The proposed Umbrella Block Exemption unfortunately does not recognise that franchising is uniquely pro-competive, in that it promotes the development of SMEs and permits SMEs to compete at a level at which they otherwise would be unable to do so. While the current franchise block exemption accounts for this fact, the proposal fails to do so and treats franchising as a mere conglomeration of vertical restraints. As a result, the proposed Umbrella Block Exemption may be unduly harsh in its application to franchising. Moreover, franchisors may be reluctant to take advantage of the market share thresholds that are embedded in the proposal because the definition of markets and calculation of market shares are not well developed in the context of franchising in the EU.

Philip F Zeidman
Rudnick, Wolfe, Epstien & Zeidman
Washington DC