Franchising in Spain
Economy
Spain has the world’s 8th largest economy with a GDP of €1.1
trillion.
Legislation
Article 62 of the Spanish Law on Retail Commerce Planning 7/1996
of 15 January 1996 together with Royal Decree 2485/1998 of 13
November 1998 as amended by Royal Decree 419/2006 of 7 April 2006
govern franchising in Spain and provide for pre-contractual
disclosure and registration of franchisors in the Franchisors
Registry.
Franchise Market
Franchising has become an important part of the Spanish during
the recent decade. In 2005 about 200,000 employees were employed in
franchise businesses.
Currently there are about different 900 franchise brands
operating on the market of which 80% are Spanish brands, followed
closely by French and Italian brands.
Franchising enjoys increasing popularity in the gastronomy and
food industry sector or clothes retailing. Another market with good
growth potential is the pharmaceutical sector.
Franchise Legislation
Spain is a civil law country and has franchise specific
legislation.
- a franchisor or master franchisee must provide prospective
franchisees with a disclosure document at least 20
days before the execution of the agreement or the payment of any
amount of money. There is a list of specific items which require
disclosure
- a franchisor or master franchisee must
register with the Franchisor Registry before offering
franchises in Spain. The information must be updated by the
registrants
- franchise agreements are considered standard terms of business
of the franchisor to which the Spanish Unfair Contract
Terms Act applies
- Spanish agency law may be applicable to
franchise agreements. This means that franchisees may be able to
claim compensation upon termination of the franchise agreement
calculated by reference to the value of its customer base, although
the case law on this point is not unequivocal.
Conclusion
Franchising in Spain is heavily regulated and it is essential
that franchisors take detailed legal advice before entering the
Spanish market to ensure that they comply with the disclosure and
registration requirements.
For more information please contact Graeme Payne.