Italy
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Italian - Printable version
Italy : Law on “commercial affiliation” (Franchising)
Approved by the Senate of the Italian Republic on April 21,2004
Note : this translation into English is provided by the
EFF. Other available translations in English have substituted the word "commercial
affiliation" with Franchising.
The EFF has chosen, in this translation, to refer as closely as it can to
the original Italian terms, whilst marking their 'franchising" equivalents
in bold:
- "commercial affiliation" = franchising
- "affiliant"(which does actually exist in English, but which can be understood)=
franchisor,
- "affiliate" = franchisee
Article 1. Definitions
1. A "commercial affiliation" ("franchising")is an agreement, whatever name it may have, between two legally and economically independent parties, whereby one party grants to another one, against consideration, a set of industrial or intellectual property rights, related to trademarks, trade names, shop signs, utility models, industrial designs, copyright, know how, patents, technical and commercial consulting and assistance, under which the "affiliate" (franchisee) joins a system (network) constituted by a number of "affiliates"(franchisees) operating in the territory, for the purpose of distributing specific goods and services.
2. The "commercial affiliation" (franchise) contract can be adopted in any sector of economic activity.
3. In the "commercial affiliation" (franchise)contract:
a)"know-how" means a body of non patented practical information, resulting from the "affiliant"'s (franchisor's) experience and testing, which is secret, substantial and identified;
"secret" means that the know-how, as a body of information or in the specific configuration and assembly of its components, is not generally known or easily accessible;
"substantial" means that the know-how includes information which is indispensable to the "affiliate" (franchisee) for the purpose of use, sale or resale (distribution), management or organization of goods and services identified under the agreement;
"identified" means that the know-how must be described in a sufficiently comprehensive manner to check that it fulfils the criteria of secrecy and substantiality;
b) "entry fee" means a fixed (financial) amount notably related to the economic value and to the potential development of the system which is paid by the "affiliate" (franchisee) at the moment the "commercial affiliation" (franchise) contract is signed;
c) "royalties" means a percentage fee requested by the "affiliant" (franchisor)of the "affiliate" (franchisee) and related to the business turnover of the latter, or consisting of a fixed rate, which can notably be paid by instalments.
d) "affiliant"'s (franchisor's) goods" means goods manufactured by the "affiliant" (franchisor) or according to his instructions and marked with the "affiliant"'s (franchisor's) name.
Article 2. Scope of the law
1. The provisions regarding the "commercial affiliation" (franchise) contract, as defined in Article 1 also apply:
- to the principal "commercial affiliation" (Master Franchise)contract, whereby an undertaking grants to another one, legally and economically independent from the former, against a direct or indirect consideration, the right to operate a "commercial affiliation" (franchise) for the purpose of having "commercial affiliation" (franchise)agreements signed with third parties;
and
- to "corner" "commercial affiliation" (corner franchising), whereby the "affiliate" (franchisee), fits out a space, in an area at its disposal, exclusively dedicated to the commercial activity mentioned in Article 1, paragraph 1.
Article 3. Form and content of the contract
1. The "commercial affiliation" (franchise)contract must be in writing; otherwise it is null and void.
2. To set up a "commercial affiliation" (franchise)network, the "affiliant" (franchisor) must have tested its commercial formula on the market.
3. If the contract is defined for a limited term, the "affiliant" (franchisor) must guarantee the "affiliate" (franchisee) a minimum term to allow the latter to depreciate his investments, and in any case not less than three years, except in the case of earlier termination of the contract due to one of the parties not fulfilling its contractual obligations;
4. The contract must also expressly mention:
a) the amount of investments and other possible entry fees that the "affiliate" (franchisee) shall bear before the beginning of his activity;
b) the manner of calculating and paying the royalties, as well as the possible indication of minimum turnover to be realised by the "affiliate" (franchisee);
c) the scope of possible exclusive territorial rights granted either vis-à-vis other franchisees of the network, or vis-à-vis sales channels and outlets run directly by the "affiliant" (franchisor);
d) the details of the know-how provided by the "affiliant" (franchisor)to the "affiliate" (franchisee);
e) the possible means of acknowledging the contribution of know-how by the "affiliate" (franchisee);
f) the details of the services offered by the "affiliant" (franchisor)in terms of technical and commercial assistance, setting-up and furnishing of the outlet, training;
g) the conditions for the contract's renewal, termination or possible transfer (assignment).
