Franchising in Austria
Economy
Austria has a well-developed economy with a GDP of approximately
EUR 271 billion. Albeit being a small country, Austria’s per capita
GDP is respectable with EUR30,800 making Aus-tria one of the 25
richest countries in the world and the 4th richest country in
Europe.
Legislation
There is no specific franchise law in Austria. However,
franchisees do enjoy a relatively high degree of protection.
Franchise Market
Franchising is a strong and growing part of Austria’s
service-sector dominated economy. There are about 400 franchise
systems active with a total sales volume of EUR 4.5 billion.
Among Austria’s top 20 franchisors are both leading
international brands such as McDonald’s and Esprit as well as
domestic brands such as Palmers (textiles and clothing) and Hagebau
(DIY stores). As much as 12 of the top 20 franchise brands are
domestic.
Franchising in Austria is boosted by the availability of
government funded start-up finance to small businesses.
Franchise Legislation
Austria is a civil law country. It has a large number of
statutes that are applicable to franchising.
- There is no franchise disclosure law in
Austria, neither statutory or case law, but gen-eral principles of
civil law apply and Austrian courts also occasionally refer to
German case law according to which the franchisor has a
pre-contractual duty to disclose key facts regarding the
profitability.
- Since 1 January 2006 franchise agreement do not have to be
notified anymore for anti-trust reasons. There is no
registration requirement.
- Under certain circumstances a cooling off
period may be applicable to franchise agreements and
cooling off notice may have to be given by franchisors to
franchisees.
- Franchise agreements are considered to be standard terms of
business of the franchi-sor. This means that the courts have the
power to strike out unreasonable contract clauses.
- Austria has agency laws that apply to
franchising. Under these agency laws franchi-sees can claim
compensation upon termination of the franchise calculated by
reference to the value of their customer base.
Conclusion
A careful review of legal documentation is essential before
franchises are sold in Austria. 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 Babette
Marzheuser-Wood.