Franchising in South Africa is regulated by the Consumer Protection Act (“CPA”) and the Franchise Association of South Africa (“FASA”), which sets out the legal requirements for franchising. The legal framework for franchising includes:

• Disclosure requirements: Franchisors must provide comprehensive disclosure documents to potential franchisees, including details of the franchise system, the franchise fees and royalties, and the franchise agreement.

• Franchise agreement: Franchisors and franchisees must enter into a written franchise agreement, which sets out the terms and conditions of the franchise relationship, including the rights and obligations of both parties.

• Code of conduct: Franchisors must comply with the FASA code of conduct, which sets out the ethical and business practices expected of franchisors in South Africa.

A franchise agreement must comply with the provisions of the Consumer Protection Act (“CPA”), which means that the agreement cannot contain provisions which are not in accordance with the CPA.

Should the franchise agreement not contain these details, the franchisee may resile from the agreement, affirming that the franchisee may elect to get out of the agreement, attracting no penalty to the franchisee. This means that the agreement is not binding on the franchisee. For examples: every franchise agreement must now contain a cancellation clause and should such an agreement fail to do so, the franchise agreement may be declared void.

For this reason, it is critical to ensure that any franchise agreement you intend to execute has been properly and duly vetted by a commercial attorney with experience with franchises.