Electronic Commerce, Social Media and Franchising

Electronic Commerce, Social Media and Franchising

This article is an extract from GTDT Practice Guide Franchise 2022. Click right here for the total information
Electronic commerce or e-commerce has turn into a elementary a part of most franchise companies and is commonly thought of as a key gross sales channel for franchisors.
The phrase e-commerce is, usually, used to explain the industrial actions between customers and enterprise retailers that happen over the web, by way of units resembling private computer systems, tablets, smartphones and internet-enabled televisions. The present e-commerce retail market is more and more pushed by rise of smartphone customers. At the top of 2019, there have been 5.5 billion smartphone subscriptions worldwide that could possibly be used to hold out e-commerce actions and that is forecast to develop to 7.5 billion by 2025 (see ‘Ericsson Mobility Report: November 2020’: https://www.ericsson.com/4adc87/belongings/native/mobility-report/paperwork/2020november-2020-ericsson-mobility-repor8.pdf). Transactions accomplished on cellular units accounted for 67.2 per cent of digital gross sales in 2019 (see Merchant Savvy report ‘Global Mobile eCommerce Statistics, Trends & Forecasts’: https://www.merchantsavvy.co.uk/mobile-ecommerce-statistics).
The (rise of) smartphone (customers) has modified the best way customers store. Dedicated purposes (apps) put in on the shopper’s units allow retailers to optimise their operations. Unlike extra conventional web sites, devoted apps enable retailers to gather knowledge and study extra about their clients by way of location-based applied sciences and different advertising automation applied sciences. Dedicated apps allow customers to find out about and purchase items and companies. Following the development of web entry, customers worldwide could have speedy, round the clock entry to digital companies.
The European Union (EU) is likely one of the largest e-commerce markets on the planet right this moment. The ongoing covid-19 pandemic has made a big influence on shopper behaviour and contributed to the speedy progress of e-commerce. Due to the covid-19 pandemic, new buyer segments emerged, such because the aged. While a few of these demand shifts in e-commerce could also be short-term, others are prone to have long-lasting results on bricks-and-mortar retailers.
The function of e-commerce, digitalisation and social media has turn into pervasive, together with for franchising organisations, whether or not franchisors or franchisees. Most main worldwide or EU retailers function quite a lot of e-commerce platforms that often embody web sites, cellular apps and social media platforms. Each of those platforms usually forming an integral a part of the model proprietor’s enterprise.
In this chapter, we’ll talk about the related laws and will stay up for legislative developments, primarily from an EU perspective. Amendments that may must be made by merchants to conform additional to such developments are each authorized (eg, in consumer-facing documentation) in addition to operational (eg, adjustments in web sites or apps). In addition, this chapter contains matters resembling the usage of social media and, particularly influencers, for gross sales and advertising, the usage of buyer knowledge and varied e-commerce associated tax facets.
A quick overview of present EU laws
Specifically, for e-commerce contracts with customers there are a variety of items of laws that cowl this space within the EU and apply throughout all member states. This laws primarily pertains to info provision by merchants and equity of phrases in shopper contracts. Franchisors and franchisees might want to be sure that the related e-commerce platforms present the required info and that the contracts with customers are compliant underneath relevant regulation.
When taking a look at present EU laws related for e-commerce, three items of laws stand out specifically: the Consumer Rights Directive, the Geo-blocking Regulation and Platform to Business Regulation. Below the primary obligations following from this EU laws are briefly defined.
Consumer Rights Directive
Distant promoting within the EU is at present primarily ruled by the Consumer Rights Directive (Directive 2011/83/EU, CRD) (Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on shopper rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council). The guidelines contained therein are related for any dealer interacting with customers at a distance, that’s, on-line. The CRD, inter alia, features a 14-day proper of withdrawal interval for items and companies bought as a part of a distance gross sales contract, varied info obligations for merchants, guidelines on supply of merchandise, and extra funds.
A report on the applying of the CRD was printed on 29 May 2017 along with the report on the Fitness Check of shopper and advertising regulation. The analysis aimed to evaluate whether or not the CRD has achieved its targets and whether or not the anticipated impacts as described within the authentic influence evaluation accompanying the proposal for the CRD have materialised.
