It is understandable that the problems associated with the theoretical justification for the inclusion of franchise agreements in the CPA have resulted in practical difficulties. One such example is the advertising plan to which franchisors are bound. Rule 3 contains a detailed list of the information a franchisee must provide to comply with the CPA. For the purposes of the law, a „franchise agreement“ means an agreement: it must also contain provisions preventing unnecessary or inappropriate conduct regarding risks and unnecessary conduct in order to protect the legitimate business interests of both parties and the franchise. Other important provisions are: it must contain a clause clearly stating that the franchisee is not entitled to benefits or compensation from suppliers unless the franchisees are informed in writing. The contract must also contain the names and descriptions of the goods or services that the franchisee may provide, produce, provide or sell, as well as the obligations of the franchisee and the franchisee. It must also describe the franchise system, all direct or indirect payments and contain details of any territorial rights, describe the premises and location and specify the conditions under which the rights and obligations of the franchise may be transferred or assigned. With regard to franchise agreements, the CPA anticipates that other important inclusions in the franchise agreement are important: at first glance, it would appear that some large franchisees are not protected by law. This is due to the fact that S5 (2) (b) stipulates that the law does not apply to transactions in which the consumer is a legal person whose annual asset or turnover is or exceeds R2 million at the time of the transaction. Although the above definition seems quite broad, there are specific references and sections in the law that govern franchise agreements. Some of the main effects on franchise agreements are as follows: the rules provide, among other things, that a franchise agreement must contain the exact wording of S7 (2) of the law, which provides that a franchisee may terminate a franchise agreement without charge or penalty within 10 working days of signing such a contract by informing the franchisee in writing. Franchisors must not only provide a disclosure document to a potential franchisee, but there is also a list of conditions that must be included in any franchise agreement.
The main reason for this frustration seems to be the arrogance of the legislation and the rules set out in it for parties who wish to conclude agreements on their own terms. With regard more specifically to the obligation to disclose, this article aims to demonstrate that these rules are not only impractical, but that it also seems that their inclusion in the CPA seems to be not very theoretical. Since franchise agreements are strategic business decisions, they also differ from consumer contracts in that franchisees rather fully understand the terms of the agreement they enter into. . . .