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Events

2018/02/21
   EC - Commission response to text adopted in plenary
Documents
2017/09/12
   EP - Results of vote in Parliament
2017/09/12
   EP - Decision by Parliament, 1st reading/single reading
Details

The European Parliament adopted by 617 votes to 31, with 43 abstentions, a resolution on the functioning of franchising in the retail sector.

Members recalled that there is no common European definition of franchising and franchising agreements differ from one business to another.

Untapped potential : while the cross-border dimension of franchising could serve as a business model contributing to the achievement of the single market in the retail sector, Parliament regretted that it is currently under-performing in the EU, representing only 1.89 % of GDP , as opposed to 5.95 % in the USA and 10.83 % in Australia, 83.5 % of franchising’s turnover being concentrated in only seven Member States, which is why it is important to encourage a wider dissemination of this business model throughout the EU.

In its resolution of 11 December 2013 , Parliament welcomed franchising as a business model which supports new business and small-business ownership, but noted the existence of unfair contract terms in certain cases and called for transparent and fair contract terms.

Given that franchisees are often the weaker contracting party , particularly in the case of SMEs, Members insisted that franchising systems are heavily dependent upon the functioning co-operation of franchisor and franchisees, taking into consideration that the franchising system depends on good implementation by all parties. Franchisors have organised themselves both at national and European level for the representation of their interests, whereas franchisees often lack such representative organisations defending their collective interests.

Promoting franchising : Members sought to encourage a wider dissemination of this business model throughout the Union.

The Commission is invited to:

introduce guidelines on franchising contracts , in order to better shape the normative environment of franchising contracts ensuring compliance with labour standards and decent and high-quality service; encourage dialogue between franchisors, franchisees and decision-makers, to facilitate the creation of associations representing franchisees, and to make sure that their voices are heard, whenever policies or legislation are prepared that may affect them; examine the functioning of franchising in the retail sector , including the existence of unfair contract terms or other unfair trading practices; open a public consultation in order to obtain unbiased information as to the real situation in franchising and to draft non-legislative guidelines, reflecting best practices, on the functioning of franchising in the retail sector, in particular in relation to the latest technological and market developments, such as internet sales, and to submit these to Parliament by January 2018 at the latest.

Parliament stated that franchise agreements should fully respect the principles of balanced partnership , under which the franchisor and franchisee must be reasonable and fair towards each other and resolve complaints, grievances and disputes through frank, transparent, reasonable and direct communication.

Sometimes franchisors require franchisees to purchase products and services that are not related to the franchise formula. Non-competition clauses should be clearly formulated, reasonable and proportionate.

Competition law : the resolution stressed that Commission Regulation (EU) No 330/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices should be uniformly applied in the Member States . It invited the Commission to check to what extent application of the Regulation could be improved through a mechanism of assessment within the European network of competition authorities.

The Commission is called on to check whether it is necessary to revise the Regulation and to verify and inform Parliament as regards:

whether the model of franchising adopted in the Regulation reflects market reality; to what extent the so-called ‘ permitted vertical restraints ’ are proportionate and have a negative effect on the market and consumers; what new challenges franchisors and franchisees have to face in the context of e-commerce and digitisation.

Parliament should be informed of the results achieved.

Documents
2017/09/12
   EP - End of procedure in Parliament
2017/05/17
   EP - Committee report tabled for plenary, single reading
Details

The Committee on the Internal Market and Consumer Protection adopted the own-initiative report by Dennis de JONG (GUE/NGL, NL) on the functioning of franchising in the retail sector.

The Committee on Economic and Monetary Affairs, exercising its prerogative as an associated committee in accordance with Article 54 of the Rules of Procedure, also gave its opinion on the report.

Members recalled that there is no common European definition of franchising and franchising agreements differ from one business to another. They expressed disappointment that it is currently under-performing in the EU, representing only 1.89 % of GDP, as opposed to 5.95 % in the USA and 10.83 % in Australia, 83.5 % of franchising’s turnover being concentrated in only seven Member States.

This is why they proposed to encourage a wider dissemination of this business model throughout the EU insofar as it has a significant potential cross-border dimension.

Guidelines : Members called on the Member States to apply effective measures against any unfair trading practices in the field of franchising. Given the high degree of divergence between Member States, they considered it important that non-legislative homogeneous guidelines, reflecting best practices, on the functioning of franchising in the retail sector be put in place.

The Commission should introduce guidelines on franchising contracts , in order to better shape the normative environment of franchising contracts ensuring compliance with labour standards and decent and high-quality service.