Further to an analysis of the CRD, the European Commission (EC) proposed to revise a number of current EU shopper regulation directives, together with the CRD (https://ec.europa.eu/newsroom/simply/objects/59332/en). This resulted in Directive (EU) 2019/2161 (Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the higher enforcement and modernisation of Union shopper safety guidelines),additionally typically known as the Omnibus, which incorporates guidelines on higher enforcement and the modernisation of the present EU shopper safety guidelines. Directive. The Omnibus Directive is to be applied by the European member states by 28 May 2022. The Omnibus Directive can be mentioned additional on this chapter.
The Geo-blocking Regulation
As of three December 2018, the Geo-blocking Regulation (Regulation (EU) 2018/302) applies (Regulation (EU) 2018/302 of the European Parliament and of the Council of 28 February 2018 on addressing unjustified geo-blocking and different types of discrimination based mostly on clients’ nationality, place of residence or place of firm inside the inner market and amending Regulations (EC) No. 2006/2004 and (EU) 2017/2394 and Directive 2009/22/EC). The Geo-blocking Regulation is related for all merchants providing their items or companies to EU end-users, each B2C and B2B, within the EU, no matter whether or not the dealer is established within the EU or in a 3rd nation. Traders established in third nations (ie, a non-EU member state), who’re working within the EU are, in precept, additionally topic to this Regulation.
The Geo-blocking Regulation addresses the issue of (potential) clients not with the ability to purchase items and companies from merchants situated in a unique member state for causes associated to their nationality, place of residence or place of firm. The regulation prevents such unjustified geo-blocking and geo-discrimination. This in flip ought to result in higher entry to items and companies for patrons within the EU.
The regulation prohibits direct and oblique discrimination based mostly on clients. nationality, place of residence or place of firm. This prohibition contains unjustified geo-blocking, computerized redirection of shoppers and the applying of various situations of entry to and fee situations for items and companies.
The Geo-blocking Regulation is particularly related for internationally working franchise companies, because the regulation units out the right way to cope with worldwide on-line visitors.
Platform to Business Regulation
The Platform to Business Regulation ((EU) 2019/1150) applies to the connection between on-line platforms and enterprise customers who use the platform to promote to customers (Regulation (EU) 2019/1150 of the European Parliament and of the Council of 20 June 2019 on selling equity and transparency for enterprise customers of on-line intermediation companies). The regulation goals to advertise equity and transparency for such enterprise customers and tackling unfair contractual clauses and buying and selling practices. As from 12 July 2020, the Platform to Business Regulation is straight relevant in all EU member states.
The Platform to Business Regulation applies to on-line intermediation companies and on-line engines like google that present their companies to enterprise customers, in addition to to company web sites established within the EU and providing items or companies to customers situated within the EU. This contains e-commerce marketplaces, app shops, social media for enterprise, value comparability instruments and basic on-line engines like google.
The regulation contains, inter alia, a ban of sure practices deemed to be unfair: digital platforms might not droop or terminate a vendor’s account with out clear causes, and there ought to be potentialities to enchantment. When altering phrases and situations, a minimum of 15 days’ prior discover must be given to permit firms to adapt pursuant to the Platform to Business Regulation.
There can also be an emphasis on transparency. Marketplaces and engines like google have to disclose the primary parameters they use to rank items and companies on their web site, to assist sellers perceive the right way to optimise their presence. It is necessary for on-line platforms to reveal any benefit they could give to their very own merchandise over others. They should additionally disclose what knowledge they gather and how they use it.
Furthermore, on-line platforms should arrange an inner complaint-handling system to help enterprise customers, with solely the smallest gamers exempt from this. Significantly, enterprise associations will be capable to take platforms to court docket to cease any non-compliance with the principles.
Legislative developments within the EU
In mild of the more and more necessary function of e-commerce, digitalisation and social media within the EU, the EC has launched new laws. This new laws contains the Digital Content and Digital Services Directive, the Sale of Goods Directive, the Directive on Representative Actions and the Digital Services Act. Specifically, the Digital Content and Digital Services Directive and the Sale of Goods Directive are a part of the EU-wide goal of reaching higher safety for customers by establishing a digital single market on the one hand and rising authorized certainty about gross sales contracts on the opposite. In this paragraph the completely different directives and the Digital Services Act are briefly defined.
