Abiru seeks passage of bill to regulate franchise agreements in Nigeria

Adetokunbo Abiru, senator representing Lagos East Senatorial District, has urged the senate to pass a bill seeking to regulate franchise agreements in the country.

A franchise agreement is a contract under which the franchisor grants the franchisee the right to operate a business, or offer, sell, or distribute goods or services identified or associated with the franchisor’s trademark.

The bill, which also seeks to create a framework for a franchise system in Nigeria, was introduced to the house on Tuesday.

Abiru, leading a debate on the bill, titled ‘Franchise Regulation Bill 2022,’ said its passage would guide the relationship between franchisors and franchisees in Nigeria.

The bill is also backed by three senators: Abdullahi Aliyu Sabi, Michael Opeyemi Bamidele, and Saidu Ahmed Alkali.

In a statement, the lead proponent, Abiru urged Nigeria to regulate the franchise system in the country in accordance with global best practices.

His argument is premised on efforts to enhance the economic development of the country.

“I hereby propose the passage of this franchise bill, which basically seeks to create a framework for the regulation of franchising and to guide the relationship between franchisors and franchisees and for related matters,’’ Abiru said.

“Laws enacted by this hallowed chamber must, therefore, be directed towards ensuring the promotion of a planned and balanced economic development; and that material resources of the nation are harnessed and distributed as best as possible to serve the common good.”

Stating that many foreign and local companies are exploring opportunities for business expansion and growth through franchising; he said there is a need to have legislation to regulate franchise as a business model in the wake of the growing frustration of franchisees.

According to him, Nigeria has no law that regulates franchising.

He noted that, although a few countries do not have such laws, there is a growing need to protect and stimulate the franchising model through legislation.

“Franchise laws have been passed in Malaysia, Canadian regions, states in the United States of America, and 78 other countries to mention a few,” he added.

“My findings suggest that local and foreign franchisors have abused their positions by insisting on terms that have whittled down the franchise model and led to the closure of several franchises. Several gaps that can be breached through this bill have been identified.”

He said some franchisors do not have any reliable system in place to provide support to the franchisee.

According to him, franchisors who did not register their trademarks prior to granting a franchise are exposing Nigerian franchisees to possible litigation.

He added that some franchisors also demand fees for intellectual property rights that have expired.

“This bill obliges franchisors to give disclosure documents to franchisees with the draft franchise agreement, prior to the execution of the agreement and also obliges franchisees to give support, training, and a training manual,” he said.

“Some franchisors are [also] able to terminate franchises unfairly leaving the franchisee in the cold! This Bill offers some comfort to franchisees on issues of the mode of termination.

“Mr. President, distinguished colleagues, a legislation and legal framework is desirable to regulate this very important emerging business strategy and this is the reason I am coming up with this bill.”

Abiru added that while special agencies regulate franchising and implement franchise-specific laws and regulations in some countries, it is not so in Nigeria.

“The bill proposes that the National Office for Technology Acquisition and Promotion established by the National Office for Technology Acquisition and Promotion Act Cap N62 Laws of the Federation of Nigeria, 2004 shall be the implementing agency responsible for the implementation of the provisions of this bill,” he said.