Franchising In Argentina: Introduction, Definition, Features And Parties' Obligations

Author:Mr Mario Eduardo Castro Sammartino
Profession:Castro Sammartino & Pierini

Content: 1. Introduction to its regulation by the Civil and Commercial Code. 2. Definition and key features of franchise agreements. 3. Legal content: franchisor and franchisee's obligations

  1. Introduction to its regulation by the Civil and Commercial Code

    Argentina enacted 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 The CCCN repealed both the Civil Code and the Commercial Code, as amended, which had ruled Argentine private law for more than one hundred years.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 about 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.

    As for contractual law, the CCCN also has regulated the so-called adhesion contracts (or contracts entered into by adhering to predisposed general clauses also known as standard-form contracts (CCCN, Articles 984 through 989). Franchise agreements may be considered one of these adhesion contracts since for the most part the franchisee may not negotiate nor draft any of the content but to adhere to the general clauses unilaterally drafted by the franchisor. Thus, more stringent provisions will apply to the franchise agreement, as to the clear, complete and legible wording of the clauses, ambiguity of its content, abusive clauses, etc. In this line, clauses referring to documents or information not provided by the franchisor, distorting obligations of the franchisee, extending the rights of the franchisor, or clauses not reasonably predictable, may be deemed unwritten.

  2. Definition and key features of franchise agreements

    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...

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