Modernization Of The Franchising Legal Framework Is Approved By The Senate Committee

Intellectual Property / Government Relations

The Economic Affairs Committee of the Federal Senate (CAE/SF) approved last week the opinion presented by Senator Kátia Abreu (PDT-TO) to the Bill of Law (PLC) No. 219/2015 (Project), authored by the former Deputy Alberto Mourão (PSDB-SP), which updates the legal framework of the franchising system in Brazil.

The Project, which revokes the current Franchise Law (Law No. 8,955/1994), corrects the terminology of the current law to avoid the possibility of framing this type of agreement as a consumer or employment relationship, especially in cases regarding the training and evaluation period.

Additionality, the Project adopts a clearer terminology to enforce the franchisor's obligation to provide the franchisee with a Franchise Offering Circular (COF) at least 10 days prior to signing the agreement or paying of the franchising fees by the franchisee. The text continues to privilege contractual freedom, provided that the contractors' options are previously stipulated in the COF. Among other aspects, information regarding transfer rights, possibility of refusing products, minimum quotas for acquisition and the territorial scope for the exclusive use of the franchisee are some of items that must be included in the COF.

The Project has also brought specific sections that represent advances in terms of intellectual property rights, once this topic is expressly addressed in the Project. The Project, for example, adopts the terminology “trademarks and other intellectual property rights” rather than providing only the right to use “trademark or patent”, expressly expanding the scope of industrial property rights that can be licensed by the franchisor to the franchisee.

For international franchises, the text of the Project provides...