The Digital Content and Digital Services Directive
The Digital Content and Digital Services Directive ((EU) 2019/770) applies to any contract for the availability of digital content material and/or digital companies to a shopper (Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on sure facets regarding contracts for the availability of digital content material and digital companies).Both to the contracts the place digital content material or digital companies are provided in return for the fee of a value and to the contracts the place such content material or companies are provided in return for the switch of the buyer’s private knowledge to the dealer, besides the place the non-public knowledge supplied by the buyer are completely processed by the dealer for the aim of supplying the digital content material or digital service or for permitting the dealer to adjust to authorized necessities.
The directive is especially related when a franchisor or franchisee points, for instance, an app which may be used to order services or products, or just to work together with (potential) clients.
The Digital Content and Digital Services Directive ought to have been applied into the nationwide laws of EU member states and in power by 1 January 2022, however many EU member states haven’t met this implementation date.
In the directive, the time period ‘digital content material’ is outlined as means knowledge that’s produced and provided in digital type. It can, due to this fact, embody pc applications, purposes, video information, audio information, music information, digital video games, digital books or different digital publications in addition to any supplies, paperwork or information in digital format. ‘Digital service’ means (1) a service that permits the buyer to create, course of, retailer or entry knowledge in digital type; or (2) a service that permits the sharing of or another interplay with knowledge in digital type uploaded or created by the buyer or different customers of that service. This class contains, inter alia, companies supplied to customers for audio and video sharing and different file internet hosting, phrase processing, or on-line video games additionally provided by way of social media or different platforms.
The directive incorporates guidelines on the conformity of digital content material and digital companies, cures within the occasion of an absence of such conformity and the modification of digital content material and digital companies. Pursuant to the directive, the dealer shall have complied with the duty to provide when the digital content material or any means appropriate for accessing or downloading the digital content material is made out there or accessible to the buyer. New necessities of conformity of the digital content material and digital companies are launched, each subjective necessities (eg, the supply of all equipment, directions – together with on set up – and buyer help as required by the contract) and goal necessities (eg, the suitability for the needs for which digital content material or companies of the identical kind would usually be used and having the amount, the qualities and efficiency options, together with in relation to performance, compatibility, accessibility, continuity and safety, regular for digital content material or companies of the identical kind). The burden of proof concerning the query whether or not the digital content material and/or digital service was provided in accordance with the necessities of conformity shall be on the dealer.
Where the contract supplies that the digital content material and/or digital companies is to be provided or made accessible to the buyer over a time period, the dealer might modify the digital content material or digital companies past what is important to keep up the digital content material/digital companies in conformity if sure situations are met. Such situations embody, for instance, the truth that the contract permits, and supplies a legitimate motive for, such a modification and that this modification is made with out extra price to the buyer.
There are a number of classes of digital content material and digital companies out of scope, inter alia, and notably digital content material or digital companies which can be integrated in or interconnected with items with digital components (eg, the smartphone or smartwatch) and which can be supplied with the products underneath a gross sales contract (a separate directive, ie, the Sale of Good Directive is relevant right here), healthcare companies, playing companies and monetary companies.
The Sale of Goods Directive
The Sale of Goods Directive ((EU) 2019/771) replaces the outdated Directive 1999/44/EC with an up to date framework for the web and offline sale of products, together with the case of products with integrated or inter-connected digital companies or digital content material (items with digital components). The Sale of Goods Directive supplies for the introduction of sure necessities regarding gross sales contracts concluded between sellers and customers, notably relating to conformity of products, cures within the occasion of an absence of such conformity and industrial ensures (Directive (EU) 2019/771 of the European Parliament and of the Council of 20 May 2019 on sure facets regarding contracts for the sale of products, amending Regulation (EU) 2017/2394 and Directive 2009/22/EC, and repealing Directive 1999/44/EC).
Similar because the Digital Content and Digital Services Directive, this directive ought to have been applied into the nationwide legislations of EU member states and in power by 1 January 2022. Many EU member states have, nonetheless, not met this time period.
