The franchise agreement enhances the franchisor’s distribution of products and provision of services and enables the franchisor to create a uniform commercial distribution network.
The Franchise is a contract between two independent parties, the franchiser and the franchisee, through which the former passes on the right or license to use his enterprise brand for a certain amount of time and in a certain place, against the payment of a certain amount of money or cannon.
The Spanish Ministry of Industry and Competitiveness has suspended the Franchisor Registraty in Spain and thus, the obligation for all franchisors to register. This Registry was used as an information mechanism to keep track of the existence of franchises and their development in Spain.
In Spain, franchise law is regulated by Real Decree 201/2010, of February 26, which regulates the exercise of franchise commercial activity and the communication of information to the franchise registry – and by article 62 of the law on Retail Trade 7/1996.
The Master Franchise agreement is an exclusivity contract of a British/American franchise abroad. Structured by a double legal relationship between the headquarters, the master franchisee and the local franchisee, the contract allows the extension of a business model and the spirit of a British/American franchise abroad legally and economically.
Direct franchising permits British/American Franchisors to develop business models in Spain quickly and simply. As it offers the opportunity to freely choose commercial partners and the establishment areas of a business model, having recourse to a direct franchise agreement is a real token of quality and control when it comes to exporting a franchise business model to Spain.
The exportation strategy of a franchise to Spain is mostly based on a combination of three economical and legal factors: to lean on an innovative and profitable model, the roll out of a stable but flexible structure and the adaptation of the model to the specific needs of the targeted market by a good understanding of that market.
The franchise contract in Spain has no specific regulations, although there are some pre-contractual duties that the franchiser must fulfil in order to give greater protection to the franchisee, which is always considered the weaker party.
The franchisor must consider the fundamental aspects of the business and what he wants to transmit to the franchisee in order for its project to function. In addition, the franchisor must have previously developed and have good knowledge of both the business model and the corporate image.
In Spain, the signature between the parties to a franchise contract is not governed by any specific law and must be performed at the end of the contracting period. It is therefore advisable to consult an expert lawyer in the franchising field before signing any document.