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Cablegate: Got Interested in Assistance with Services and Franchising

VZCZCXRO3441
PP RUEHTRO
DE RUEHTU #1581/01 3511227
ZNR UUUUU ZZH
P 171227Z DEC 07
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 4218
INFO RUEHAS/AMEMBASSY ALGIERS PRIORITY 7576
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0928
RUEHFR/AMEMBASSY PARIS PRIORITY 1860
RUEHRB/AMEMBASSY RABAT PRIORITY 8464
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0161
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4157
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 TUNIS 001581

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/MAG (MHARRIS) AND EB/CIP
STATE PASS USTR (BURKHEAD)
USDOC FOR ITA/MAC/ONE (MASON), ADVOCACY CTR (REITZE), AND
CLDP (MCMANUS)
CASABLANCA FOR FCS (ORTIZ)
PARIS FOR NEA WATCHER

E.O. 12958: N/A
TAGS: ETRD ECON TS
SUBJECT: GOT INTERESTED IN ASSISTANCE WITH SERVICES AND FRANCHISING
LAW

-------
SUMMARY
-------

1. (SBU) During a December 10 meeting, Ministry of Commerce
Director of Domestic Trade Mohamed Laouini told EmbOffs that the GOT
has drafted a revised services law. The legislation will also
address the regulation of franchises, which are currently limited in
Tunisia. Laouini shared the draft law and said he was open to USG
technical assistance on franchise legislation. Laouini also
provided an overview of existing GOT regulations regarding
franchising. End Summary.

----------------
NEW SERVICES LAW
----------------

2. (SBU) EconCommOff and EconCommSpecialist met with Mohamed
Laouini, Director of Domestic Trade at the Ministry of Commerce, on
December 10 to discuss GOT interest in franchising reform. Laouini
indicated that the GOT is currently reviewing many old laws and
regulations dating back to 1961. He confirmed that the GOT is
preparing new legislation regulating the services sector in
accordance with President Ben Ali's program for domestic trade
regulation. He added that the ministry has already completed a
preliminary draft of the new legislation and plans to have it in
final form and approved through the legislative process for
implementation before the end of 2009. This legislation will also
cover the important issue of commercial franchising in Tunisia,
which is currently unregulated. Laouini passed EmbOffs a copy of
the draft services law, which includes several articles outlining
the general terms of franchisor/franchisee relations.

----------------------------------
Technical Assistance Opportunities
----------------------------------

3. (SBU) When asked if the USG could provide technical assistance
with the franchise legislation, Laouini said that the major concern
of the GOT is to develop a standard commercial contract template for
franchises. The GOT wants to be assured that any franchise contract
will not favor the franchisor but instead will contain a balanced
relationship between the franchisor and the franchisee and protect
the rights of both in the case of a dispute or conflict. Laouini
said he hoped to review other countries' franchise legislation to
see how this issue has been addressed elsewhere.

4. (SBU) Laouini, who attended the US Department of Commerce's Cairo
Franchising Conference in October 2007, said he is also interested
in learning about the franchise experience of other countries.
EmbOffs suggested that he consider attending the April 2008
International Franchise Show in Washington D.C. where he could meet
USG officials and US Franchise Association representatives. EmbOffs
also mentioned the January 2008 visit of Marianne McManus from the
Department of Commerce's Commercial Law Development Program and said
that CLDP may be able to provide technical assistance in the field
of franchising. Laouini was very interested in the International
Franchise Show and was willing to meet with McManus. He said that
the GOT is open to any type of training or seminars in the area of
franchising.

-------------------------
NO EXCLUSIVITY IN TUNISIA
-------------------------

5. (SBU) Laouini said that Tunisian law currently prohibits all
types of "exclusivity contracts" arguing that their prohibition
increases competition within the domestic economy and gives the
Tunisian consumer wider choices and lower prices. Tunisian
businesses can privately arrange bilateral exclusivity contracts
with an international enterprise, but these contracts have no
validity in Tunisian courts.

-----------------------
"INDUSTRIAL" FRANCHISES
-----------------------

TUNIS 00001581 002 OF 002

6. (SBU) According to Laouini, "industrial franchising" or local
production and distribution of foreign products under license to
Tunisian manufacturers is currently permitted in Tunisia.
Specifically, industrial franchising refers to the acquisition, by a
Tunisian manufacturer (franchisee), of the right to use the
trademark, brand name, and production process for a product under
license. He cited the French dairy manufacturer, Sodiaal, which has
granted a license for the production of its 'Candia' brand to
Tunisie Lait (a local dairy producer) and the Italian tire
manufacturer that has licensed its brand, 'Pirelli' to Stip (a
Tunisian tire manufacturer). This kind of industrial franchising
gives the franchisee the right to manufacture the licensed products
in Tunisia and to set up their own distribution system and
commercial stores in which to sell the final product. The primary
condition for this type of franchise to exist in Tunisia is that the
product must be manufactured domestically.

---------------------------------
COMMERCIAL FRANCHISING IN TUNISIA
---------------------------------

7. (SBU) Laouini explained that there are some commercial
franchises that had been approved on a case by case basis. These
franchises received special authorization to operate, after the
benefits and positive contribution to the local economy had been
ascertained. He used the example of the existence of several French
ISO international certifying agencies operating in Tunisia. These
agencies facilitate the rehabilitation of Tunisian companies by
helping them obtain relevant ISO certifications. Laouini added that
the GOT has also concluded several preferential bilateral agreements
with Algeria, Libya and France allowing commercial franchises from
these countries. He cited hyper-markets Carrefour and Geant as
examples of French franchises that had opened under these
agreements.

-------
COMMENT
-------

8. (SBU) Laouini is the first GOT official to express interest in
US-GOT cooperation on the new services and franchising law. The
upcoming CLDP visit is particularly timely, as it will provide the
opportunity to offer assistance in crafting the final services
legislation, particularly as it relates to franchises, so that it
creates a favorable legislative and regulatory environment for US
franchising in Tunisia. Post will continue to encourage Laouini or
other GOT representatives to attend the April 2008 International
Franchising Show and meet with relevant US officials to discuss
franchise and/or services legislation. End Comment.

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