Enforcement and Modernisation Directive or Omnibus Directive
The Enforcement and Modernisation Directive (Directive (EU) 2019/2161), additionally known as the Omnibus Directive, introduces varied adjustments to 4 present EU Directives, particularly the Consumer Rights Directive (2011/83/EU), the Unfair Commercial Practices Directive (2005/29/EC), the Unfair Contract Terms Directive (93/13/EEC) and the Price Indication Directive (Directive 98/6/EC) (Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the higher enforcement and modernisation of Union shopper safety guidelines). The EC additionally printed 4 up to date steerage paperwork for these directives.
EU member states are required to implement the Omnibus Directive and such implementing laws have to be in power on 28 May 2022.
While most EU member states have a system of, largely nationwide, sanctions on non-compliance with e-commerce and shopper laws, the Omnibus Directive introduces a brand new EU stage sanction. Member states should set a advantageous for sure widespread infringements, of as much as a minimum of 4 per cent of the dealer’s annual turnover within the member state(s) the place the breach occurred, or as much as a minimum of €2 million if turnover info will not be out there.
Materially, the Omnibus Directive incorporates new info obligations for on-line merchants, together with new pre-contract disclosure obligations. Further info obligations relate to standards used to rank search outcomes, whether or not the dealer verifies evaluations, whether or not the buyer will profit from shopper safety regulation (pre-contract info requirement underneath the CRD for on-line marketplaces), any personalisation of the worth based mostly on automated decision-making.
Notable guidelines which may be related for franchising organisations are these which can be being launched on, for instance, twin high quality merchandise (categorical provisions now present that the observe of promoting twin high quality merchandise might be deceptive), and value reductions (as a rule, in each value discount announcement, merchants should point out a so-called reference value (that’s, the worth utilized inside a interval of a minimum of 30 days earlier than the worth discount).
Member states do have some proper to derogate from the Omnibus Directive in sure instances, for example the place it regards contracts, with regard to sure guidelines for on-line marketplaces, and solicited visits for house repairs. 
Directive on Representative Actions
The Directive on Representative Actions (Directive (EU) 2020/1828) goals to harmonise collective redress mechanisms for customers throughout all EU member states. It will enable collective actions to be introduced in opposition to companies in the event that they breach EU regulation in a broad vary of areas resembling knowledge safety, journey and tourism, monetary companies, vitality and telecommunication (Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on consultant actions for the safety of the collective pursuits of customers and repealing Directive 2009/22/EC).
Pursuant to the directive, EU member states should put in place a minimum of one efficient procedural mechanism that permits certified entities, resembling shopper organisations or public our bodies, to convey lawsuits to court docket for the aim of both searching for an injunction to stop or prohibit an motion or to get well monetary compensation for a breach. These entities can be legally and financially supported to convey actions on behalf of teams they characterize.
The EU member states should transpose the Directive on Representative Actions into their nationwide legal guidelines by 25 December 2022 and apply these measures from 25 June 2023 onwards.
Digital Services Act: 10 key factors from new, global-first rulebook aimed toward on-line platforms
The Digital Services Act (DSA) package deal is the boldest initiative up to now in an ongoing international dialog concerning the function and duties of on-line platforms. With the Digital Services Act the EC proposes new content material moderation and transparency guidelines in addition to danger evaluation administration. In this manner, the EU has revealed its excessive ambitions to introduce a brand new normal for the governance of digital companies, in the identical method that the General Data Protection Regulation has turn into a world norm.
Internet service suppliers, cloud companies, messaging, marketplaces and social networks will all fall underneath the scope of this new, horizontal framework for on-line intermediaries. Specific due diligence obligations will apply to internet hosting companies, specifically on-line platforms resembling social networks, content-sharing platforms, app shops, on-line marketplaces, on-line journey and lodging platforms. In addition, there can be additional obligations for very massive on-line platforms with over 45 million customers, whether or not established in or exterior the EU.
It can also be necessary to notice that the DSA could have extra-territorial attain. It will apply to firms headquartered exterior the 27 member states, as long as they aim EU customers. Whether they supply companies within the Union is decided by a ‘substantial connection’ take a look at. This is deemed to exist the place the supplier both has an institution within the EU; a big variety of customers in a number of member states; or targets actions in direction of a number of member states. 
