Franchise activity: Definitive suspension of the Spanish National Franchisors Register

According to Spanish Retail Act (article 62.2) all franchisors that intend to develop in Spain the franchise activity must communicate to the Franchisors’ Register the starting of their activity within three months.

Such Register is regulated by Royal Decree 201/2010 (February 26) which also foresees the information to disclose, the obligation to update it within three months of any modification and inform, during each month of January, about any closing or opening of premises in the previous year. The information should be disclosed electronically.

This said, during 2018 there have been some technical difficulties at the Register provoking the provisional suspension of such disclosure obligations. During that period, the Register did not admit any notification regarding franchisors.

From June 2018, nevertheless, the Minister of Economy, Industry and Competitiveness has decided to definitively suspend the activity of the Franchisors’ Register. This decision has been adopted with the intention of supporting companies in the franchise sector and to cancel as many obstacles as possible in the development of the commercial activity. Therefore, franchisors are no longer able to disclose such information to the Register and information on Franchisors is not longer available.

The decision does not affect, however, other mandatory obligations such as the disclosure information to the potential franchisees at least 20 days before the signature of the agreement, the pre-agreement or before any payment made.

Official information (in Spanish) can be found at the website: https://sede.micinn.gob.es/solicitudFranquiciadores/

The book contains a detailed questionnaire for 17 different jurisdictions and permits to have a first approach to the subject not only in those countries but also to compare the regulations in each of them.

It intends to solve the main questions on Agency and Distribution agreements. The questions try to discuss about the following: the possibility of establishing a local company to import products (laws governing the formation of entities, how foreign parties are treated); distribution structures with reference to the termination of the agreement, compensations, transfer of rights, confidentiality; non-competition covenants (with reference to resealing prices, for instance), restrictions on territories or customers; other general issues arising in this sort of agreements such as advertising provisions, intellectual property clauses, consumer protections issues, warranties, employment connected conflicts; and also governing and choice of forum and dispute resolution remedies.

You can have a free pdf copy of the Spanish chapter by clicking Distribution and Agency 2016.

Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through: Distribution & Agency 2016, (published in March 2016; contributing editor: Andre R Jaglom, Tannenbaum Helpern Syracuse & Hirschtritt LLP). For further information please visit www.gettingthedealthrough.com.

Negotiating and drafting international Agency or Distribution agreements not always an easy question because it regards what is governed during the agreement but also the important consequences (in term of legal requirements and economic consequences) of the termination.

This paper is a mere summary of what has been presented and discussed in Munich in September 10 2016 by Ignacio Alonso at the occasion of the Workshop-Seminar «Drafting Effective International Contracts: International Sales, Agency and Distributorship Contracts» of the UIA joint session of the Contract Law and International Sale of Goods Commissions. The information has been obtained, among other sources, from the International Distribution Institute Reports (www.idiproject.com).

It contains some clues on what to take into account when drafting Agency and Distribution contracts regarding the goodwill indemnity and damages compensation after the termination of the agreements.

The book contains a detailed questionnaire for 17 different jurisdictions and permits to have a first approach to the subject not only in those countries but also to compare the regulations in each of them.

It intends to solve the main questions on Agency and Distribution agreements. The questions try to discuss about the following: the possibility of establishing a local company to import products (laws governing the formation of entities, how foreign parties are treated); distribution structures with reference to the termination of the agreement, compensations, transfer of rights, confidentiality; non-competition covenants (with reference to resealing prices, for instance), restrictions on territories or customers; other general issues arising in this sort of agreements such as advertising provisions, intellectual property clauses, consumer protections issues, warranties, employment connected conflicts; and also governing and choice of forum and dispute resolution remedies.

You can have a free pdf copy of the Spanish chapter by clicking here.

Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through: Distribution & Agency 2015, (published in March 2015; contributing editor: Andre R Jaglom, Tannenbaum Helpern Syracuse & Hirschtritt LLP). For further information please visit www.gettingthedealthrough.com.

The book contains a detailed questionnaire for 29 different jurisdictions and permits to have a first approach to the subject not only in those countries but also to compare the regulations in each of them.

