk arises on a franchisee\u2019s exit. Although the franchise relationship must be concluded afresh, section 197 of the LRA may be triggered where the franchisee transfers its business as a going concern, automatically transferring employees to the new owner on existing terms, even if that owner does not continue the franchise. The franchisor may also be exposed if it takes over the franchisee&#8217;s business, so should be alert to section 197 when consenting to or facilitating an exit.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a risk that a franchisee could be deemed to be the commercial agent of the franchisor? What steps can be taken to mitigate this risk?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>This may be a risk depending on how the franchise agreement is drafted. Wording typically associated with agency should be avoided, and the agreement should record that the relationship is one of principal and independent contractor, with neither party acting as agent of the other.<\/p>\n<p>South African franchisees are typically regarded, in practice, as independent undertakings because they bear significant commercial risk, including investment costs, operational expenses and the risk of profit or loss. The Competition Commission is therefore likely to look beyond the contractual label of \u201cagent\u201d and assess the economic reality of the relationship. The risk arises where a franchisor relies on an \u201cagent\u201d characterisation to justify conduct that would otherwise be scrutinised under the Competition Act\u2019s vertical restrictive practice provisions, such as mandatory resale pricing, territorial restrictions or customer allocation arrangements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws and regulations that affect the nature and payment of royalties to a foreign franchisor and\/or how much interest can be charged? Are there any requirements for payments in connection with the franchise agreement to be made in the local currency?  Are there any restrictions on structuring payments (e.g. royalties vs service fees vs mark-ups)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Exchange control &#8211; Outward royalty payments to a non-resident franchisor must be processed through an Authorised Dealer (local bank), which may approve them under delegated authority from the Reserve Bank&#8217;s Financial Surveillance department (FinSurv), against prescribed documents including the franchise agreement and invoices confirming the purpose and amount. Advance and down payments are permissible provided they are recoupable from future royalties or fees.<\/p>\n<p>Where royalty payments are recurring, an independent auditor&#8217;s letter confirming the amount or percentage transferred must be provided to the Authorised Dealer annually. For related-party payments, the resident entity must confirm in writing that transfer pricing documentation is maintained as prescribed by SARS, and that ad hoc services were priced at fair market rates.<\/p>\n<p>Licence agreements involving the local manufacture require a Department of Trade, Industry and Competition (DTIC) assessment confirming that royalties are market-related and in line with industry standards, before the Authorised Dealer may also approve payment.<\/p>\n<p>Authorised Dealers may also approve residents licensing IP to non-residents at an arm&#8217;s length, market-related price, subject to sight of the licence agreement and an auditor&#8217;s letter on the royalty calculation, with royalties repatriated within 30 days and reported on FinSurv&#8217;s system.<\/p>\n<p>There is no requirement for franchise agreement payments to be made in local currency, although payments to other exchange control residents must be in South African Rand.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to impose contractual penalties on franchisees for breaches of restrictive covenants etc.? If so, what requirements must be met in order for such penalties to be enforceable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Any penalty stipulation must comply with the CPA, including its provisions on unfair, unreasonable or unjust terms, notice requirements, and Regulation 2(2)(b), which requires provisions preventing conduct unnecessary or unreasonable relative to the risks incurred.<\/p>\n<p>The Conventional Penalties Act, 15 of 1962, also applies. A court may reduce a disproportionate penalty, and a creditor may not claim both damages and the penalty.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What tax considerations are relevant to franchisors and franchisees? Are franchise royalties subject to withholding tax?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><ul>\n<li>Franchise fees are generally taxable revenue for the franchisor, arising from the ongoing use (not cession) of its IP and processes.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>IP creation, acquisition or registration costs are generally capital and non-deductible, though certain IP may qualify for deductions covering registration\/renewal costs, acquired IP or R&amp;D expenditure. Agreement drafting costs are generally deductible for the franchisor but not the franchisee.<\/p>\n<p>&nbsp;<\/p>\n<p>Renewal fees follow the same treatment as initial fees; advertising fund contributions and training fees are generally gross income for the franchisor and deductible for the franchisee. Transfer pricing rules apply where the parties are connected persons or associated enterprises.