International Franchise Lawyers Association e.V.
 
 
Franchising in Italy
 
For further details please contact:

DE LEO, Marco

 

Studio Legale Rinaldi e Associati

Via Conservatorio, 15
20122 Milan
Italy
Phone +39 02-76008860
Fax +39 02-76006944
mdeleo@rinaldilawf.com

www.rinaldilawf.com

 

Franchising in Italy is mainly regulated by Law 129/2004.

Main provisions of Law 129/2004

Definition

'Franchising' is defined as a contract through which one party (the franchisor) grants to the other (the franchisee), against compensation, the use of a combination of intellectual property and/or industrial rights, know-how and technical and commercial assistance, as well as the opportunity to be part of a franchising network.

Execution and Duration of Contract

The franchising contract must be executed in writing; otherwise it is considered null and void.

Before organizing a franchising network, the franchisor must first test its commercial prospects.

The duration of a franchising contract, where a certain period is specified, must be at least three years, so as to give the franchisee sufficient time to recoup his investment.

Content of Contract

The written contract must specify:

  • the exact amount of the franchising fee and the start-up investment required of the franchisee;
  • the method for paying royalties and the minimum turnover which the franchisee must guarantee, if any;
  • the exact location of the franchisee's exclusive territory, if any;
  • a description of the know-how to be provided;
  • a description of the services to be provided by the franchisor (eg, technical and commercial assistance, planning and training); and
  • the contractual conditions relevant to renewal, termination and assignment of the contract

Franchisor's Obligations

At least 30 days before the date of execution of the franchising contract, the franchisor must deliver to the franchisee a final draft of the contract, together with annexes detailing the following information:

  • corporate information relating to the franchisor and, if requested by the franchisee, a copy of the balance sheets for the three previous financial years;
  • the franchisor's trademarks, including data relevant to registration and/or license;
  • a description of the characteristic elements of the franchisor's commercial system;
  • a list of all members of the franchisor's network, together with a list of the franchisor's direct points of sale;
  • an indication of any fluctuations year by year in the number of franchisees and relevant locations in the previous three years; and
  • a description of any judicial lawsuits or arbitration proceedings filed against the franchisor with respect to its franchising system and finalized in the previous three years.

All of this information must then be included in the executed contract.

Franchisee's Obligations

The franchisee (i) cannot transfer its seat without the prior written consent of the franchisor, and (ii) must keep confidential, and ensure that all its personnel keep confidential, all information regarding the franchising relationship.

Negotiations

During negotiations, both franchisor and franchisee must act fairly and in good faith, giving the other party all necessary and true information.

If one party provides false information, the other party may claim for termination of the contract and compensation for damages.

Conciliation

In the case of disputes, before filing suit or commencing arbitration the parties may agree to seek conciliation in accordance with the rules of the local chamber of commerce.