Lya Doria Maeda
Lawyer at Marcos Martins Advogados
Enacted on December 26, Law 13.966/19[1] regulates the business franchise system in Brazil and will come into force on March 26, 2020. The new franchise law consolidates in its text case law from various courts and updates the legal provisions for this contract, which was previously regulated by Law 8.955/94.
Under Law 13.966/19, the object of the franchise agreement has become broader, including intellectual property as a whole, not just trademarks and patents. In addition, the law expressly provides for the absence of an employment relationship and a consumer relationship in the franchise contract, topics that were constantly litigated in the past.
For franchisees, new features of the new law include the extinction of the security deposit fee and the obligation for the franchisor to clearly inform them of periodic fees and other amounts to be paid to them or to third parties, with the basis for calculation and the purpose of the remuneration. It is also mandatory to indicate the situations in which penalties, fines or indemnities are applied and the respective amounts established in the franchise agreement. In addition, the document must state whether or not there are transfer or succession rules and, if so, what they are.
As for territoriality, the Franchise Offering Circular will also indicate rules limiting competition between the franchisor and franchisees, and between franchisees, during the term of the franchise agreement and detailing the territorial scope.
The innovations introduced by Law 13.966/19 provide greater transparency in the relationship between franchisee and franchisor, encouraging business expansion, the creation of new franchises and new job opportunities.
Is this subject of interest to you? The team at Marcos Martins Advogados has extensive experience in setting up and providing legal advice to companies of all sizes, and is qualified to deal with all demands aimed at guaranteeing your company’s maximum performance.
[1] BRAZIL. Law No. 13.966. Provides for the business franchise system and repeals Law No. 8.955, of December 15, 1994 (Franchise Law). Disponível em: http://www.in.gov.br/en/web/dou/-/lei-n-13.966-de-26-de-dezembro-de-2019-235563710. Accessed on: Feb. 20, 2020.
