Last March 2018, the Spanish Ministry of Industry and Competitiveness announced the suspension of the Franchise Registry, and thus the inherent obligations applicable to all franchisors.
The Registry of Franchisors is a public administrative body that had been operating in Spain as the main mechanism for information on the status of franchises. In the administrative field, it depended on the General Directorate of Commercial Policy of the Ministry of Industry, Tourism and Commerce.
The obligation to register in the Franchisor Registry was extended to all franchisors, both individuals (autonomous) and legal entities (companies, common properties). It was applicable both to Spanish and foreign entities, provided that they developed an activity in Spain which consisted of a franchise assignment.
However, the registration requirement in the Registry no longer applies to franchisors, since the Secretary of State for Commerce suspended its activity in March 2018. In its communication, the Ministry admits to there being technical problems that prevent the proper functioning and full provision of its services.
Because of this suspension of registration, it is not currently possible to register or enter updates in the Franchise Register in Spain.
Hence, no company can be subject to sanctions for this reason. It thus follows that paragraph 3 of Article 5 of the Royal Decree, which establishes that the lack of data communication after the period of 3 months will lead to a corresponding sanction, is no longer applicable. No company can be sanctioned in accordance with the sanctioning system provided for in Law 7/1996, of January 15, on Retail Trade Regulation.
We are currently in a transition period of indefinite duration to:
- Carry out the necessary procedures for the legal rectification of the Royal Decree with the purpose of annulling the Registry in its current form
- Study alternative measures to maintain an alternative informational system.
Consequences of the suspension of the Franchisor Registry
The main consequences of the suspension of the Franchisor Registry are:
- Release of an obligation to the franchisor, which arose from the need to have substantial information reported to the Spanish franchise system
- Companies that want to open franchises in Spain are no longer obligated to work with the registry
- Already registered companies in the Franchisor Registry are from now on exempted from updating franchise information.
This article is not considered as legal advice