Members stated that franchise agreements should fully respect the principles of balanced partnership , under which the franchisor and franchisee must be reasonable and fair towards each other and resolve complaints, grievances and disputes through frank, transparent, reasonable and direct communication.

The report stressed the need to:

encourage dialogue between franchisors, franchisees and decision-makers, to facilitate the creation of associations representing franchisees, and to make sure that their voices are heard, whenever policies or legislation are prepared that may affect them; include provisions relating to online sales in franchise agreements; ensure that non-competition clauses should be clearly formulated, reasonable and proportionate and should not apply for a longer duration than what is strictly necessary; designate, in the Member States, contact points for information on problems encountered by franchisors and franchisees; include specific principles to: (i) ensure the balanced contractual rights and obligations of the parties, such as clear, correct and comprehensive pre-contractual information; (ii) set clear limits concerning confidentiality requirements, to be available in writing and with sufficient notice prior to the signing of the agreement; (iii) the introduction of a cooling-off period after signing the agreement.

Members took note of the European Code of Ethics for Franchising , developed by the European Franchise Federation (EFF), as a potentially efficient tool for promoting best practices in the franchising sector on a self-regulatory basis. They also noted that the Code has been subject to fundamental criticism from franchisees and there were concerns about the lack of an independent enforcement mechanism.

Competition law : Members called for Commission Regulation (EU) No 330/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices to be uniformly applied in the Member States. They invited the Commission to check to what extent application of the Regulation could be improved through a mechanism of assessment within the European network of competition authorities.

The Commission is called on to check whether it is necessary to revise the Regulation and to verify and inform Parliament as regards:

whether the model of franchising adopted in the Regulation reflects market reality; to what extent the so-called ‘permitted vertical restraints’ are proportionate and have a negative effect on the market and consumers; what new challenges franchisors and franchisees have to face in the context of e-commerce and digitisation; collecting market information in terms of new trends, market developments regarding network organisation and technological advances.

Documents
2017/05/11
   EP - Vote in committee, 1st reading/single reading
2017/03/29
   EP - Committee opinion
Documents
2017/02/08
   EP - Amendments tabled in committee
Documents
2017/01/09
   EP - Committee draft report
Documents
2016/10/07
   EP - MARTIN Dominique (ENF) appointed as rapporteur in EMPL
2016/10/06
   EP - Committee referral announced in Parliament, 1st reading/single reading
2016/10/06
   EP - Referral to associated committees announced in Parliament
2016/06/15
   EP - FRUNZULICĂ Doru-Claudian (S&D) appointed as rapporteur in ECON
2016/01/25
   EP - DE JONG Dennis (GUE/NGL) appointed as rapporteur in IMCO

Documents

Votes

A8-0199/2017 - Dennis de Jong - Vote unique 12/09/2017 12:58:01.000

2017/09/12 Outcome: +: 617, 0: 43, -: 31
DE IT FR ES PL RO GB PT CZ BE AT HU NL BG SE FI SK DK LT HR EL LV IE SI MT EE CY LU
Total
87
66
68
48
49
30
63
21
20
21
18
17
24
15
19
13
13
12
11
11
18
8
9
7
6
5
5
5
icon: PPE PPE
200

Denmark PPE

For (1)

1

Estonia PPE

For (1)

1

Cyprus PPE

1

Luxembourg PPE

3
icon: S&D S&D
179

Netherlands S&D

3

Croatia S&D

2

Latvia S&D

1

Ireland S&D

For (1)

1

Slovenia S&D

For (1)

1

Malta S&D

3

Estonia S&D

For (1)

1

Cyprus S&D

2

Luxembourg S&D

For (1)

1
icon: ECR ECR
69

Italy ECR

2

Romania ECR

For (1)

1

Czechia ECR

2

Netherlands ECR

2

Bulgaria ECR

2
2

Lithuania ECR

1

Croatia ECR

For (1)

1

Greece ECR

Abstain (1)

1

Latvia ECR

For (1)

1

Cyprus ECR

1
icon: ALDE ALDE
60

Romania ALDE

3

United Kingdom ALDE

1

Portugal ALDE

1

Austria ALDE

For (1)

1

Denmark ALDE

2

Croatia ALDE

2

Latvia ALDE

1

Ireland ALDE

For (1)

1

Slovenia ALDE

For (1)

1

Estonia ALDE

2
icon: Verts/ALE Verts/ALE
48

Italy Verts/ALE

For (1)

