Tag Archives: FR

Franchising

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Franchising

Franchising in the European Union Law

Concept of Franchising provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): A special type of agreement whereby one undertaking (the fran-chiser) grants to the other (the franchisee), in exchange for direct or indirect financial consideration, the right to exploit a package of industrial or intellectual property rights (franchise) for the purposes of producing and/or marketing specified types of goods and/or services. This package typically relates to trademarks, trade names, shop signs, utility models, designs, copyrights, know-how or patents. A franchise agreement usually contains obligations relating to (1) the use of a common name/shop sign and a uniform presentation of contract premises and/or means of transport, (2) the communication by the franchiser to the franchisee of know-how, (3) the continuing provi-sion by the franchiser to the franchisee of commercial and technical assistance during the life of the agreement.

Free riding

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Free riding

Free riding in the European Union Law

Concept of Free riding provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Free riding occurs when one firm (or individual) benefits from the actions and efforts of another without paying for or sharing the costs. For example, a retail store may initially choose to incur costs of training its staff to demonstrate to potential customers how a partic-ular kitchen appliance works, in order to expand its sales. However, the customers may later choose to buy the product from another retailer who is able to sell it at a lower price because his business strategy is to do without such training and demonstration, thus avoiding the costs involved. This second retailer is thus viewed as 'free-riding' on the efforts and costs incurred by the first retailer, who will lose the incentive to continue demonstrating the product.