Code of conduct

 

 

INTRODUCTION

This Code of Ethics must be observed by all Members of the Associazione Italiana del Franchising. Its aim is to oblige Franchisees and Members of Assofranchising to adopt rules of conduct founded on the principles of propriety and professionalism.

Membership as an Assofranchising Franchisor thereby entails liability to these additional rules, which aim to encourage the establishment and performance of a proper Franchising relationship. This Code of Ethics integrates but - where there is a conflict - does not replace the provisions of law and self-regulation which are in force nationally and in Europe, which Members must therefore continue to scrupulously observe.

In the event that a conflict arises between this Code of Ethics and a provision of binding law, it will be Assofranchising’s responsibility to modify the Code of Ethics as a result. In the meantime, Members shall automatically be released from observation of any of its rules which might conflict with such a regulation. This Code of Ethics presupposes Member’s strict observance of the ethical and self-regulatory rules prepared by the European Franchise Federation. The Code of Ethics must be coordinated with the latter to prevent any conflict arising, both in its interpretation and application. This Code of Ethics shall be periodically reviewed and updated, to ensure it is in line with the new regulations which must be adopted, both on the basis of legislation and voluntarily, on an Italian and European level.

Art. 1 – MEMBER'S OBLIGATIONS

Members are obliged to scrupulously observe all Italian law regarding Franchising that is directly or indirectly applicable, in particular: law n. 129 of 6 May 2004 and Ministerial Decree n. 204 of 2 September 2005; the law contained in the Civil Code; the law in force concerning industrial and intellectual property rights, with specific reference to Legislative Decree n. 30 of 10 February 2005 (the so-called Code on industrial property); the law relating to the protection of competition with specific reference to Law n. 287 of 10 October 1990, and Legislative Decree n. 196 of 30 June 2003 (Code concerning personal data protection).
In addition, Members are obliged to scrupulously respect the European regulations regarding Franchising which are directly or indirectly applicable, both on a regulatory and voluntary basis, with particular reference to EU Regulation n°  330/2010, and the European Code of Ethics prepared by the European Franchise Federation. Finally, Members must scrupulously observe all the regulations contained in this Code of Ethics and in the Statute of Assofranchising.

Members’ failure to observe the abovementioned obligations shall be punished in accordance with the provisions contained in Art. 11 below.

Art. 2 – MINIMUM PERIOD OF EXPERIENCE

Before building its own Franchising network, the Franchisor must have successfully tested its own formula on the market for a minimum period of 1 year, with at least one pilot unit where applicable.

Art. 3 – TRADEMARKS

The Franchisor must be the owner of a right for exclusive use of trademarks used in the context of the Franchising network. The registration, or in any event the filing, of such trademarks must occur in accordance with the regulations in force. The limits of the registration or filing of trademarks - or of the licence (including its term and extent) granted to the Franchisor by a third party which has ownership of the trademarks themselves - must be specifically indicated in the Franchising contract. In the absence of registration or filing of the trademarks used, the Franchisor shall be obliged to provide the Franchisee with documentation proving concrete use of the trademarks.

Art. 4 – PROVISIONAL FRANCHISING CONTRACT

The use of a provisional franchising contract must be limited to cases where it is absolutely essential in allowing the Franchisor to properly pursue the development objectives of the franchising system. Such a contract must not however under any circumstances replace or add to the definitive franchising contract, either entirely or in part, and must clearly indicate the timescales and procedures for the set-up of the relationship and subscription to the definitive contract.

