Franchisors Duty of Care in the U.K.
Do franchisors have a "duty of care" towards franchisees and an obligation to provide an honest assessment of costs that franchisees will encounter during start-up? Apparently, in the United Kingdom they do.
In "MCB Printing and Design Limited v Kall Kwik UK Limited" the court found:
". . . that the franchisor did indeed had a duty of care towards the franchisee, in view of the sufficiently close and proximate relationship between them, the foreseeability of damage, and because it is fair, just and reasonable to impose such a duty. The franchisor was thus liable on the ground of causing damage to the franchisee."
The court recognized that there was "a clause of the agreement that excluded liability for pre-contractual statements, but held it not to be applicable." This would also hold true in South Africa with regard to franchise dealings and contracts that have franchisees sign away their rights and, essentially, legalize fraud:
"It also appears that courts would scrutinise closely any exclusionary clause. Moreover, the Consumer Protection Act provides protection against contracts of an unfair nature in which rights are waived." Lexology.com
Would these same laws require more accurate profitability assessments for the sale of franchises? If the franchisor has knowledge of the cost of "refitting the premises", don't they also have knowledge of revenues and costs?