1

Spain Verts/ALE

3

Belgium Verts/ALE

2

Austria Verts/ALE

3

Hungary Verts/ALE

For (1)

1

Netherlands Verts/ALE

2

Finland Verts/ALE

For (1)

1

Denmark Verts/ALE

For (1)

1

Lithuania Verts/ALE

For (1)

1

Croatia Verts/ALE

For (1)

1

Latvia Verts/ALE

1

Slovenia Verts/ALE

For (1)

1

Estonia Verts/ALE

For (1)

1

Luxembourg Verts/ALE

For (1)

1
icon: GUE/NGL GUE/NGL
46

United Kingdom GUE/NGL

Abstain (1)

1

Netherlands GUE/NGL

3

Sweden GUE/NGL

For (1)

1

Finland GUE/NGL

For (1)

1

Denmark GUE/NGL

For (1)

1

Ireland GUE/NGL

3

Cyprus GUE/NGL

1
icon: ENF ENF
38

Poland ENF

2

Romania ENF

1

United Kingdom ENF

Against (1)

1

Belgium ENF

Abstain (1)

1

Netherlands ENF

4
icon: NI NI
15

Germany NI

2

France NI

Abstain (1)

2

Poland NI

Abstain (1)

2

United Kingdom NI

For (1)

Against (1)

Abstain (1)

3

Hungary NI

2
icon: EFDD EFDD
34

Germany EFDD

Against (1)

1

France EFDD

1

Poland EFDD

1

Sweden EFDD

2

Lithuania EFDD

For (1)

1
AmendmentsDossier
200 2016/2244(INI)
2016/12/14 EMPL 22 amendments...
source: 595.459
2017/02/08 ECON 178 amendments...
source: 599.639

History

(these mark the time of scraping, not the official date of the change)

