FASA TO TIGHTEN UP ITS CODE OF ETHICS RELATING TO THE REFUND OF DEPOSITS
Ahead of the Consumer Protection Act regulations that will reflect FASa's Code of Ethics and as a result of some complaints received by the Franchise Association of South Africa (FASA), the question of the refund of deposits by prospective franchisees is being seriously reviewed by the association in view of a number of complaints that have been received.
With FASA's primary role that of ensuring that all its members adhere to the franchise business principles adopted and accepted in the Code of Ethics and Business Practices, it is disturbing that reports of some franchisors, whether FASA members or not, have been taking deposits from prospective franchisees and then are stalling when it comes to refunding those deposits when potential franchisees are not accepted for whatever reason.
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THE 2010 WORLD CUP -DOs AND DON'Ts OF MARKETING
The 2010 World Cup is widely being touted as an unparalleled marketing
opportunity for South Africa and its business community.
Naturally, however, the commercial potential of an international event of this magnitude
is not fair game for anyone to exploit. FIFA, as the "owner" of the event,
is at pains to ensure not only that the goodwill and reputation attached to the
event are not open to abuse, but that the interests of the official sponsors (in
other words those who have entered into agreements with FIFA and who have paid substantial
sums of money for the right to have their names attached to the event) are not undermined
by "ambush marketing".
"Ambush marketing" is the colloquial term applied to any attempt by a
supplier to associate its products or services with an event, despite not being
an official sponsor. The supplier uses the event as a platform to promote his brand
or product but without making the financial investment and the other obligations
undertaken by a sponsor.
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TRADING AS ...NO MORE
The Lumber City Franchise, as well as several
other FASA members, have a franchisee base who are each individually registered
as separate legal entities trading as Lumber City etc. In essence, this has severe
ramifications going forward. We would appreciate comment and direction from FASA,
assisting in the way forward in this matter.
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AN OPPORTUNITY FOR FRANCHISORS: THE CONSUMER PROTECTION ACT
The Consumer Protection Act ("the Act") will apply
to franchise agreements and is likely to pose significant challenges to many weaker
franchisors, including those which do not abide by best franchise practices or provide
reasonable value to their franchisees. In terms of the Act, a "franchise agreement"
means an agreement:
- Where a franchisor, for consideration, grants to the franchisee
a right to carry on business under a system or marketing plan, substantially determined
or controlled by the franchisor or its associate;
- The business will be substantially or materially associated with
advertising schemes or programmes, or a trade mark or any combination thereof used
or licensed by the franchisee or its associate; and
- 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 the franchisor, or by its associate.
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