Franchising in Ethiopian፡ The Need for Regulation

Abstract

Franchising is a way of doing business in which the franchisor licenses
its known business model or trademark for the use of the franchisee in
return for consideration. It becomes a viable solution for business
startups, especially for small and medium enterprises (SME), and to
penetrate the foreign market. Franchising benefits not only those parties
involved in the business but also the national economy. In order to create
a leveling field and protect the interests of parties countries are on the
move for regulating franchising. This article assesses the regulation of
franchising in Ethiopia using comparative analysis method. Even though
there are scattered laws pertaining to franchising, still the country lacks,
compared to other countries, comprehensive and detailed laws on
franchise regulation. The research identified several legal gaps in
regulating franchising; essential aspects of franchising such as, precontractual disclosure, parties’ relationship, and registration are not
regulated in a comprehensive manner. Hence, the author recommends the
adoption of comprehensive franchise laws that take into consideration the
best international practice.