The Franchising Contract in Brazil

The franchising agreement, also known as the “franquia” agreement, is notably widespread on the Brazilian market.

Preliminarily, it should be noted that in Brazil the franchising agreement is expressly governed by law no. 8955/94. It follows that the entrepreneur who decides to invest in Brazil through the franchising agreement, has the certainty of being protected by express provisions of the law. According to the aforementioned law, the franchising contract is defined as the instrument by which "the franchisee grants the franchisor the right to use its own brand or logo for commercial purposes, associated with the right of exclusive or semi-exclusive distribution of products and services, and, possibly, also the right to use the technology of the plant and the administration of the shop or operational system created or owned by the franchisor, in exchange for direct or indirect remuneration, without the characterization of employee constraints ".

As a rule, as is the case in most countries of the world, before the conclusion of the franchising agreement, the franchisor must necessarily submit a pre-contractual proposal to the franchisee, containing all the information necessary for the latter to have full awareness of the commercial formula used. in the past and currently promoted by the franchisor. In this sense, the franchisor must make the following information available to the franchisee, among others:

• lthe history and legal form of the company;
• their financial statements;
• the possible existence of pending judicial cases related to existing franchise contracts;
• a complete description of the business that the franchisor intends to carry out etc...

In drafting the franchising agreement, it is advisable to specify the amount of royalties, the delimitation of the territory in which the franchisor may operate, as well as the causes for termination of the contract. It is also advisable for the entrepreneur to register the franchising agreement with Instituto Nacional da Propriedade Industrial (INPI), thus being able to guarantee greater protection, even with respect to third parties.

Furthermore, it should be emphasized that, to invest through the franchise tool, a minimum investment of US $ 50.00 is required, legally reported at the Central Bank of Brazil (BACEN).