<\/p>\n<p>&nbsp;<\/p>\n<p>Section 23I of the Income Tax Act is a domestic anti-avoidance provision restricting deductions for expenditure on &#8220;tainted intellectual property&#8221;, broadly, IP previously owned by the resident end-user or a connected person, where the related income is not effectively taxed in South Africa. Where it applies, no deduction is permitted, save that one-third of the expenditure is deductible if withholding tax on royalties is levied at 10%, and one-half if levied at 15%.<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>Capital gains tax (CGT) applies to disposals of assets \u2013 for residents, on a worldwide basis; for non-residents, mainly on immovable property and permanent establishment assets. A franchisee&#8217;s disposal of its interest in the franchise entity, or a franchisor\u2019s disposal of a licence, may trigger CGT based on proceeds less base cost. The tax treaties may, however, prevent South Africa from taxing specified capital gains derived by residents of the treaty country.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li>Franchise fees paid by a South African franchisee to a South African franchisor are standard-rated taxable supplies: the franchisor charges VAT at 15%, and a VAT-registered franchisee recovers it as input tax.<\/li>\n<\/ul>\n<p>A South African franchisor granting a franchise to a foreign franchisee may zero-rate the services if prescribed requirements are met.<\/p>\n<p>Where a foreign franchisor grants a franchise to a South African franchisee, this can create an imported-services issue making the recipient, not the foreign supplier, liable for VAT, though this is not intended to apply where the recipient uses the services to make taxable supplies.<\/p>\n<p>A foreign franchisor physically supplying services in South Africa may be carrying on an enterprise here and be required to register for and charge VAT.<\/p>\n<ul>\n<li>Withholding tax applies to any royalty amount paid for the benefit of a foreign franchisor from a South African source, at the rate of 15%. The foreign franchisor is liable for the tax, but the franchisee must withhold it and pay it to SARS by the last day of the month following payment. Many double tax treaties reduce the rate, but a declaration and undertaking from the non-resident franchisor are required beforehand to benefit from the reduced rate.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is e-commerce regulated and does this have any specific implications on the relationship between franchisor and franchisee?  For example, can franchisees be prohibited or restricted in any way from using e-commerce in their franchise businesses?  Are there any rules regarding online sales within or outside a franchisee\u2019s territory?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>South Africa\u2019s regulation of electronic transactions does not specifically address franchisor\/franchisee arrangements. The Electronic Communications and Transactions Act, 25 of 2002 (ECTA) facilitates and regulates electronic transactions, including by confirming that contractual obligations can arise from data messages, but does not prohibit franchisors or franchisees from using e-commerce.<\/p>\n<p>ECTA\u2019s consumer protections provisions apply where a franchisee supplies goods or services electronically, requiring minimum information so consumers can identify the supplier, keep a transaction record, and understand their rights and obligations, including delivery times, returns policy and information security.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the applicable data protection laws and do they have any specific implications for the franchisor\/franchisee relationship?   In particular, what are the key data protection considerations in a franchise relationship, including: (a) allocation of controller\/processor roles; (b) use of customer databases; (c) cross-border data transfers; and (d) marketing and CRM activities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Protection of Personal Information Act, 4 of 2013 (POPIA) regulates the processing of personal information (broadly, information identifying a natural or juristic person), distinguishing between the responsible party (who determines the purpose and means of processing) and the operator (who processes on its behalf); which of the responsible party or operator bears primary compliance obligations depends on the nature of each processing activity.<\/p>\n<p>For example, a franchisee collecting customer personal information on the franchisor&#8217;s instructions may be an operator vis-\u00e0-vis the franchisor, while remaining a responsible party for its own employees\u2019 data. Franchise agreements should correctly characterise each party&#8217;s role and ensure this is reflected in practice.<\/p>\n<p>POPIA prescribes eight conditions for lawful processing: accountability, processing limitation, purpose specification, further processing limitation, information quality, openness, security safeguards and data subject participation. Both parties, as responsible parties, must ensure that their processing activities, including use of customer databases, comply with these conditions.<\/p>\n<p>Cross-border transfers of personal information are prohibited unless, <em>inter alia<\/em>, the recipient is subject to comparable data protection laws, the data subject has consented, or the transfer is necessary to perform a contract with the data subject; both parties must ensure compliance with section 72 when transferring data abroad.