Abstract
We explore in this project the issues likely to arise in the application of
the Fair Trade Law to franchising industry in Taiwan. In particular, we focus
first on whether the close relationship between franchisor and its franchisees,
which usually is a reflection of the intention by the franchisor to control
the principal-agent problem in franchising, should be treated and reviewed under
the regulation of merger in the Fair Trade Law. Secondly, how various contractual
restraints commonly seen in franchise contracts such as resale price maintenance,
tying, and exclusive dealing, should be analyzed under the Fair Trade Law. We
approach those issues from theoretical as well as empirical perspectives, in
which both legal and economic explanations would be applied. We close the discussion
with suggestions to the Fair Trade Commission of Taiwan concerning the enforcement
and interpretation of relevant provisions of the Fair Trade Law to franchise
relationship.