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With effect from 19
October 2005, foreign franchisors which have not
operated in Italy before must comply with the
following disclosure obligations.
At least
30 days before the franchise agreement is
executed, the franchisor must provide the
franchisee with the following
documents:
- A copy of the
franchise agreement
- A list of all
existing franchisees
- A list of all
corporate outlets of the franchisor
- Upon request, a list
setting out contact detail and location details
for 20 existing franchisees
- An overview of
changes in the franchise network (new
franchisees joining, old franchisees leaving)
for the last 3 years on a country by country
basis
- A summary of Court
proceedings commenced against the franchisor
with respect to its franchise system covering
the last 3 years. Franchisors are only required
to disclose proceedings which have been
concluded. The same applies to arbitration
proceedings.
- If the franchisee
requests this, the franchisor must provide
disclosure in the Italian
language
This new ordinance is
not good news for large franchise systems entering
Italy as they have to provide U.S. style detailed
disclosure. Some franchisors have several thousand
franchisees and it appears that they will have to
list all of them.
However, we understand
the new law only applies where Italian law governs
the franchise agreement. One possible solution
which will enable franchisors to avoid the
additional and more onerous obligations set out
above therefore appears to be to make the
franchise agreement subject to another law, for
example English law.
If you would like any
further information please contact Mark Abell or
Babette
Märzheuser-Wood
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