Art. 5 – THE FRANCHISOR'S PRELIMINARY DUTIES FOR PROVIDING INFORMATION TO THE FRANCHISEE

The Franchisor must provide the Franchisee with the following documentation, at least 30 days before the signing of the Franchising contract:

  1. a complete copy of the aforesaid Franchising contract, containing all the requirements required by law 129/04 together with all related attachments, with the exception of those which are subject to objectives and specific confidentiality requirements, which must in any case be mentioned in the contract;
  2. at the Franchisee’s request, a copy of financial statements for the last three years, or, in any case, financial statements running from the date that its activity began if this occurred less than three years ago;
  3. a list of the Franchisees operating within the Franchising system, complete with addresses and telephone numbers or other contact details (fax, e-mail, etc.);
  4. a document containing an indication of the change year by year in the number of Franchisees, either in the last three years or from the date its activity began if this occurred less than three years ago;
  5. a document containing a summary description of any judicial proceedings initiated against it which might have been concluded in the last three years and which relate to the Franchising system in question, whether such proceedings were initiated by Franchisees or private third parties or public authorities;
  6. at the Franchisee's request, an assumed profit and loss account based, if possible, on the average experiences of Franchisees in a similar position;
  7. a copy of this Code of Ethics;
  8. a copy of the European Code of Ethics.

 

Art. 6 - FRANCHISING CONTRACT

At the moment that the request for admission to Assofranchising is presented, the Franchisor must deliver a copy of the Franchising contract to Assofranchising, accompanied by the relevant attachments, with the exception of those which are subject to objectives and specific confidentiality requirements, which must in any event be mentioned in all cases. In addition, the Franchisor must deliver to Assofranchising all possible subsequent modified versions of its franchising contract in a timely fashion, so that Assofranchising always has a copy of the contract in use at any given moment. The Franchising contract must be drawn up in writing, in a clear and exhaustive manner, and may lay down the Franchisee’s obligation to adhere to the rules contained in the European Code of Ethics.

Art. 7 – TERM OF THE CONTRACT

The Franchising contract can have a fixed or indeterminate term. The Franchisee must however be guaranteed a minimum term to allow for amortisation of the investment made and this must in any event be no less than three years. This does not prejudice the scenario of early termination of the contract due to non-fulfilment of contractual obligations by one of the parties. Nevertheless, the permanence of the contract can be dependent on the Franchisee’s attainment of minimum annual results, for example in terms of minimum levels of purchases or sales. Such minimum levels must be reasonable and based on previous experiences of the Franchising system, but adapted to the case in question, and must also be the result of assessments agreed between the parties.

Art. 8 - TRAINING AND KNOW-HOW

The type, extent and period of assistance and training provided by the Franchisor to the Franchisee must be clearly indicated in the Franchising contract. This data can be contained in an attachment which may be periodically updated. In addition, the know-how provided by the Franchisor to the Franchisee must be clearly indicated.

 

Art. 9 – EXCLUSIVITY

The franchising contract must indicate the field of possible territorial exclusivity in relation to other franchisees, both with regard to channels and sales units directly managed by the franchisor.

Art. 10 – DISSOLUTION OF THE CONTRACT

The Franchising contract must clearly indicate the possible scenarios for its dissolution.
Any automatic termination of the contract due to non- fulfilment by one of the parties must be limited to non- fulfilment of clauses which are important for the proper set-up and management of the Franchising system. For cases where contractual obligations of minor importance are violated, a formal notice procedure must be set in motion for the party which committed the violation, to provide a way for it to rectify the breach. The contract must in the end, expressly indicate the terms and conditions for possible renewal and possible transfer of the contract, as well as contain specific provisions relating to the obligations of the parties after its transfer, for any reason that may have arisen, in particular regarding transfer of the Franchisee’s use of the Franchisor’s distinctive signs.

Art. 11 – PENALTIES

The Associazione Italiana del Franchising shall monitor the proper and complete observance by its own Members of the regulations contained in this Code of Ethics, as well as regulations which have legal or self-regulatory effect and are applicable in Franchising relationships both within Italy and Europe. In the event of any violation of the abovementioned regulations, Assofranchising may, against Members which are liable, enforce the penalties foreseen by art. 14 of the Association’s Statute, according to the procedure indicated therein. Adequate disclosure of the penalties adopted shall be given to Members.

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