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Are there any legal definitions of a franchise?
Under English law there is no legal definition of a ‘franchise’. However, both the European Commission and the British Franchise Association have produced a definition, which can be found on their websites at www.europa.eu and www.british-franchise.org. In the UK franchising is not subject to any particular legal regulation, and so the need to have a definition is less important. However, the role of the BFA should not be forgotten. The BFA, which although not a statutory body, does seek to regulate the franchise industry in the UK to the extent that franchisors are members or associate members of the organisation. The definition of a ‘franchise’ in the UK is potentially very wide because it could be used to describe many different business relationships. The most commonly recognised form of franchise is the business format franchise where a franchisor grants a franchisee a licence to carry on the same type of business as the franchisor under its name, usually at an agreed location. There are other forms of franchising, but the elements that make up a franchise usually include permission to carry on a business under a certain name belonging to or associated with the franchisor, a right for the franchisor to exercise an element of control over the business, an obligation on the franchisor to provide support and assistance to carry on the business and a requirement for the franchisee to pay the franchisor periodically.
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