docs/3/body
EC
events/3/docs/0/url
Old
http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&mode=XML&reference=A8-2017-0199&language=EN
New
http://www.europarl.europa.eu/doceo/document/A-8-2017-0199_EN.html
events/5/docs/0/url
Old
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2017-0322
New
http://www.europarl.europa.eu/doceo/document/TA-8-2017-0322_EN.html
committees/0
type
Responsible Committee
body
EP
associated
True
committee_full
Internal Market and Consumer Protection
committee
IMCO
rapporteur
name: DE JONG Dennis date: 2016-01-25T00:00:00 group: European United Left - Nordic Green Left abbr: GUE/NGL
shadows
committees/0
type
Responsible Committee
body
EP
associated
True
committee_full
Internal Market and Consumer Protection
committee
IMCO
date
2016-01-25T00:00:00
rapporteur
name: DE JONG Dennis group: European United Left - Nordic Green Left abbr: GUE/NGL
shadows
committees/1
type
Committee Opinion
body
EP
associated
True
committee_full
Economic and Monetary Affairs
committee
ECON
rapporteur
name: FRUNZULICĂ Doru-Claudian date: 2016-06-15T00:00:00 group: Progressive Alliance of Socialists and Democrats abbr: S&D
committees/1
type
Committee Opinion
body
EP
associated
True
committee_full
Economic and Monetary Affairs
committee
ECON
date
2016-06-15T00:00:00
rapporteur
name: FRUNZULICĂ Doru-Claudian group: Progressive Alliance of Socialists and Democrats abbr: S&D
committees/2
type
Committee Opinion
body
EP
associated
False
committee_full
Employment and Social Affairs
committee
EMPL
rapporteur
name: MARTIN Dominique date: 2016-10-07T00:00:00 group: Europe of Nations and Freedom abbr: ENF
committees/2
type
Committee Opinion
body
EP
associated
False
committee_full
Employment and Social Affairs
committee
EMPL
date
2016-10-07T00:00:00
rapporteur
name: MARTIN Dominique group: Europe of Nations and Freedom abbr: ENF
commission
  • body: EC dg: Taxation and Customs Union commissioner: MOSCOVICI Pierre
committees
  • type: Responsible Committee body: EP associated: True committee_full: Internal Market and Consumer Protection committee: IMCO date: 2016-01-25T00:00:00 rapporteur: name: DE JONG Dennis group: European United Left - Nordic Green Left abbr: GUE/NGL shadows: name: POSPÍŠIL Jiří group: European People's Party (Christian Democrats) abbr: PPE name: TARABELLA Marc group: Progressive Alliance of Socialists and Democrats abbr: S&D name: SULÍK Richard group: European Conservatives and Reformists abbr: ECR name: SELIMOVIC Jasenko group: Alliance of Liberals and Democrats for Europe abbr: ALDE name: ŠOLTES Igor group: Greens/European Free Alliance abbr: Verts/ALE name: TROSZCZYNSKI Mylène group: Europe of Nations and Freedom abbr: ENF
  • type: Committee Opinion body: EP associated: True committee_full: Economic and Monetary Affairs committee: ECON date: 2016-06-15T00:00:00 rapporteur: name: FRUNZULICĂ Doru-Claudian group: Progressive Alliance of Socialists and Democrats abbr: S&D
  • type: Committee Opinion body: EP associated: False committee_full: Employment and Social Affairs committee: EMPL date: 2016-10-07T00:00:00 rapporteur: name: MARTIN Dominique group: Europe of Nations and Freedom abbr: ENF
docs
  • date: 2017-01-09T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&mode=XML&language=EN&reference=PE597.399 title: PE597.399 type: Committee draft report body: EP
  • date: 2017-02-08T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&mode=XML&language=EN&reference=PE599.674 title: PE599.674 type: Amendments tabled in committee body: EP
  • date: 2017-03-29T00:00:00 docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=COMPARL&mode=XML&language=EN&reference=PE595.762&secondRef=02 title: PE595.762 committee: ECON type: Committee opinion body: EP
  • date: 2018-02-21T00:00:00 docs: url: /oeil/spdoc.do?i=29768&j=0&l=en title: SP(2017)780 type: Commission response to text adopted in plenary
events
  • date: 2016-10-06T00:00:00 type: Committee referral announced in Parliament, 1st reading/single reading body: EP
  • date: 2016-10-06T00:00:00 type: Referral to associated committees announced in Parliament body: EP
  • date: 2017-05-11T00:00:00 type: Vote in committee, 1st reading/single reading body: EP
  • date: 2017-05-17T00:00:00 type: Committee report tabled for plenary, single reading body: EP docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=REPORT&mode=XML&reference=A8-2017-0199&language=EN title: A8-0199/2017 summary: The Committee on the Internal Market and Consumer Protection adopted the own-initiative report by Dennis de JONG (GUE/NGL, NL) on the functioning of franchising in the retail sector. The Committee on Economic and Monetary Affairs, exercising its prerogative as an associated committee in accordance with Article 54 of the Rules of Procedure, also gave its opinion on the report. Members recalled that there is no common European definition of franchising and franchising agreements differ from one business to another. They expressed disappointment that it is currently under-performing in the EU, representing only 1.89 % of GDP, as opposed to 5.95 % in the USA and 10.83 % in Australia, 83.5 % of franchising’s turnover being concentrated in only seven Member States. This is why they proposed to encourage a wider dissemination of this business model throughout the EU insofar as it has a significant potential cross-border dimension. Guidelines : Members called on the Member States to apply effective measures against any unfair trading practices in the field of franchising. Given the high degree of divergence between Member States, they considered it important that non-legislative homogeneous guidelines, reflecting best practices, on the functioning of franchising in the retail sector be put in place. The Commission should introduce guidelines on franchising contracts , in order to better shape the normative environment of franchising contracts ensuring compliance with labour standards and decent and high-quality service. Members stated that franchise agreements should fully respect the principles of balanced partnership , under which the franchisor and franchisee must be reasonable and fair towards each other and resolve complaints, grievances and disputes through frank, transparent, reasonable and direct communication. The report stressed the need to: encourage dialogue between franchisors, franchisees and decision-makers, to facilitate the creation of associations representing franchisees, and to make sure that their voices are heard, whenever policies or legislation are prepared that may affect them; include provisions relating to online sales in franchise agreements; ensure that non-competition clauses should be clearly formulated, reasonable and proportionate and should not apply for a longer duration than what is strictly necessary; designate, in the Member