Franchising in Greece
Economy
Prior to the global financial crisis of 2008–2009, Greece had
managed to achieve a fast-growing economy after the implementation
of stabilization policies in recent years. It remains a net
importer of industrial and capital goods, foodstuffs, and
petroleum. Leading exports are manufactured goods, food and
beverages, petroleum products, cement, chemicals and
pharmaceuticals. The people of Greece enjoy a high standard of
living, reflected by the country's high Human Development Index
(the world's 18th highest) and Quality-of-Life Index.
Legislation
Although there is no franchise specific law in Greece, as long
ago as 1991 the Ministry of Trade announced that it was in the
process of examining the concept of franchising and intended to
produce some legislative provisions. This was partly due to a run
of cases where franchisees suffered severe damages as a result of
“fraudulent” behaviour of some franchisors at the pre-contractual
stage. A draft franchise disclosure law is still being
contemplated, but whether and when it will be implemented is still
unknown.
Franchise Market
As at December 2008, there were more than 700 franchisors
working in Greece with more than 850 valued openings each year.
Most of the brands have their base in the Greek capital of
Athens.
The Greek Franchise Association (GFA) was founded in 1996 and
has about 50 members.
Franchise Legislation
Greece is a civil law country.
- There is no franchise disclosure law in Greece
but there is the ‘obligation of faith’ contained in the Greek Civil
Code which sets out that a franchisor is bound to act in accordance
with the requirements of good faith and business ethics.
- There is no set form required for a franchise
agreement. The parties are free to conclude the
contract in any form they wish. The agreement does not have to be
in Greek language. However, all franchisees located in Greece are
under the obligation to lodge a copy of the contract with the local
tax office and so a Greek translation is normally required. In
addition, some franchise agreements, especially when they involve
elements of technology transfer and clauses relating to transfer of
know-how, need to be registered with the relevant government
authorities.
- There is a notification requirement for the
purposes of Greek Anti-Trust Law. Businesses whose agreements fall
under the scope of the Greek Anti-Trust Law are under an obligation
to notify the Hellenic Competition Commission within thirty (30)
days after entering into a franchise agreement.
- Greece has agency laws that apply to
franchising. The franchisor has a general obligation to assist the
franchisee in the exercise of its activities. This obligation
derives from the nature of the franchise agreement combined with
the principles of good faith and commercial practice. A corollary
to that is that the franchisor must provide support throughout the
term of the contract as well as supply him with documents,
brochures and other information in order to assist him in promoting
the franchise system.
Conclusion
A careful review of legal documentation is essential before
franchises are sold in Greece. In addition to compliance with
mandatory laws a good understanding of local business practice is
key to local success. An appropriately customised disclosure
document would also be appropriate.
For more information please contact Gordon Drakes.