|International Franchise Lawyers Association e.V. (IFLA)|
|Franchising in Malta|
|For further details please contact:||
Dr. Gabarretta, Adrian
Prof. J.M. Ganado & Associates
171, Old Bakery Street
Valletta VLT 09
Phone +356-21-235 406/7/8
Fax +356-21-225 908
Several franchise operations have been established in Malta, especially, though not exclusively, in the food and catering, fashion clothing and professional cleaning trades. At the current stage of the country’s economic development, most franchises contracted in Malta are international or cross-border franchise arrangements entered into between foreign franchisors and local entrepreneurs as franchisees. However, in recent years, some local businesses have developed on a purely autochthonous level into proper franchise networks. While they are currently only a few in number, it is likely that the opportunities for foreign and local brand names operating on a franchise formula within Malta are bound to increase especially on account of Malta’s accession to full membership of the EU on the 1st May, 2004.
In common with several typically civil law systems, our law does not specifically regulate franchises or franchise agreements. No mandatory elements are prescribed by law concerning the form and content of a franchise agreement, while there is neither any requirement at law for the registration of a franchise agreement nor any provision permitting such registration. Franchise agreements are essentially innominate and hybrid or ‘sui generis’ contracts which do not fall squarely within the parameters of any of the institutes of law under the Civil Code, Chapter 16 of the Laws of Malta (the “Civil Code”). However, the general principles of civil and commercial law apply. In fact, franchise agreements ordinarily contain various elements of our civil law and other statute law, and thus existing laws regulating intellectual property, especially insofar as concerns trademarks, patents and licensing, agency, competition, lease, and taxation become relevant.
It might be added that our Civil Code (contrary to the legislation of some countries) draws no specific distinction between ‘contracts of adhesion’ - in which the essential stipulations are imposed or drawn up by one of the parties, on his behalf or on his instructions, and are not negotiable - and ‘contracts by mutual agreement’. As, in practice, most franchise agreements are invariably contracts of adhesion, this means that no special protection is conferred by our law to an ‘adhering’ party (the franchisee) in the context of a franchise agreement. The Civil Code does recognise that contracts may be either (i) “unilateral”, when one party binds itself to the other without any obligation on the part of the latter; or (ii) “commutative”, when one party binds himself to give or do a thing which is considered to be the equivalent of that which is given to or done for him by the other party. However, the principle ‘pacta sunt servanda’ is pre-eminent under our law. Having said this, the Civil Code provision that contracts must be carried out in good faith militates to some extent against the ‘unilateral’ characteristics typical of contracts of adhesion.
Disclaimer: While every effort has been made to ensure the accuracy of the information contained herein, the above is not intended to impart advice but only to provide relevant information; readers are advised to seek confirmation of statements made herein before acting upon them; specialist advice should always be sought on specific issues.