It should be recognised that any franchisee is, to some extent, concerned that another franchisee should not turn away and engage in unfair competition using the knowledge acquired as a former franchisee. Overall, most dismissals, including for infringements, can be settled in a civilized manner between franchisors and franchisees. Once the relationship is broken, an amicable farewell is usually successful and offers the best solution for a franchisee whose business can be purchased either by a franchisee or by a potential franchisee interested in taking over. If the property does not play an essential role in the operation of a given franchise, the franchise agreement may nevertheless oblige the franchisee to sell to the franchisee all its equipment, its fleet of products, etc. On the other hand, the franchisee is able to get a fair price (if the content is properly written) for his equipment and stock. Otherwise, they would be of little use to it, given the nature of the non-competition clause and the limitation of commercial agreements found without exception in franchise agreements. A franchise relationship is one that should be able to exist over a long period of time. The fact remains that there will be opportunities to stop. However, the principle set out in that judgment must be applied with caution and can only apply in cases where no agreement is reached between new and old franchisees and they deal only with the franchisee.
Alternatively, if the new franchisee acquires, for example, the assets of the former franchisee that do not belong to the franchisee (such as equipment and customer contracts), Section 197 may apply and, in this case, the new franchisee would be legally required to assume the obligations of the former franchisee to its employees. Although the Sanders decision was delivered by the Labour Appeal Court, the debate over the application of Section 197 to franchise agreements may not be over. It is likely that over time the issue will arise again and that it will, I hope, receive the attention of the Constitutional Court and that it will be definitively decided. The difficulties arise from the imposition of restrictions on the future activities of the franchisee and the extent to which they can become competitive with the activities of the franchisee and its other franchisees. As we`ve seen, the end of a franchise relationship doesn`t have to be as traumatic as some people seem to believe.