<\/p>\n<p>Electronic direct marketing is prohibited under POPIA unless the data subject has given voluntary, specific and informed consent, or is an existing customer (subject to qualifying criteria and an opt-out right). Non-electronic direct marketing (eg in-store activations) is governed by the CPA, subject to the customer&#8217;s right to object. Direct marketers must register on the NCC\u2019s opt-out registry, which lets consumers pre-emptively block direct marketing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the franchisor permitted to restrict the transfer of (a) the franchisee's rights and obligations under the franchise agreement or (b) the ownership interests in the franchisee?  Can the franchisor impose conditions on transfers (e.g. approval rights, fees, qualification criteria)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. Regulation 2(3) requires every franchise agreement to specify conditions for transfer, restrictions on the franchisee, and goodwill and assignment terms, but these must comply with the CPA, including its provisions on unfair, unreasonable or unjust and prohibited terms.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent can a franchisor impose audit rights, reporting obligations, and operational controls on a franchisee, and what legal limits apply?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>These may be imposed provided they comply with the CPA, including its provisions on unfair, unreasonable or unjust and prohibited terms.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does a franchisee have a right to request a renewal on expiration of the initial term? In what circumstances can a franchisor refuse to renew a franchise agreement? If the franchise agreement is not renewed or it if it terminates or expires, is the franchisee entitled to compensation? If so, under what circumstances and how is the compensation payment calculated?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no statutory right to renewal, although if no option to renew or extend exists, this must be expressly stated. Regulation 2(3) requires the agreement to specify duration, renewal terms, and the effect of termination or expiration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any mandatory termination rights which may override any contractual termination rights? Is there a minimum notice period that the parties must adhere to?  Are there any requirements regarding notice periods and opportunities to remedy breaches before termination?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The CPA prescribes no minimum notice period for termination, save for the franchisee&#8217;s right under section 7(2) to cancel within 10 business days of signature. Beyond that, termination mechanics must comply with the CPA provisions on unfair, unreasonable or unjust and prohibited terms, and Regulation 2(3) requires termination terms to be documented.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any intangible assets in the franchisee's business which the franchisee can claim ownership of on expiry or termination, e.g. customer data, local goodwill, etc.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Regulation 2(3) requires the franchise agreement to address termination, goodwill and related terms, subject to the CPA&#8217;s requirements on unfair, unreasonable or unjust and prohibited terms.<\/p>\n<p>The franchisee has no proprietary claim to the franchisor&#8217;s IP used under licence. It remains the franchisor\u2019s (or its licensor\u2019s) property throughout and reverts in full on termination or expiry, subject to any agreed de-branding period. Local goodwill generated in the branded business is generally treated as accruing to the franchisor&#8217;s brand rather than to the franchisee personally, and franchise agreements typically include an express acknowledgement to this effect to avoid disputes on termination.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What post-termination obligations are typically enforceable (e.g. de-branding, return of confidential information, non-compete, non-solicitation) and how readily are such post-term restrictions enforced in practice?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Standard post-termination obligations such as de-branding, ceasing use of IP, and returning confidential information, are typically enforceable, and Regulation 2(3)(v) requires them to be addressed in the agreement.<\/p>\n<p>Non-solicitation and non-compete obligations imposed on the franchisee should also extend, through separate confidentiality and restraint of trade covenants, to key employees exposed to the franchisor\u2019s proprietary information.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a national franchising association? Is membership required?  If not, is membership commercially advisable? What are the additional obligations of the national franchising association?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, the Franchise Association of South Africa (FASA). Membership is voluntary but commercially advisable, as it lends credibility to franchisors that abide by FASA&#8217;s Code of Ethics. FASA can investigate complaints, mediate disputes and expel non-compliant members, but has no statutory enforcement power.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are foreign franchisors treated differently to domestic franchisors? Does national law\/regulation impose any debt\/equity restrictions?  Are there any restrictions on the capital structure of a company incorporated in your country with a foreign parent (thin capitalisation rules)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign franchisors are not treated differently, except that a foreign company conducting business in its own right may require external company registration under the Companies Act (see Question 2).