There are several ways to start a business in Spain. Investors can choose to incorporate a new business, to purchase a company with operations here or to enter into a franchise agreement with another party, whose business model already produced positive financial results. Usually, such contracts are signed with well recognized companies, at a national or international level. Investors interested to sign a franchise agreement are advised to study the requirements of such contracts; our team of Spanish lawyerscan offer assistance for drafting a contract in Spain.
Definition of a franchise agreement in Spain
Although there is no specific legislation regulating the relationships established when signing a franchise agreement, its definition can be found in the Law 7/1996, Article 2, which provides the following understanding:
•the franchise agreement is signed between two parties, the franchisor and the franchisee;
•it involves the transfer of rights to use the products or services and the know-how of the franchisor;
•the franchisee should perform the business activities as prescribed by the franchisor, who should also provide commercial or technical assistance to the newly founded business.
The following video offers a short presentation on the Spanish franchise agreements:
The franchisor is entitled to receive economic compensations from the franchisee, as prescribed in the Retail Commerce Law. At the same time, the franchisee will be entitled to use the intellectual property of the main company.
As a general rule, the franchising contract is not bound to specific laws, and, as such, the parties can set up new regulations applicable in the Spanish legislation;our team of attorneys in Spaincan offer more details on this matter.
Key elements of a franchise contract in Spain
According to the applicable legislation, the franchise contractdoes not have to respect a certain model, but is should be drafted in such a manner that will respect the provisions of the Competition Law. However, there are several elements which are compulsory, as follows:
•the parties agree on the way in which the franchisor will receive his or her remuneration;
•the franchisee must receive the guarantee that the business will have exclusivity over a region;
•the contracts are usually signed for a period of minimum five years.