The 10 key factors from the DSA are:

Liability regime: in accordance with the Commission, the proposed DSA builds on the nonetheless ‘legitimate’ core ideas of the e-Commerce Directive (2000/31/EC), which has been in place for 20 years. It due to this fact retains the legal responsibility secure harbour provisions for on-line intermediaries and the prohibition of basic monitoring obligations for unlawful content material. Nevertheless, there may be some uncertainty over the way forward for the ‘energetic function’ criterion, which seems solely in recitals and is prone to be topic to additional debate.
Illegal content material on-line (items and companies): a mechanism is proposed for residents to inform unlawful content material and harmful merchandise they encounter on-line and for platforms to work with ‘trusted flaggers’. Hosting companies can be required to place in place notice-and-action mechanisms that allow people or entities to inform a number of particular objects of alleged unlawful content material by way of one discover, thus streamlining the enforcement course of for rights holders. There can even be a US-style ‘Good Samaritan’ provision, whereby suppliers that voluntarily take down unlawful content material is not going to have adverse penalties by shedding their secure harbour.
Content moderation: measures are proposed to allow residents to problem on-line platforms when their content material is eliminated. Platforms should present for a mechanism to contest selections, even when they’re in accordance with the phrases and situations of that individual service. Platforms are additionally obliged to inform residents of any selections taken to take away their content material and the explanations for these selections. Users can complain on to the platform, select an out-of-court settlement or search redress earlier than the courts.
Transparency necessities: on-line platforms are required to make sure that customers have the individualised info wanted for them to grasp when and on whose behalf an commercial is displayed, together with whether or not or not this commercial relies on profiling. Also, when platforms suggest content material, customers will be capable to modify the standards used and select to not obtain personalised suggestions. Users must also see if content material is sponsored.
Traceability of enterprise customers: on-line marketplaces ought to undertake a ‘know-your-business-customer’ strategy, to assist establish sellers of unlawful items. There can be an obligation for sure on-line platforms to obtain, retailer and partially confirm and publish info on merchants utilizing their companies.
A single level of contact: service suppliers established within the US or elsewhere can be obliged to nominate a authorized consultant within the EU.
Access to knowledge: will probably be compulsory for key platforms to supply entry to knowledge in order that impartial auditors and vetted researchers can scrutinise their actions by way of stories and impartial audits.
Very massive on-line platforms: VLOPs will face extra necessities to stop abuse of their methods by taking risk-management measures, together with oversight by way of impartial audits. These additional duties will apply to on-line platforms with greater than 10 per cent of the EU inhabitants, or 45 million customers. Such platforms want to ensure they aren’t manipulated into spreading dangerous items or content material (eg, disinformation or hoaxes throughout the pandemic).
Oversight construction: every member state can be obliged to nominate a Digital Service Coordinator, who can be supported by a brand new European Board for Digital Services. There can even be enhanced supervision and enforcement by the European Commission for very massive on-line platforms.
Penalties: on-line platforms deemed to have flouted the brand new guidelines danger fines of 6 per cent of whole international turnover within the previous yr, which might quantity to billions of euros for the most important gamers.

The begin of the trialogue negotiations on the DSA in January 2022 adopted on from the adoption by each the European Parliament and Council of their respective positions on the proposal. Significantly, the Parliament launched plenty of new components in comparison with the Commission’s authentic proposal. The Council place has additionally positioned some new amendments on the desk. During the trialogue conferences, all these proposed adjustments to the proposal should be mentioned and both agreed, modified or rejected earlier than a closing compromise settlement between the EU establishments might be reached.
Notable amendments launched by the Parliament embody the next.

Targeted promoting: extra obligations aimed toward making certain a clear and knowledgeable alternative for recipients of digital companies, together with info on how their knowledge can be monetised. Refusing consent to be tracked ought to be no harder or time-consuming to the customers than giving consent. Users must also be given choices to entry the web platform based mostly on tracking-free promoting.
Minors and weak teams: the textual content supplies for a ban on the usage of concentrating on or amplification methods involving the info of minors for the aim of displaying advertisements. It would even be prohibited to focus on people based mostly on particular classes of information that enable for concentrating on of weak teams.
