On one side is the franchisor and their challenges in expanding their business without losing its essence and quality. On the other is the franchisee, with their hopes for the future and their desire to pursue a secure business. For years, we’ve witnessed many issues related to franchising, most of which stem from a lack of transparency and misaligned expectations between the parties. Regardless of whether or not a new law is necessary, I welcome the “new franchising framework,” enacted by Law 13.966/19.
In practice, the franchise market can benefit from the new developments brought by the new Law, with the changes related to the franchise offering circular being those that can most help the parties, especially regarding the services offered by the franchisor, the incorporation of technological innovation and the rules of territorial competition between owned and franchised units.
The new law contains more details, likely addressing the various problems arising from gaps in the previous law. The provisions for transfer and succession rules, as well as the description of penalties and fines, the existence of minimum purchase quotas, and the conditions for refusing products and services offered by the franchisor needed more attention and were duly clarified in the new text.
A major change is the elimination of the security deposit fee, leaving only the initial membership fee, also known as the franchise fee. The criteria for subletting the commercial space to the franchisee have also been clearly specified, resolving long-standing disputes.
Another topic that will still generate considerable discussion is the distinction that the law makes between national and international contracts, allowing the choice of forum for legal disputes or even the use of arbitration.
The new law’s changes are interesting and useful. It remains to carefully analyze each situation vis-à-vis the new rules to ensure the correct interpretation applicable to each case.
