Franchising in Portugal
Economy
Portugal is one of the smaller economies (currently the 37th)
and has a GDP of €166.2 billion (2008).
Legislation
There is no franchise specific franchise law in Portugal.
However, franchisees do enjoy a relatively high level of
protection.
Franchise Market
Portugal is an expanding market for franchisors and very often
Portugal serves as a stepping stone for entering the Brazilian
market.
Although the number of international franchise brands is still
relatively small more foreign franchisors are entering the
market.
The majority of franchise businesses operate in the service
sectors and provide services in the areas of wellness, health care
and real estate, but also retail franchises prove popular, in
particular for children’s clothing, books, and natural
products.
Franchise Legislation
Portugal is a civil law country. It has a large number of
statutes which are applicable to franchising.
- There is no franchise disclosure law in
Portugal, but franchisors are required to disclose material facts
to the franchisee under general principles of contract law.
However, there is no set list of items which have to be
disclosed.
- There is no franchise registration.
- Franchise agreements are considered standard terms of business
of the franchisor to which the Portuguese Unfair Contract Terms Act
applies. The Portuguese Unfair Contract Terms Act
will apply to a franchise agreement irrespective of the governing
law chosen by the parties if the agreement is more closely
connected with Portugal than any other country. There are several
black listed clauses which are invalid.
- Portuguese agency law applies to franchising,
irrespective of the governing law chosen by the parties if the
contract is exclusively or predominantly performed in Portugal.
Under the agency laws a franchisee can claim compensation upon
termination for loss of goodwill.
Conclusion
A careful review of legal documentation is essential before
franchises are sold in Portugal. In addition to compliance with
mandatory laws, a good understanding of the local market and
business practice is essential.
For more information please contact Graeme Payne.