Recommender methods: customers ought to have extra alternative relating to recommender methods based mostly on algorithms and used to advertise of rank sure content material or merchandise.
Anonymity: a brand new provision was launched on the correct to make use of and pay for digital companies anonymously, in accordance with the precept of information minimisation and to stop unauthorised disclosure, id menace and different types of abuse of private knowledge.
Compensation: recipients of digital companies and organisations representing them should be capable to search redress for any damages ensuing from platforms not respecting their due diligence obligations.
Dark patterns: on-line platforms can be prohibited from utilizing misleading or nudging methods to affect customers’ behaviour.
Waiver for SMEs: the textual content additionally proposes an exemption for micro, small and medium-sized enterprises (SMEs) from sure DSA obligations. SMEs are deemed to be enterprises that make use of fewer than 250 individuals and which have an annual turnover not exceeding €50 million, and/or an annual steadiness sheet whole not exceeding €43 million.

The trialogue conferences on the DSA between the European Parliament, Council and Commission are anticipated to succeed in a closing consequence within the second quarter of 2022.
Social media and influencer advertising
In current years, social commerce, a subset of e-commerce, has turn into an integral a part of e-commerce. Social media performs an more and more necessary function in each buyer engagement and the advertising of services or products and, extra usually, the model of an organization. In addition, following the introduction of, for instance, the procuring tab on Instagram and Facebook Marketplace, social media can also be typically used as a gross sales channel.
Engaging in social commerce on franchisor or franchisee stage
For franchise firms, participating in social commerce is feasible on two ranges: the franchisor stage and the franchisee stage. Both include their very own advantages and (authorized) challenges.
Social media accounts operated by (or on behalf of) the franchisor will typically be used as basic model accounts. Such accounts cowl both the worldwide model or the model on a nationwide stage. The advantage of a social media account operated by the franchisor is that the franchisor can construct a uniform model and is ready to management the content material that can be posted on the related social media accounts. This additionally applies when franchisors use a 3rd get together, for instance, an promoting company, to create on-line content material. In the settlement with such get together, all related facets might be included.
A limiting issue of a basic model account is, nonetheless, that the choices to have interaction with native clients can be restricted. National stage social media pages will put the franchisor in a greater place to attach with native clients, as such pages can give attention to, for instance, native holidays or merchandise. Local engagement can, nonetheless, be maximised by entitling franchisees to make use of personal social media accounts to advertise the franchisor’s services or products. Franchisees will usually have data of native market, native occasions and can interact with native clients.
As such native franchisee accounts can be operated by (or on behalf of) the franchisees, there are additionally some challenges. To construct a robust model, preserve consistency on-line and guarantee compliance with relevant laws, franchisors will often need the contractual documentation with the franchisee to incorporate obligations and restrictions that management such social media exercise. This method, the franchisor will retain the final word possession over the model, its presentation and the important thing model messages. Obligations and restrictions for franchisees might be included in social media model advertising requirements and sensible tips and/or insurance policies for social media. By making these paperwork a part of the franchise settlement, the necessities tie in with the therein, resembling confidentiality, basic advertising obligations, termination rights and penalties of termination of the franchise settlement. Taking under consideration the quick tempo of social media, incorporating social media requirements and insurance policies within the franchise guide will allow the franchisor to commonly replace the rules. In basic, as e-commerce is a quickly evolving territory, it’s important that franchise agreements are sufficiently versatile to accommodate the adjustments that lie forward.
Influencer advertising
When taking a look at advertising by way of social media, influencer advertising stands out as a fast-growing buyer acquisition methodology. Influencer advertising is a revolution within the advertising and promoting panorama, with nice successes tales but additionally critical penalties if gone fallacious. Various jurisdictions within the EU have seen a rising variety of instances involving influencers.
Regulatory steerage or finest observe within the EU dictates that the influencer supplies some form of identifier to point a industrial relationship with the model (for instance, #advert or #spon). There are particular guidelines in place in a number of EU member states, regulating social media and influencer advertising. Such guidelines embody native language necessities in varied jurisdictions. Penalties in every member state fluctuate from adverse publicity to hostile selections, potential fines and prison sanctions. In addition to promoting regulation, additionally shopper regulation, mental property and knowledge protection-related facets ought to be considered.
