Franchising in Italy

Regulation of Franchising

The Italian Senate approved the “Rules on the Regulation of Franchising” which require pre-sale disclosure of certain matters to a prospective franchisee at least 30 days prior to the execution of a franchise agreement, and these rules regulate certain rights and duties of the parties involved in a franchise relationship.

The Rules expressly apply to both “unit” and “master” franchise agreements. However, it was not until October, 19, 2005, that clarifying regulations came into effect that apply only if the foreign franchisors, prior to executing the franchise agreement, have not operated in Italy, and then only apply where Italian law governs the franchise agreement.

Italian  Definition of a Franchise

A “franchise agreement” is an “agreement, whatever its name or form, between two legally and financially independent parties, pursuant to which one party grants to the other party, in exchange for consideration, the right to use a series of industrial or intellectual property rights related to trademarks, trade names, shop signs, utility models, industrial designs, copyright, know-how, patents, technical and commercial support and assistance, with the object of having the franchisee join a system consisting of a group of franchisees operating in the territory for the purpose of distributing specific goods and services.”

Required Disclosures

The Rules require that, at least 30 days prior to the execution of a franchise agreement, the franchisor

deliver to a prospective franchisee a complete copy of the franchise agreement, together with any annexes thereto, as well as the following information:

The name and registered capital of the franchisor, and, upon the franchisee’s request, copies of the franchisor’s balance sheets for the prior three years.

The details of the trademarks used in the system, including trademarks licensed from third parties, and documentation proving the actual use of the trademarks.