Franchising in Malta
Economy
The strengths of the economy of Malta are its limestone, a
favourable geographic location, and a productive labour force. The
economy is dependent on foreign trade, manufacturing (especially
electronics), tourism and financial services. In 2003, over 1.2
million tourists visited the island. Per capita GDP of $23,200
places Malta just above the middle of the list of European Union
(EU) countries in terms of affluence. The island joined the EU in
2004 despite having been divided politically over the question
earlier. A sizeable budget deficit was a key concern, but recent
initiatives by the government have changed the situation
dramatically enough for the country to be admitted into the
eurozone as of 1 January 2008.
Legislation
There is no specific franchise law in Malta. General civil and
commercial law apply to the franchise relationship.
Franchise Market
Several franchises have been established in Malta, predominantly
in the F&B, fashion retail and cleaning services trades. Most
franchises are cross-border deals involving a foreign-owned
franchisor and local entrepreneur. However, the home-grown
franchise industry is expected to increase also as Malta’s economy
continues to develop.
Franchise Legislation
Malta is a civil law country.
- there is no franchise disclosure law in Malta.
The principle of good faith is an important underlying principle of
Maltese contract law and the courts have held that a contract is
not valid if the consent of one of the contracting parties is
procured by fraud or misrepresentation
- there is no franchise registration
- Maltese law does not stipulate an automatic right of renewal,
but where there is uncertainty in the contract, a franchisor might
be obliged to renew under the good faith obligation in light of the
investment made if the franchisee has not been able to recoupe its
original investment during the initial contractual term
Conclusion
A careful review of legal documentation is essential before
franchises are sold in Malta. 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.