Besides some questions related to the general legal system (forms of business, formation of entities, restrictions to foreign investments, tax system amongst others), these are the main questions concerning the franchise:

• What is the legal definition of a franchise?
• Which laws and government agencies (if any) regulate the offer and sale of franchises?
• What are the exemptions and exclusions from any franchise laws and regulations?
• Does any law or regulation create a requirement that must be met before a franchisor may offer franchises?
• Are there any laws, regulations or government policies that restrict the manner in which a franchisor recruits franchisees or selects its or its franchisees’ suppliers?
• In the case of a sub-franchising structure, who must make pre-sale disclosures to sub-franchisees? If the sub-franchisor must provide disclosure, what (if anything) must be disclosed concerning the franchisor and the contractual or other relationship between the franchisor and the sub-franchisor?
• What is the compliance procedure for making pre-contractual disclosure in your country? How often must the disclosures be updated?
• What information must the disclosure document contain?
• Is there any obligation for continuing disclosure?
• How do the relevant government agencies enforce the disclosure requirements?
• What actions can franchisees take to obtain relief for violations of disclosure requirements? What are the legal remedies for such violations? How are damages calculated? If the franchisee can cancel or rescind the franchise contract, is the franchisee also entitled to reimbursement or damages?
• In the case of sub-franchising, how is liability for disclosure violations shared between franchisor and sub-franchisor? Are individual officers, directors and employees of the franchisor or the sub-franchisor exposed to liability? If so, what liability?
• In addition to any laws or government agencies that specifically regulate offering and selling franchises, what are the general principles of law that affect the offer and sale of franchises? What other regulations or government agencies or industry codes of conduct may affect the offer and sale of franchises?
• Other than franchise-specific rules on what disclosures a franchisor should make to a potential franchisee or a franchisee should make to a sub franchisee regarding predecessors, litigation, trademarks, fees etc, are there any general rules on pre-sale disclosure that might apply to such transactions?
• What actions may franchisees take if a franchisor engages in fraudulent or deceptive practices in connection with the offer and sale of franchises? How does this protection differ from the protection provided under the franchise sales disclosure laws?
• Legal restrictions on the terms of franchise contracts and the relationship between parties in a franchise relationship
• Are there specific laws regulating the ongoing relationship between franchisor and franchisee after the franchise contract comes into effect?
• Do other laws affect the franchise relationship?
• Do other government or trade association policies affect the franchise relationship?
• In what circumstances may a franchisor terminate a franchise relationship? What are the specific legal restrictions on a franchisor’s ability to terminate a franchise relationship?
• In what circumstances may a franchisee terminate a franchise relationship?
• May a franchisor refuse to renew the franchise agreement with a franchisee? If yes, in what circumstances may a franchisor refuse to renew?
• May a franchisor restrict a franchisee’s ability to transfer its franchise or restrict transfers of ownership interests in a franchisee entity?
• Are there laws or regulations affecting the nature, amount or payment of fees?
• Are there restrictions on the amount of interest that can be charged on overdue payments?
• Are there laws or regulations restricting a franchisee’s ability to make payments to a foreign franchisor in the franchisor’s domestic currency?
• Are confidentiality covenants in franchise agreements enforceable?
• Is there a general legal obligation on parties to deal with each other in good faith? If so, how does it affect franchise relationships?
• Does any law treat franchisees as consumers for the purposes of consumer protection or other legislation?
• Must disclosure documents and franchise agreements be in the language of your country?
• What restrictions are there on provisions in franchise contracts?
• Describe the aspects of competition law in your country that are relevant to the typical franchisor. How are they enforced?
• The court system. What types of dispute resolution procedures are available relevant to franchising?
• Principal advantages and disadvantages of arbitration for foreign franchisors considering doing business in your jurisdiction.
• In what respects, if at all, are foreign franchisors treated differently  from domestic franchisors?

Those who were interested in having a free pdf copy of the Spanish chapter are pleased to send an email to info@evenabogados.com.