III. Franchising

III. Franchising

1. Pronuptia: P distributes wedding dresses; Mrs Shillgallis carries on business in Hamburg under the name of Pronuptia (franchisee)

   • Different types of agreements: services franchises; production franchises; distribution franchises (this case concerns the latter)
   • Different clauses: (i) to ensure quality (non-compete), but does not restrict 101(1) although obtaining products from other franchisees must remain an option; (ii) to protect IPR (know-how) => non-compete but outside 101
   • Type of rule of reason approach: a number of restrictions are essential to pursue this type of contract (ancillary restraints)
   • In order for the system to work: (i) The franchisor must be able to communicate his know-how to the franchisees; (ii) The franchisor must be able to take the measures necessary for maintaining the identity and reputation of the network bearing his business name or symbol

2. Decision Yves Rocher: Cross-supplies are not allowed

3. Computerland: Only sales to end users (not to resellers) – normally not OK, but exempted The conjunction of the location clause, which obliges the franchisee to operate from the premises specified in his contract and thus prevents him from opening further stores, and the exclusivity clause, which assures him of a protected zone in which no other Computerland outlets can be established, either by the franchisor or by other franchisees, results in a certain degree of market-sharing between the franchisor and the franchisees or between the latter, thus restricting competition in the network in which the Computerland business format is exploited = restriction of Art 101(1) that can be exempted under 101(3).

4. BER and Vertical Guidelines

   • A non-compete obligation that is necessary to maintain the common identity and reputation of the network = outside Art 101()1) (irrespective of the duration)
   • Obligation not to disclose know-how as long as it is not in the public domain = outside 101(1)