<\/p>\n<p>There are no general debt-to-equity or thin capitalisation ratios; this is instead addressed under the transfer pricing rules in section 31 of the Income Tax Act. Where a South African company is funded by a connected non-resident, the debt must be at a level and on terms independent parties would have agreed, and any excess is adjusted. SARS applies an arm&#8217;s-length analysis rather than a fixed ratio. Section 23M separately caps deductible interest paid to a creditor not subject to South African tax, by reference to a percentage of adjusted taxable income.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Must the franchise agreement be governed by local law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Not necessarily, though choosing a foreign governing law will not exclude the application of the CPA.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What dispute resolution procedures are available to franchisors and franchisees?  Are there any advantages to out of court procedures such as arbitration versus litigation, in particular if the franchise agreement is subject to a foreign governing law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Section 34 of the Constitution, 1996 affords parties the right to have disputes resolved by a fair public hearing before a court or, where appropriate, another independent and impartial tribunal. Available fora include courts, statutory bodies, ombuds, agreement between the parties, mediation, and domestic and international arbitration.<\/p>\n<p>Statutory bodies and ombuds: franchisees may lodge complaints with the NCC; FASA also offers voluntary mediation for member disputes.<\/p>\n<p>Courts: disputes may be determined by a court of competent jurisdiction. Where proceedings are brought by a party not domiciled in South Africa, jurisdiction may need to be \u201cfounded\u201d, for instance by consent to jurisdiction or attachment of local assets. Mediation is a pre-requisite for High Court proceedings, and decisions may be appealed or reviewed by superior courts.<\/p>\n<p>Agreement: the parties may refer disputes to any person or forum by agreement, provided the process follows the rules of natural justice.<\/p>\n<p>Domestic arbitration: where all elements of a dispute (domicile, subject matter, contractual performance, governing law etc) are tied to South Africa, the dispute may be resolved by domestic arbitration, with awards made orders of court for enforcement.<\/p>\n<p>International arbitration: where one or more elements are not tied to South Africa, international arbitration is available. As a signatory to the New York Convention, South Africa generally enforces international arbitral awards, as do the courts of other Convention countries.<\/p>\n<p>Court disputes generally take longer to resolve than alternative dispute resolution mechanisms. Arbitration is the preferred resolution mechanism despite being costlier; South Africa\u2019s courts enforce both arbitration agreements and awards, making it an \u201carbitration-friendly\u201d jurisdiction.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Must the franchise agreement and disclosure documents be in the local language?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Not necessarily. The CPA requires only that consumer-facing documents, including franchise agreements and disclosure documents, be in plain language \u2013 satisfied if an ordinary consumer of the intended class, with average literacy and minimal experience, could understand the document without undue effort, having regard to its context, comprehensiveness, consistency, form, style, vocabulary, sentence structure and any aids such as headings, illustrations or examples.<\/p>\n<p>Regulation 2(3)(p) requires the franchisor, on written request, to explain any term the franchisee does not fully understand; which may assist where the language used is not the franchisee\u2019s first language. In practice, English is typically used.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to sign the franchise agreement using an electronic signature (rather than a wet ink signature)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, an advanced electronic signature is sufficient. Advanced electronic signatures are a specialised type of electronic signature that have been accredited or &#8220;passed a test.&#8221; In order to &#8220;pass the test&#8221;, the South African Accreditation Authority (SAAA) must accredit authentication products and services in support of the advanced electronic signature. The purpose of requiring accreditation is to guarantee the authenticity of the signature.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do you foresee any significant commercial or legal developments that might impact on franchise relationships over the next year or so?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Competition Commission has initiated a market inquiry into the franchise sector (the FMI) to determine whether certain practices impede, distort or restrict competition. The FMI will assess franchise agreements and contractual practices, information asymmetries, and finance and funding conditions, including how capital and lending requirements affect entry by SMEs and historically disadvantaged persons. It remains at a preliminary stage, with final terms of reference expected shortly, but could reshape franchise relationships or lead to increased regulatory oversight under the CPA.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">6225<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/150124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=150124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}