When utilizing influencers within the franchising enterprise a sturdy contract with the influencer ought to be in place. Contracts with influencers often include (sensible) necessities for the influencer referring to the content material and frequency of posts but additionally basic compliance with the franchisor’s model requirements. Other topics to think about are morality clauses, post-term restrictions, applicable mechanisms for breaches and the usage of the followers’ private knowledge. Franchisors will often wish to monitor the exercise of the influencer, to mitigate any (authorized) dangers in the event that they come up.
Customer knowledge ‘possession’
There is a transparent rising coverage curiosity in and drive to control (quasi) possession and sharing of non-personal knowledge. Similarly (quasi) possession of non-personal knowledge is of nice industrial curiosity of market events, given the numerous doable use instances, current and future. Notwithstanding, up to now there is no such thing as a relevant basic authorized framework.
With regard to non-personal (private sector) knowledge, no basic a priori statutory or authorized proper to course of such knowledge exists on European Union stage. Simultaneously, nonetheless, no proper to possession of such knowledge exists on European Union stage. As such, there aren’t any usually relevant knowledge rights.
Often, options are sought in contractual preparations. Parties who use, for instance, gear that generate knowledge, resembling airways utilizing planes, argue that knowledge is theirs as a result of they generate it, whereas the producers of the planes or firms concerned in knowledge evaluation might argue the identical. It relies upon significantly on the sector and particular circumstances as to which of the events tends to win such a dialogue.
The European Commission has recognised the necessity to deal with, inter alia, the problem of non-personal knowledge and has an initiative for a Data Act, which might replace the at present relevant database legal guidelines and commerce secrecy legal guidelines and regulate sharing of B2B (ie, non-personal) knowledge. The intention of the Act can be to determine extra authorized certainty and equity in knowledge sharing. Policy choices which can be thought of are, for instance, transparency obligations for producers of linked objects on rights of entry and use of non-personal knowledge, equity exams to keep away from unilaterally imposed unfair situations for entry and use (eg, by mannequin contract phrases really helpful by the Commission) and offering harmonisation and horizontal modalities for entry to knowledge. The initiative is at present nonetheless in a really early stage.
VAT/tax laws
New EU VAT laws
The new EU VAT guidelines primarily intention to simplify VAT obligations for firms engaged in cross-border e-commerce within the EU. The important components of the brand new EU VAT guidelines referring to enterprise to shopper e-commerce gross sales are the abolishment of the €22 import VAT exemption for small consignments, and the substitute of the varied nationwide intra-EU distance gross sales thresholds when B2C intra-EU gross sales exceed the space gross sales threshold by an EU-wide threshold of €10,000.
Under the brand new guidelines – relevant since 1 July 2021 – the next transactions are lined:

on-line marketplaces facilitating the B2C provide of imported ‘low worth’ items not exceeding €150, being shipped by a non-EU provider;
intra-EU B2C provides of products by suppliers or on-line marketplaces facilitating these provides (‘intra-EU distance gross sales’);
home B2C gross sales of products by on-line marketplaces facilitating these provides; and
provides of B2C companies by non-EU firms or by EU firms the place the buyer is situated in one other EU member state.

Online marketplaces
Online marketplaces resembling internet retailers, platforms or portals that facilitate provides are so-called ‘deemed suppliers’ that deemed to have acquired and provided the products for VAT functions. This implies that two separate transactions are carried out for VAT functions a deemed provide, from the provider to the web market – VAT exempt and a provide from the web market to the buyer – taxed with native VAT fee the place EU shopper is situated.
Imported items and IOSS
In the occasion of imported items, import VAT is due because the €22 exemption is abolished. The declarant for customs functions (often the EU shopper or provider) is responsible for EU import VAT until the Import One Stop Shop (IOSS) is used to by the provider or on-line market to cowl the imported consignment. In the occasion that the import is roofed by IOSS – doable just for ‘low worth’ items not exceeding €150 – the import is exempt from import VAT.
Non-EU suppliers and on-line marketplaces that make use of IOSS are required to cost EU customers with native VAT and account for this VAT by way of the month-to-month IOSS return within the EU member state of registration.
