Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/945258
LEXPERT MAGAZINE | MARCH/APRIL 2018 47 brands purchase their competitors. But it's not as if all this is a sudden revelation to franchise lawyers or their clients. "Tech- nology, the internet and e-commerce have played an increasing part of the evolution of selling products and service for the last 10 or 20 years, and they will continue to do so," Teasdale says. "From a legal perspective, we've been taking these developments into account since they've emerged." Indeed, franchisors have tried to limit potential liability arising from encroach- ment claims by reserving applicable rights to themselves from the time the internet imposed its unique species of territorial issues on the industry. But no matter how broadly franchisors reserve the right to do what it takes to survive, including ex- panding beyond bricks and mortar, the ultimate question is always the extent to which such encroachment undermines the franchise agreement. "Courts are going to ask themselves whether franchisees really understood how far franchisors could go, and whether franchisees can still expect reasonable returns on their investments," Dolman says. "ey're also going to ask how the duty of good faith and fair dealing comes into play." Quite apart from the fact that increased online sales can destroy a franchisee's busi- ness if not accounted for in the franchise relationship, franchisors may well require franchisees' co-operation to maximize the online experience. Franchisors may want to permit customers to take returns to a store instead of sending them back, or may wish to encourage customers to pick up their purchases at the store instead of having them delivered. "is is particularly important when a franchisor is dealing in complicated prod- ucts that require some training for custom- ers, or where customers are likely to need accessories or add-ons and it makes more sense to buy them at a local store," says Blakes' Shaw. In such cases, co-operation is paramount by way of ensuring a good customer experi- ence. "Franchisees who aren't getting any- thing out of the online sales or are ticked off at the franchisor's online practices are not likely to co-operate — so sometimes franchisors have no choice but to buy that co-operation," Weinberg says. Franchisees are doing that in various ways, either in the franchise agreement or by striking deals otherwise: for example, sometimes they pay a reverse royalty to the franchisee if the online purchaser's address lies within the franchisee's territory and sometimes they pay a flat royalty calculated in a variety of ways. Ironically, the seismic changes envelop- ing the retail market could help the mom and pop operations that populate franchi- sees' demographics. "Retail everywhere will have to undergo seismic change to survive, and in that environment indi- vidual mom and pop operations have just about no chance," Shaw says. "But give these operations an established brand that has a well-developed franchise system and enough purchasing power, and they may very well have opportunities not only to survive but to succeed and expand." Julius Melnitzer is a freelance legal-affairs writer in Toronto. .ca TAKE A TOUR OF The Lexpert.ca media platform works to highlight Lexpert-ranked lawyers and law firms and the work they do to a coveted target audience including in-house counsel, C-Suite executives, law firm partners and associates, and other legal professionals - making Lexpert.ca an unparalleled tool for business development. We invite you to visit Lexpert.ca. INCLUDING: • Lexpert Magazine • Canadian Legal Lexpert Directory • Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada • Lexpert CCCA Corporate Counsel Directory & Yearbook • Lexpert Special Editions (in the ROB) and Guides PLUS: • Deals coverage found in the DealsWire e-newsletter • Information on Lexpert courses and webinars • Awards and events updates Custom-designed for Lexpert-ranked lawyers, law firms, and their clients, Lexpert.ca brings together all Lexpert media properties in one portal. | FRANCHISE WAGES |