Franchising in Lithuania
Background
Lithuania is a country in the Baltic region of Europe with an
area of 65,200 km and population of 3.354,700 (2008 figure). It has
a GDP of US$ 47.3 billion and is a parliamentary democracy.
Lithuania joined the European Union in 2004.
There are many international franchises in the travel and car
hire, clothing retail and food & beverages sectors.
Legislation
There is no specific franchise law but franchise agreements are
governed by the Civil Code of 2001.
There is also a requirement for registration.
Franchise Legislation
There are certain laws which are of particular importance to
franchisors and franchisees:
- there is a pre-contractual disclosure requirement
- franchise contracts have to comply with certain standard
requirements
- franchisees have a right to have the agreement renewed on same
terms on its expiry, if the franchisee has duly performed all
duties under it. There are certain exceptions
- franchisor may be jointly liable with franchisee in relation to
third party claims in relation to quality of products
- one sided or unequal contract terms are difficult to
enforce
- on death of franchisee the rights and duties pass to heirs if
they have entrepreneurial capacity and take over the business
within 6 months of inheritance, otherwise the agreement
terminates
- there is a general duty of good faith
- there is a duty of confidentiality during negotiations
- franchise agreements are subject to Competition
law
Conclusion
In Lithuania it is very important to be aware of the laws
applicable to franchising and its implications to foreign
franchisors especially in terms of liability to franchisees and
third parties and to ensure that the terms of the agreement are
enforceable.
For more information please contact Lisa Sen.