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As part of the series of posts on the most relevant legal matters affecting the fashion industry, we discussed about wearable technologies and privacy while here is a post from my colleague Stefania Baldazzi on legal issues affecting franchising in Italy being franchising agreements one the most common contractual arrangements used in the fashion sector. In particular, we will review the issues that a foreign franchisor needs to consider before entering into the Italian market.
In order to open a franchising store in Italy it is important to know the rules which are mandatory and would be binding regardless of the governing law of the contract i.e. they would apply even if for instance the agreement is governed by the laws of England and Wales. These mandatory rules are that:
- the contract must have a written form;
- a minimum 3 years term and
- it must regulate the renewal and / or the termination condition.
Also as a general principle, franchisors must comply with the disclosure obligations and, at least 30 days before the execution of the contract, provide information in accordance with the Italian franchising law to the franchisee, together with a copy of the contract itself.
For foreign franchisors who enter into contracts with Italian franchisees, there are additional disclosure obligations aimed at protecting franchisees against inadequate information. For example, the foreign franchisor must indicate for each country the number of franchisees currently operating in the system, the number of direct points of sale and, upon request of the new franchisee, must provide detailed information about 20 incumbent franchisees.
In addition, in order to establish a franchising network, the franchisor must have tested its business concept on the market. As a general principle, such rules should also apply to an Italian subsidiary of a foreign franchisor as well as to a sub-franchisor under a master franchise relationship.
If you want to know more about legal issues pertaining franchising in Italy and explore more deeply how to go about setting up your franchising business in Italy, feel free to contact me, Giulio Coraggio, to discuss. And follow me on Twitter, Google+ and become one of my friends on LinkedIn.
Image courtesy of Flickr by Lloyd Alter
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