States, contact points for information on problems encountered by franchisors and franchisees; include specific principles to: (i) ensure the balanced contractual rights and obligations of the parties, such as clear, correct and comprehensive pre-contractual information; (ii) set clear limits concerning confidentiality requirements, to be available in writing and with sufficient notice prior to the signing of the agreement; (iii) the introduction of a cooling-off period after signing the agreement. Members took note of the European Code of Ethics for Franchising , developed by the European Franchise Federation (EFF), as a potentially efficient tool for promoting best practices in the franchising sector on a self-regulatory basis. They also noted that the Code has been subject to fundamental criticism from franchisees and there were concerns about the lack of an independent enforcement mechanism. Competition law : Members called for Commission Regulation (EU) No 330/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices to be uniformly applied in the Member States. They invited the Commission to check to what extent application of the Regulation could be improved through a mechanism of assessment within the European network of competition authorities. The Commission is called on to check whether it is necessary to revise the Regulation and to verify and inform Parliament as regards: whether the model of franchising adopted in the Regulation reflects market reality; to what extent the so-called ‘permitted vertical restraints’ are proportionate and have a negative effect on the market and consumers; what new challenges franchisors and franchisees have to face in the context of e-commerce and digitisation; collecting market information in terms of new trends, market developments regarding network organisation and technological advances.
  • date: 2017-09-12T00:00:00 type: Results of vote in Parliament body: EP docs: url: https://oeil.secure.europarl.europa.eu/oeil/popups/sda.do?id=29768&l=en title: Results of vote in Parliament
  • date: 2017-09-12T00:00:00 type: Decision by Parliament, 1st reading/single reading body: EP docs: url: http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2017-0322 title: T8-0322/2017 summary: The European Parliament adopted by 617 votes to 31, with 43 abstentions, a resolution on the functioning of franchising in the retail sector. Members recalled that there is no common European definition of franchising and franchising agreements differ from one business to another. Untapped potential : while the cross-border dimension of franchising could serve as a business model contributing to the achievement of the single market in the retail sector, Parliament regretted that it is currently under-performing in the EU, representing only 1.89 % of GDP , as opposed to 5.95 % in the USA and 10.83 % in Australia, 83.5 % of franchising’s turnover being concentrated in only seven Member States, which is why it is important to encourage a wider dissemination of this business model throughout the EU. In its resolution of 11 December 2013 , Parliament welcomed franchising as a business model which supports new business and small-business ownership, but noted the existence of unfair contract terms in certain cases and called for transparent and fair contract terms. Given that franchisees are often the weaker contracting party , particularly in the case of SMEs, Members insisted that franchising systems are heavily dependent upon the functioning co-operation of franchisor and franchisees, taking into consideration that the franchising system depends on good implementation by all parties. Franchisors have organised themselves both at national and European level for the representation of their interests, whereas franchisees often lack such representative organisations defending their collective interests. Promoting franchising : Members sought to encourage a wider dissemination of this business model throughout the Union. The Commission is invited to: introduce guidelines on franchising contracts , in order to better shape the normative environment of franchising contracts ensuring compliance with labour standards and decent and high-quality service; encourage dialogue between franchisors, franchisees and decision-makers, to facilitate the creation of associations representing franchisees, and to make sure that their voices are heard, whenever policies or legislation are prepared that may affect them; examine the functioning of franchising in the retail sector , including the existence of unfair contract terms or other unfair trading practices; open a public consultation in order to obtain unbiased information as to the real situation in franchising and to draft non-legislative guidelines, reflecting best practices, on the functioning of franchising in the retail sector, in particular in relation to the latest technological and market developments, such as internet sales, and to submit these to Parliament by January 2018 at the latest. Parliament stated that franchise agreements should fully respect the principles of balanced partnership , under which the franchisor and franchisee must be reasonable and fair towards each other and resolve complaints, grievances and disputes through frank, transparent, reasonable and direct communication. Sometimes franchisors require franchisees to purchase products and services that are not related to the franchise formula. Non-competition clauses should be clearly formulated, reasonable and proportionate. Competition law : the resolution stressed that Commission Regulation (EU) No 330/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices should be uniformly applied in the Member States . It invited the Commission to check to what extent application of the Regulation could be improved through a mechanism of assessment within the European network of competition authorities. The Commission is called on to check whether it is necessary to revise the Regulation and to verify and inform Parliament as regards: whether the model of franchising adopted in the Regulation reflects market reality; to what extent the so-called ‘ permitted vertical restraints ’ are proportionate and have a negative effect on the market and consumers; what new challenges franchisors and franchisees have to face in the context of e-commerce and digitisation. Parliament should be informed of the results achieved.
  • date: 2017-09-12T00:00:00 type: End of procedure in Parliament body: EP
procedure
reference
2016/2244(INI)
title
Functioning of franchising in the retail sector
subject
type
INI - Own-initiative procedure
subtype
Initiative
legal_basis
Rules of Procedure EP 54
Modified legal basis
Rules of Procedure EP 159
stage_reached
Procedure completed
dossier_of_the_committee
IMCO/8/08004