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FASA ANSWERS YOUR QUESTIONS AROUND THE CPA

As we all grapple with the intricacies of the Consumer Protection Act and how to apply it to our businesses we share some queries we’ve had from members and the response FASA’s legal advisor Eugene Honey from Bowman Gilfillan gave.

QUESTION:  Do new franchise agreements need to be entered into with existing franchisees in the case where the existing franchise agreement expires after 30 April 2013 as well as those agreements that expire during the period 1 April 2011 and 30 April 2013?

ANSWER:  Your question revolves around the transitional provisions.  If a franchise agreement for fixed term is due to lapse before 1 April 2013, then the agreement will merely be allowed to run out for the remainder of its term and the CPA is not applicable to the agreement.  If the agreement is for a fixed term and that fixed term lapses after 1 April 2013, then the CPA does apply from 1 April 2013, but only in certain limited respects.  Essentially, therefore, new franchise agreements should be entered into once the existing agreements lapse.  There is no obligation to enter into new agreements whilst existing agreements are already in place.  Any new franchise agreements entered into after 1 April 2011, or any agreement renewed after that date should comply with the CPA.

 
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Fasa Events
PRESENTATION BY CLEM SUNTER

Date: 27 Sept 2011
Venue : Eversheds, 22 Fredman Drive, Sandton

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FASA ONE DAY TRAINING COURSE FOR POTENTIAL FRANCHISEES

Date: 28 Sept 2011
Venue : FASA Office, Bruma (Venue subject to change pending delegate bookings)

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