Paul Lawless (Mayo, Aontú)
Link to this: Individually | In context

191. To ask the Minister for Enterprise, Trade and Employment in view of recent high-profile receiverships affecting franchise networks, if his Department plans to introduce dedicated franchise legislation in Ireland, similar to that in other jurisdictions (e.g., Australia or certain US States), which would mandate a Franchise Disclosure Document (FDD) and establish a code of conduct to ensure fair contractual terms and transparency. [67664/25]

Niamh Smyth (Cavan-Monaghan, Fianna Fail)
Link to this: Individually | In context

Ireland does not have specific franchising legislation. Franchise agreements are governed by general contract law, in addition to, where applicable, competition, consumer and other national and EU legislation. Franchise agreements are not a matter of company law.

The European Commission has confirmed that it does not intend to propose specific legislation on franchising. A recent comprehensive consultation process conducted by the Commission in which a broad community of stakeholders participated identified no specific issues in respect of franchising.

EU legislation lays certain ground rules to provide for legal certainty and fair conditions for franchisors and franchisees. For example, franchise agreements must comply with both Irish and EU competition law, notably Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 102 TFEU. The EU Commission’s Vertical Block Exemption Regulation (2022) concerns vertical agreements, and it has a section that sets out how this regulation operates in relation to franchises. From a domestic perspective section 4 of the Competition Act 2002 prohibits agreements between businesses that prevents, restricts or distorts competition in the trade of goods and services in Ireland. Section 5 prohibits the abuse of a dominant position. These provisions align with Articles 101 and 102 TFEU which prohibits the same conduct on an EU level.

In addition, all traders, including those involved in franchise agreements must adhere to Irish consumer protection legislation, including the Consumer Protection Acts 2007 and 2014 and the Consumer Rights Act 2022. Franchisees, as traders must ensure compliance when selling to consumers.

When a business becomes insolvent, a suite of legislative provisions provide protection for creditors, employees and consumers. Processes set out in the Companies Act 2014, such as examinership and SCARP, are available to support the debt restructuring of insolvent companies that have a reasonable prospect of survival.

Limited liability is designed to encourage and foster honest enterprise by permitting individuals to engage in entrepreneurial activity while limiting personal exposure to financial loss in the event of commercial failure. However, the law demands that, in return for the privilege of limited liability, those availing of it act in good faith and abide by minimum requirements of governance, transparency and commercial probity.

Company law provides for robust compliance and enforcement mechanisms and sets out the clear legal duties that directors’ have in respect insolvency, as well as specific provisions in relation to reckless and fraudulent trading.

The Corporate Enforcement Authority (CEA), in particular, promotes high standards of corporate behaviour: It promotes compliance with company law; investigates instances of suspected breaches of company law; takes appropriate enforcement action in response to identified breaches of company law; supervises the activities of liquidators of insolvent companies; and operates a regime of restriction and disqualification in respect of directors of insolvent companies. Where a breach of company law has been established, the CEA will take action.