Franchise agreement in Argentina

The franchise agreement in Argentina has recently undergone major changes. Argentina approved a new Civil and Commercial Code by Law Number 26,994, (Código Civil y Comercial de la Nación or CCCN), effective as from 1 August 2015. The CCCN abrogates both the Civil Code and the Commercial Code, as amended, which have ruled Argentine private law for more than one hundred years.

Under the abrogated Codes, franchise agreements were not statutorily regulated. Therefore, all franchise businesses operating in Argentina were governed by the stipulations agreed upon by the parties in their particular agreements and by case law.

The new CCCN covers franchise agreements in Articles 1,512 through 1,524. As a general principle, the CCCN in its Article 962 sets forth that legal norms relative to contracts only apply in the absence of parties´ stipulations, unless their imperative nature results from their way of expression, content or context. Should disagreement about the nature of a provision arise out of a contract, a judge will be who ultimately interprets the norm and settle the dispute.

The CCCN, in its Article 1,512, defines commercial franchise (franquicia comercial) as follows: “There is commercial franchise when a party, named franchisor, grants to the other, named franchisee, the right to use a proven system, aimed to commercialize certain goods or services under the commercial name, commercial symbol, or trademark of the franchisor, who provides a set of technical knowledge and continuous technical or commercial assistance, on a direct or indirect consideration by the franchisee. The franchisor must be the exclusive owner of the set of intellectual rights, trademarks, patents, commercial names, copyrights and others included in the system under franchise, or have the right to use and transmit those rights to the franchisee in the terms of the contract. The franchisor cannot have direct or indirect controlling equity interest in the business of the franchisee”.

In case you want to know more about franchise agreement in Argentina, please, contact us and let us know to furnish you with a specially prepared article for foreign franchisors with interests in Argentina.

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