Can franchise agreements be stored electronically and the paper version be destroyed?
Franchise & Licensing
Again, there is no specific guidance on that, however, we recommend that at least one paper version should be stored to allow further certified copies to be obtained if necessary.
Yes. Franchise agreements (and other ancillary documents, as well as franchise disclosure documents) can be stored and transmitted in electronic format.
Yes, this is feasible from a legal standpoint, although not recommended from a practical viewpoint, as the paper version would suffice as proof of the franchise agreement if the electronic version of lost. Moreover, if feasible, signing and executing the franchise agreement in the form of a private deed signed before a notary public is recommended, as it provides legal certainty as to execution date and the signatory parties.
Yes, franchise agreements can be stored electronically instead of in a physical paper version. The method of storage in itself is not of the essence as long as it can be proved that the agreement exists and has been validly entered into.
As mentioned above, digital agreement can only be legally binding if signed by an accredited digital signature. In all others instances, it shall be executed in a paper form.
This shall be subject to two assumptions: the first one is that the agreement is signed on paper with a wet ink signature, and the agreement is scanned and stored electronically. In this event, the paper signed copy will be the original of the agreement and accordingly it should be kept and maintained and cannot be destroyed. The second assumption is that the agreement is signed through E-signature, in accordance with the provisions of the E-Signature law. In this event, there will be no original paper version.
Franchise agreements can be kept in electronic format.
It is recommended to keep the paper version.
No, it is important to keep the original version of all executed franchise agreements and related documents.
For the registration of the franchise agreement, the Ministry of Economy and the Commercial Register will request an original hard copy signed by the parties. Accordingly, the paper copy may not be destroyed.
Yes, in the event that the franchise agreements are validly signed electronically. However, the electronic signatures need to comply with the legitimate form as stipulated in the relevant PRC laws and regulations.
According to Article 13 of the Electronic Signature Law of the People's Republic of China (“ESL”), an electronic signature shall be deemed as reliable electronic signature if it satisfies all the following criteria: (1) when the electronic signature creation data is used for electronic signature, it is exclusively proprietary to the electronic signatory; (2) the electronic signature creation data is exclusively controlled by the electronic signatory at the time of signing; (3) any subsequent alteration to the electronic signature after the signature can be detectable; and (4) any subsequent alteration to the content and form of the data message after the signature can be detectable.
Accordingly with answer 29 above, the paper version of the franchise agreement should not be destroyed.
Owing to the consensual nature of franchise agreements, the contract remains legally binding irrespective of the form in which it exists, i.e., paper-based or electronic. Additionally, in the event of litigation, the Philippine Rules of Court provides that the digital version may be admissible when the original document has been destroyed without bad faith on the part of the party offering the agreement into evidence.
No, this is not recommended by practice. The franchise agreement should be signed using wet ink signatures of the parties and be stored on paper. Electronic versions may serve only as back-up copies, but shall not be a substitution.
From a legal perspective there are no requirement to keep paper versions of agreements. However, in the event of a dispute, it is recommended that original versions (paper versions) are available as evidence if the dispute relates to the genuineness or authenticity of the agreement. Please note that any electronic storing of agreements, must comply with GDPR/data protection requirements if the agreement contains personal data of individuals resident in Norway or EEC.
Franchise agreements are permitted to be signed and stored electronically. In the event that a franchise agreement is signed manually, there is no hard requirement that the original signature versions be retained in hard copy. Although state laws concerning admissibility of evidence vary, and many still are of the belief that original copies hold more legitimacy, almost all states have generally adopted legislation that includes the language of the Uniform Rules of Evidence (“URE”) and/or the Uniform Photographic Copies of Business and Public Records as Evidence Act (“UPA”), accepting use of digital image copies of signed documents and permitting the destruction of original documents unless preservation is required by law. While there are a certain documents of which original signature copies are required to be kept (i.e., wills, promissory notes, deeds, etc.), franchise agreements are not among those types of documents. The only rule relevant to retention of franchise documents is the FTC Franchise Rule that requires that franchisors keep a copy of each materially different version of their FDDs and also a copy of the signed FDD Receipt for at least three years.
In case the franchise agreement is signed using an electronic signature, than the contract may be stored electronically. On the contrary in case the franchise agreement is signed with wet ink signature, the paper version cannot be destroyed.
Although scanned copies of original documents are admissible in court proceedings in the UK provided their integrity can be shown, there is always a risk that the authenticity of a scanned copy might be called into question in a way which only the original can resolve.
In civil proceedings (in England, Wales and Northern Ireland), a statement contained in a document can be proved either by producing the original document (primary evidence), or by producing a copy of the document (secondary evidence). It does not matter whether the original document is still in existence.
As secondary evidence, an electronic copy will need to be "authenticated", ie the court must be convinced that the document matches the claims made about it and the origin and integrity of an electronic copy must be established by the party wishing to rely on it. The evidential weight of the copy will depend upon the position taken by the other party, other evidence that is available, and the degree to which the ‘pedigree’ of the copy can be established.