The Consumer Protection Act 2008 (CPA) together with the regulations under it regulate franchising in South Africa.
Pursuant to Regulation 3 of the CPA, a franchisor must provide a prospective franchisee with a disclosure document, dated and signed by an authorised officer of the franchisor, at least 14 days before signature of the agreement.
Regulation 3(1) sets out minimum information that must be included in the disclosure document, including:
Under Regulation 3(3) the disclosure document should be accompanied by a certificate from the accounting officer or auditor certifying that:
Under Regulation 3(4) the disclosure document must also be accompanied by an organogram depicting the support system in place for franchisees and a list of current franchisees (if any) and outlets owned by the franchisor stating the following information in respect of any franchisee: (i) business name; (ii) representative name; (iii) physical address; (iv) email and phone number together with a statement that the prospective franchisee is entitled to contact the franchisees listed or visit their outlets.
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Regulation 2 of the CPA sets out over 50 points that should be included in a compliant franchise agreement.
Under Regulation 7(1) a franchise agreement must be in writing, signed by the franchisee and must be in “plain and understandable language”.
Under Regulation 7(2) of the CPA a franchisee must be afforded a 10 business day “cooling-off” period, during which they are entitled to cancel the agreement “without cost or penalty”. The wording of this section must appear on the front page of the franchise agreement.