Currently, international trade relations are increasing rapidly. As a result of this rapid increase, the parties of international trade relations are increasingly sign contracts linked to more than one country.

In the recent years, franchising has become the most highly preferred method for distributing products or services . For this reason, franchise agreements have an important place among the contracts most widely used in international trade law. 

As globalization has increased, international organizations have sought to make national legal systems more uniform, due to the perception that the conflicts and divergencies arising from the different legal systems were an obstacle to the development of international trade. It is anticipated that this problem can be resolved by unifying of international commercial law. The unification of commercial law will create a legal framework for international transactions and provide legal certainty for the contracting parties. 

Due to inadequate and different national laws related to franchise agreements, unification of legal rules on cross-border franchise agreements is extremely important. 

Studies of organizations like the International Chamber of Commerce (ICC) play an important role for international franchise agreements as there is no international agreement on franchising that is binding for the parties. The ICC and other entities including public bodies, intergovernmental agencies and private organizations’ works for uniformity, model laws, standard contracts, guides and principles are used commonly as a source for lex mercatoria. 

Defined as the general principles of law regarding the international trade principles, lex mercatoria is the collection of rules that have been autogenously created around international trade that doesn’t depend on any particular national law. Lex mercatoria, thus refers to the general principles applied in international trade agreements, tangible clauses, commercial traditions and practices. Lex mercatoria is becoming increasingly important in international trade law, due to the acceptance of its applicability as substantial law in international arbitration.

Model contracts are an important source of lex mercatoria and are frequently used in international trade. Such contracts are drafted with a purpose to secure international deals of parties in international trade taking into consideration the traditions and practices of the related fields of international trade law. In addition, model contracts are soft law rules that are accepted as a source of lex mercatoria. Soft law rules are not automatically binding and their existence depend on the agreement of the parties.

The ICC is one of the foremost examples in the global business world with its contributions to development of lex mercatoria. The ICC Model International Franchising Contract is a commonly used text that is drafted by ICC which is considered to be one of the most prestigious organization in global trade. This model contract is drafted with a purpose to ensure a balance between interests of parties and to guide the ones considering to enter into franchise contracts in drafting their own contracts. 

One of the main difficulties faced by parties of international franchise contracts is the lack of uniform rules for franchise contracts. Since there is no international agreement on franchising for the countries involved, parties must rely on national laws and regulations applicable to franchising. But these existing laws and regulations are not adequate for the specific needs of international trade and differ from one country to another. Thus, stipulations agreed by the parties have the utmost importance in determining the legal status of the contract, and parties should be very careful while drafting their contracts.

The ICC model franchise contract aims to provide convenience to those who are considering entering into a franchise contract with a set of clauses that can guide the parties in drafting their own franchise contract. The ICC Model International Franchising Contract follows the traditional ICC approach in seeking to strike a balance between the interests of the parties to franchise contract.

Large-scale enterprises that already use franchising for distribution of products or services have their own forms of franchise contracts. But there are also small and medium-sized enterprises which have acquired valuable experience at a local level. ICC Model International Franchising Contract is a concrete, practical way to secure international deals involving small firms. In addition, ICC Model International Franchising Contract is a unique and useful model form for small enterprises to develop their international franchise operations.

ICC Model International Franchising Contract has been elaborated taking into account the most commonly encountered clauses in franchise agreements and therefore may be used as a checklist of the core obligations of a cross-border franchise agreement.

This model agreement prepared to apply only to international franchise contracts. But this model may also be used as a basis for drafting domestic franchise contracts provided the necessary adaptations are made. Franchise agreements may regard distribution of products or supply of services. This model contract deals exclusively with distribution franchise agreements and does not cover service franchise agreements.

In addition, ICC Model International Franchising Contract has been based on the assumption that will not be governed by a specific national law but only by the provisions of the contract itself and lex mercatoria as applicable to franchise agreements. The reason of this solution is that the rules of this model contract can be applied in a uniform way to parties of the franchise contracts in different countries, in a balanced way without favoring one or the other side of the transaction. 

In our opinion, the parties of cross-border franchise contracts may avoid the most of the risks in international trade by using the ICC Model International Franchising Contract as a model form while drafting their own franchise contract.