Consumer Protection Bill set to benefit consumers
Franchisees may soon have reason to smile, as the Consumer Protection Bill (CBP) is in its third draft and the final step to being passed. The groundbreaking bill is expected to provide a legal framework that will promote fair competition and even the playing field between franchisor and franchisee.
Although it has not yet been passed, all provisions included in the draft are expected to remain. The CBP seeks to promote consistency, coherence and efficiency in the implementation of consumer laws, providing broad based consumer protection against, amongst others, exploitation in the marketplace.
However, many provisions are directly aimed at the franchising industry, which has until now been self-regulated through the Franchising Association of South Africa (FASA). For example, franchisors will have to provide a full disclosure document, giving a potential franchisee access to information that will allow him to consider all the pros and cons before committing to anything.
A bone of contention for many industry players, the bill will set out that the franchisor may not compel the franchisee to buy goods or services from the franchisor or its preferred service providers. Provision have however been made for cases where the subject of the agreement justifiably requires the franchisee to purchase branded goods or services, e.g. certain fast food chains.
Under the spotlight
Franchise agreements will be subject to stringent requirements, which include:-
A valid agreement must be a plain, understandable written document, signed by the franchisee.
-
The franchisor must adhere to a certain level of transparency and provide information to the franchise as will be set out in separate regulations, of which FASA will have input into.
-
A franchisee will have the write to cancel the franchise agreement within 10 business days of signing the document, preventing the business owner from being 'trapped' in a deal.
The Department of Trade and Industry envisages that once passed, the bill will promote an environment that supports and strengthens consumer rights and responsibilities, business innovation and enhanced performance; this against the backdrop of emerging technological changes and trading methods that continue to bring new benefits, opportunities and challenges to the market for consumer goods and services in South Africa.
| Back to Home |
 Share
|
 Print Version
|
 Email
|
RSS Feeds
