Distribution systems vs. data protection

25. Mar 2018 News

The EU General Data Protection Regulation is on everyone’s mind. This also applies to distribution systems, but in particular to franchise systems. It is already foreseeable that the General Data Protection Regulation will increase the sensitivity of data protection issues.  The General Data Protection Regulation from May 25, 2018 is the on point law concerning this area; however, as it (among other things) increases sanctioning possibilities more than before, plus established a stronger position for the Supervisor and also requires extended information obligations, it is necessary to deal with the effects at an earlier stage.

Franchise contract, clarification before conclusion of contract

A critical area is “education before conclusion of contract;” however, the latest significant decision comes from the Court Ruling in OLG Dresden from June 18, 2016. (OLG Dresden 10 U 1137/15). The Dresden Higher Regional Court decided that the defendant franchisor had violated her pre-contractual duty to inform by failing to tell the plaintiff franchisee on what basis of data the income forecast was provided to him, or that the earnings forecast was a rough estimate.

In light of the recent case-law, it should be noted that (in particular the abovementioned decision) franchisors should inform potential franchisees about the profitability of the franchise system (especially the intended location, but also the system as a whole) and ensure that this is done on the basis of reliable figures. It requires a careful examination of the respective industry’s market and its peculiarities in relation to the specific location or region. If only one estimate is possible, it should be clearly indicated.

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