Franchising in Italy
Economy
Italy has the world’s seventh largest economy with a GDP of USD
2,313.8 billion.
Legislation
The law on “commercial affiliation” (franchising) provides for
pre-contractual disclosure in a set form and requires franchised
concepts to have been trialled by the franchisor prior to entering
into franchise contracts.
Franchise Market
Franchising is a strong and growing part of the Italian
economy. There are more than 700 franchise systems active in
Italy comprising a total of approximately 60,000 units.
Among Italy's top franchisors are both leading international
brands such as McDonalds and domestic brands such as Benetton.
Franchise Legislation
Italy is a civil law country. The Italian law regulating
franchising “Law No.129” came into force on 25 May 2004. In summary
it requires that:
- the franchisor has previously tested its own business formula
on the market
- the franchise contract is for a term not less than three years,
except for early termination in case of breach of the contract
- the franchise contract incorporates certain specified
clauses
- at least thirty days before the date of execution of the
franchise contract, the franchisor delivers to the franchisee a
definitive draft of the contract together with disclosure of
information relating to:
- the franchisor
- trademarks
- the characteristics of the franchise
- any existing franchisees and other points of distribution
- any change in the number of franchisees
- any legal proceedings against franchisees
Both parties to the franchise contract own a duty of loyalty,
fairness and good faith to each other during the ongoing franchise
relationship. If one party provides false information to the other,
the law expressly states that the latter may claim for termination
of the contract and compensation for damages.
Conclusion
Italy is an attractive market for franchisors and its franchise
legislation is relatively benign.
For more information please contact Mark Abell.