Code of Ethics

PREAMBLE

This Code of Ethics (The Code), to which EFDA’ members shall adhere, aims at establishing the framework for the implementation of best practices to the franchise relationships and activities of the EFDA members.

The Code is a self-regulation on how EFDA and its members will govern themselves and thus it is not intended to replace any Egyptian legislation that may apply to the franchise business but to support full compliance with, and vigorous enforcement of, all applicable Laws and Regulations including but not limited to the Civil Code no. 13/48, Commercial Code no. 17/99, Copyrights Law no. 354/54, Trade Mark Law no. 57/39, Law in respect of Parents, Industrial Designs and Models no. 132/49 and Taxation Law. The Code is not intended to establish standards to be applied by third parties such as courts.

1. APPLICATION

   1. All prospective members of EFDA must agree to be bound by the Code before they are considered for membership. The Code conducts part of the membership agreement between EFDA and its member.
   2. The Code shall not be deemed part of the contractual agreement between franchisor and franchisee unless it is mentioned explicitly in the franchise agreement between franchisor and franchisee.
   3. The members of EFDA undertake to respect and apply the provisions of the Code and accordingly any violation of the Code by any of the members shall be deemed a breach of its membership agreement with EFDA.
   4. The members shall abide and adhere to any amendment, modification and attachment, issued and published by EFDA, which may be added to the Code.

2. THE OBLIGATIONS OF THE MEMBERS

   1. The franchisor shall have operated a business concept with success, for a reasonable time and in at least one pilot unit before starting its franchise network.
   2. The franchisor shall be the owner, or have legal rights to the use, of its network’s registered trade name, registered trade mark or other distinguishing identification.
   3. The franchisor shall provide the individual franchisee with initial training and continuing commercial and / or technical assistance during the entire life of the agreement.
   4. In order to allow prospective individual franchisees to enter into any binding document with full knowledge, the franchisor shall give them a copy of the Code as well as full and accurate written disclosure document which shall contain at least all information material set forth in Appendix I attached here to and such other information as may be material to franchise relationship. All franchise agreements shall contain a clause referring to the disclosure document and recording that the information therein contained is, to the best franchisor’s knowledge and belief, true and accurate and that no material information has been withheld. All the above documents shall be delivered within at least two weeks prior to the execution of these binding documents.
   5. No member shall offer, sell or promote the sale of any franchise, product or service by means of any explicit or implied representation, which is likely to have a tendency to deceive or mislead prospective purchasers of such franchise, product or service
   6. No member shall imitate the trademark, trade name, corporate name, slogan, or other mark of identification of another business in any manner or form that would have the tendency or capacity to mislead or deceive
   7. The pyramid or chain distribution system is inimical to prospective investors and to the franchise system of distribution and no member shall engage in any form of pyramid or chain distribution

3. DISCLOSURE

   1. Full and accurate written disclosure of all information considered material to the franchise relationship (including but not limited to, franchisor’s current operations, the investment required, potential profits and performance records) shall be given to each prospective franchisee within two weeks prior to the execution of any binding document.
   2. This disclosure document will be updated at least annually and be provided to all prospective franchisees at least fourteen (14) days prior to signing a franchise agreement. A disclosure document is required to be provided to an existing franchisee in conjunction with the renewal of the franchise agreement within one month of being requested by the franchisee.
   3. The financial disclosure contained within the disclosure document, as updated on an annual basis, will be provided to any existing franchisee at any time upon request by the franchisee. The franchisor will be at the liberty to add further comment by way of more elaborate explanation or clarification to further explain the financial disclosure.
   4. Where a franchisor and sub-franchisor 9Master Franchisee) enter into a contractual arrangement with a franchisee, the disclosure document will contain material information in relation to both the franchisor and sub-franchisor including financial disclosure relating to both the franchisor and the sub-franchisor.
   5. The information provided by the franchisor during the presale disclosure process is the cornerstone of a positive business climate for franchising, and is the basis for successful and mutually beneficial franchise relationships. Thus it is the franchisor’s obligation to provide the franchisee with all information, materials and documents as stated in appendix I.

4. CONFIDENTIALITY

   Members acknowledge that all information provided by the parties during the negotiation of franchise agreement is strictly confidential and shall not be utilized or disclosed to any other party unless prior written agreement has been reached by both parties.

5. DISPUTE SETTLEMENT

This preamble and the attached appendix shall be deemed and integral part of the Code.

APPENDIX I

DISCLOSURE DOCUMENT REQUIREMENTS

1. Cooperate status and business history including but not limited to: the company status, name and purpose, the registration office of the franchisor, names, job descriptions, qualifications (if any) of the franchisors’s Managing directors/ executive / officers / principals.
2. General description of the principal characteristics of any trade mark, trade name logo, symbol, utc used to market the franchisor’s goods or services and steps taken to protect these and details of any threatened or pending litigation in relation to these.
3. Details of payments to be made by the franchisee to the franchisor (including method of calculation if applicable).
4. Costs and information to all licenses required by law associated with establishing a franchised business and the necessary period of time for the franchise to amortize his initial invest to establish the franchised outlet.
5. Particulars of any restrictions imposed on the franchisee (e,g. territorial, or offer on competing franchises).
6. Details of any bankruptcies, receiverships, liquidations, or materially relevant debt recovery, criminal, civil or administrative proceedings which are current or have occurred or for which judgment has been entered against the franchisor (and any related entities) or any of its directors/ executive officers/ principals within the last ten (10) years.
7. A detailed resume of the business experience of the franchisor (and any related entities) and its directors/ secretary/ executive officers/ principals including:
   1. Length of experience in the type of business offered in the franchise.
   2. Length of experience in operating or offering the franchise.
   3. Length of experience in operating or offering other franchises and a description of those franchises.