An Examination of the Regulation of Franchise Agreements Under Nigerian Commercial Law

Franchising has grown significantly as a business model in Nigeria, particularly in the food service, retail, and education sectors, yet no dedicated franchise legislation governs these commercial relationships, leaving parties exposed to contractual uncertainty and potential exploitation. This study examines how franchise agreements are regulated under existing Nigerian commercial law, including contract law principles, the Companies and Allied Matters Act, trade mark licensing rules, and intellectual property obligations. The doctrinal methodology involves analysis of standard franchise agreements used by ten major franchisors operating in Lagos and Abuja, assessed against existing legal provisions. Interviews with five franchise attorneys and eight franchisees supplement the doctrinal analysis. Results indicate that franchise agreements are predominantly governed by general contract law, with franchisors enjoying disproportionate bargaining power to set non-negotiable terms. Disclosure obligations before contract execution are absent from Nigerian law, unlike in South Africa and the United States. Dispute resolution clauses frequently favour international arbitration, disadvantaging franchisees with limited financial resources. Intellectual property licensing provisions were found to be poorly integrated with the Trademarks Act, creating enforcement uncertainty. The study concludes that Nigeria urgently needs a Franchise Disclosure Act to mandate pre-contractual information disclosure, regulate termination rights, and establish a minimum statutory framework for franchise relationships. Recommendations include engagement between the Nigerian Investment Promotion Commission, Nigerian Bar Association, and franchise industry bodies to develop model franchise legislation.

Keywords: franchise agreements, commercial law, disclosure obligations, Nigerian contract law, franchisee protection