Franchising in Argentina clauses on term, exclusivity an others
The term of the contract
The Civil and Commercial Code of Argentina (Código Civil y Comercial de la Nación or CCCN) imperatively determines as a general principle that the minimum term of the franchise agreement must be four years. Provided that the parties agree upon a shorter term or no term at all, the contract is deemed to have been entered into for four years. Notwithstanding this legally mandatory minimum term, a shorter term may be agreed upon under special circumstances, such as trade fairs, conferences, activities developed within premises or ventures with a foreseen shorter duration, or the like (Article 1,516).
When it comes to development franchises and as an exception to the general principle, the minimum term must be five years (Article 1,513, Sub -Article b)).
According to Article 1,517 of the CCCN, franchises are exclusive for both parties, unless the parties stipulate otherwise limiting or excluding exclusivity. Provided that exclusivity not be limited or excluded by contractual provisions, the CCCN establishes that the franchisor cannot authorize another franchisee in the same territory, except with the consent of the existing franchisee.1
Additionally, the franchisor may not directly commercialize to third parties goods or services under the franchise within the franchisee's territory or area of influence (Article 1,518, Sub-Article b).
Accordingly, the franchisee must perform the franchised activities at the premises specified within the territory granted or, otherwise, in the area of influence. Further, the franchisee cannot operate - directly or indirectly- franchise units or activities that may be construed competitive.
Under Article 1,518, unless otherwise agreed by the parties, the following provisions will apply to franchise agreements:
Unless otherwise agreed upon, the franchisee may not assign its contractual position or the rights emerging from the contract while the agreement is in force, except for pecuniary obligations. This provision does not apply for wholesale or master franchises, where the franchisee may grant sub-franchises (article 1,518, sub-article a)).
The right to the clientele corresponds to the franchisor. The franchisee cannot move the location of its attention or manufacturing premises (Article 1,518, Sub-article c).
The franchise contract is by definition...