One-Stop store scheme
The One Stop store scheme (OSS) is one other simplification that can be utilized by EU firms and non-EU firms when supplying B2C companies – beforehand restricted to electronically provided companies, intra-EU distance gross sales and home gross sales by on-line marketplaces.
Through OSS, an organization can register itself in just one EU member state, submit one digital OSS return and make one fee for all eligible gross sales of products and companies within the EU.
Competition regulation
Franchise relationships
Some franchisors might welcome the usage of the web by their franchisees as a method of attracting a wider vary of shoppers and rising their gross sales income. Other franchisors might, nonetheless, want to management or restrict the extent to which their franchisees use the web. This can also be the place competitors regulation comes into play and limits what preparations could also be entered into.
More broadly, competitors regulation performs a job in relation to all types of distribution and on-line gross sales, significantly regarding unique preparations, selective distribution, pricing preparations, buyer allocation, and so forth.
Agreements between entities energetic at completely different ranges of the availability chains (eg, a producer and a distributor) are known as vertical agreements. The notion of vertical agreements covers all varieties of distribution or reselling of services or products, besides company agreements underneath which the agent bears no industrial or monetary danger for the services or products delivered (aside from its personal fee).
Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements that prohibit competitors. Article 101(3) TFEU units out an exception to this prohibition for agreements, which contribute to enhancing the manufacturing or distribution of products or to selling technical or financial progress, whereas permitting customers a fair proportion of the ensuing advantages. The Vertical Agreement Block Exemption Regulation (VBER) robotically exempts vertical agreements that adjust to a set of standards by way of a secure harbour underneath article 101(3) TFEU.
While recommending resale costs to distributors and retailers is mostly allowed underneath the regime for vertical agreements, it’s thought of unlawful to limit a distributor’s freedom to find out its resale value aside from most resale costs. Similarly, restrictions of on-line gross sales, restrictions on reselling and absolute territorial safety (passive gross sales bans) are usually prohibited.
The VBER, relationship from 2010, is at present underneath evaluation. On 9 July 2021, the European Commission printed a draft VBER and accompanying tips for session. The new VBER is anticipated in Q1 2022, because it ought to take impact from 1 June 2022. It is anticipated to use for a interval of 12 years (ie, till 2034).
The draft VBER alludes that the brand new VBER can be robust on agreements which will impede on-line competitors. Vertical agreements containing clauses on on-line promoting or promoting might due to this fact warrant a (re-)analysis. Noteworthy amendments within the draft VBER embody that focused internet marketing in addition to providing a web based store with, for instance, sure language choices represent a type of energetic promoting (into one other territory).
In 2017, the CJEU supplied extra readability on marketplaces bans in relation to luxurious items within the Coty ruling. In this case, the CJEU discovered that luxurious model homeowners are ready to make use of the safety of the luxurious picture of their merchandise as the only real justification for implementing a selective distribution system. After this judgment, a debate ensued on whether or not these restrictions had been permissible exterior of the scope of luxurious items. The European Commission has now put an finish to this debate by addressing the matter in its draft VBER Guidelines. Restrictions on gross sales by way of on-line marketplaces are block exempted in vertical agreements if the market share thresholds are met. This exemption applies to all merchandise.
E-commerce sector inquiry and its aftermath
The progress of e-commerce has gone accompanied by a rise of regulatory consideration. E-commerce agreements are receiving rising scrutiny because the European Commission has stepped up its enforcement following its Digital Single Market targets. In 2017, the European Commission printed its e-commerce sector inquiry report. In the report, the European Commission recognized enterprise practices that might increase competitors considerations, such because the elevated deployment of pricing algorithms by companies. The Commission additionally famous an uptake in selective distribution, enabling suppliers of (luxurious) model merchandise to get extra management over the standard of distribution of their merchandise.
Pricing algorithms might give rise to competitors considerations as a consequence of their potential to allow tacit coordination (the place events collude with out express communication) and monitor and implement current anticompetitive agreements. Subsequent to the e-commerce sector inquiry, the European Commission’s fined 4 producers in 2018 for mounted or minimal resale value upkeep. The producers in query made use of subtle monitoring instruments to successfully monitor resale value setting within the distribution community and to intervene within the case of value decreases.


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