Franchising in Poland
Economy
Poland has the world’s 18th largest economy with a GDP of EUR
525.7 billion according to 2008 data of the Int’l Monetary
Fund.
Legislation
There is no specific franchise law in Poland. There are no
disclosure obligations and no franchise-related registration
requirement.
Franchise Market
Franchising is a strong and growing part of the Poland
economy. There are more than 300 franchise systems active in
Poland comprising a total of 12,500 units.
Among Poland’s top 20 franchisors are both leading international
brands such as Carretour and Tesco and domestic brands such as
Groszek.
Franchise Legislation
- There is no franchise disclosure law but under
general principles of civil law the franchisor has a
pre-contractual du to disclose key facts.
- There is no franchise registration.
- Under Polish law, Art. 56 KC imposes a duty of good faith and
provides that; “an action produces not only those effects expressly
intended by it, but also those arising from law, principles of
community life and accepted customs”. Thus the parties to the
franchise agreement are bound by not only the express contractual
terms but also those implied by law. These obligations can be
collateral, adaptive or restrictive. An example of the
franchisor’s collateral obligations is the requirement to provide
the franchisee appropriate assistance both at the beginning of the
relationship, in form of both initial and ongoing training. This
obligation arises from the need to enable the franchisee to
effectively exercise rights granted it in the franchise agreement
(in particular the intellectual and/or industrial property rights).
Without the franchisor’s appropriate advice and guidance the
franchisee would not be able to put the contractual provisions into
effect. Revealing or taking advantage of the Franchisor’s
trade secrets or obtaining them from an unauthorised person, if it
may harm or endanger the entrepreneur’s interest, is deemed to be
an act of unfair competition. Breach of this duty of
confidentiality entitles the franchisor “to end the infringement
and to prohibit further violation; to eliminate the consequences of
the infringement by requiring the infringer to make an appropriate
public declaration or declarations; pay damages according to
general compensation rules and account for any profits made
according to general unjustified enrichment rules.” Breach can lead
to imposition of a fine or a custodial sentence of up to two years
imprisonment. Damages are limited to the actual loss directly
resulting from the unsuccessful continued negotiations. The Polish
Act Against Unfair Competition may also apply.
- A number of jurisdictions impose a duty of confidentiality
on the franchisees, regarding information disclosed to them by the
franchisor. The Polish Code imposes a similar obligation.
Conclusion
A careful review of legal documentation is essential before
franchises are sold in Poland. 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 David Bond.