Significance of Legal Norming of Pre-Contractual Disclosure of Information for Franchise Contracting

Abstract

The needs of capital for new markets through the minimum of investment can be achieved through franchising as a specific investment method of contracting business. Using the methods of successful operations, reduced investment risks and autonomy in operations are among the decisive reasons for joining the franchise network by the potential franchisee. Access to relevant information in the modern market conditions of business operations at global, regional and micro_level is a condition of achieving competitiveness in the market. While the franchisor is in possesion of relevant information pertaining to the franchising business, franchisee has access to them only if they are made available by the franchisor. The information that has significance for the franchisee is also those known as "pre-contractual information" – information disclosure, and is related to business operations of the franchisor and the franchise network.                 
Obligation to disclose pre-contractual information is one of the significant obligations of the franchisor. A franchisor, regardless of the form of franchising business in question, is obliged to make information on business operations available, meaning adequate information to a potential franchisee. The importance of disclosing pre-contractual information is reflected in the fact that a potential franchisee, the economically inferior of the two, is given access to the business operations of the network and the franchisor.
Keywords: pre-contractual information, pre-contractial disclosure, franchising contracts, franchise, franchisor, franchisee