Statute of Assofranchising

 

Art. 1 – INCORPORATION

1.1.  An Association with headquarters in Milan, Via Melchiorre Gioia no. 70, is hereby incorporated under the name of "Associazione Italiana del Franchising – Confcommercio-Imprese per l'Italia" or in short form "Assofranchising Italiana" or "Assofranchising" or under the acronym "AIF".

1.2.  "Assofranchising" is a member of the "Confederazione Generale Italiana delle Imprese, delle Attività Professionali e del Lavoro Autonomo" ("Italian General Confederation of Enterprises, Professional Activities and Self Employment") and uses its logo, accepts the principles of its By-Laws and Code of Ethics, and complies with the Regulations, as well as the resolutions of the Confederal bodies, representing the Confederation in its specific category.

1.3.  "Assofranchising" is the confederal level of organisation and representation of interests for its specific categories as recognised by "Confcommercio-Imprese per l'Italia" and constitutes the national joint representation system of franchising companies which recognise the values of the market and competition, corporate responsibility of the business activity and of the service rendered to citizens, consumers and users according to the provisions of article 13 of the Confederal by-laws.

Art. 2 - MEMBERSHIP AND CLASSIFICATION OF MEMBERS

2.1.  Membership to the "Italian Association of Franchising - Confcommercio-Imprese per l'Italia" or in abbreviated form "Assofranchising Italiana" or "Assofranchising" or acronym "AIF", confers the rightful relationship of association and implies acceptance of these Bylaws, the Regulations and the resolutions of the association bodies with explicit reference to the Confederal Ethics Committee as well as the By-Laws, the Code of Ethics and the resolutions of the Confederal Bodies regarding "Assofranchising" and its members.

2.2.  Members who do not perform regular payment of the membership fees referred to in the following paragraph may not exercise their respective membership rights.

2.3.  In compliance with the provisions of the above paragraph, membership to "Assofranchising" or to any association body incorporated within it, or in any case adhering to it, involves classification of the member at the category, sector and geographical level corresponding to their economic activity, as well as in the other organisational structures acknowledged by these By-laws and by the Confederal by-laws. The complete geographical, sector and category classification of the "Assofranchising" Members is an essential factor of organisational unity and trade union protection.

Art. 3 – DURATION

The duration of the Association is unlimited.

Art. 4 – PURPOSES

The Association, which is not-for-profit, aims at:

a)  representing the general interests of franchising in Italy and abroad;

b)  representing, defending and promoting, in Italy and abroad, the economic, social and professional interests of its Franchisor members, that is, those who, in the context of their business activity, grant, through a special contract, to the Franchisee the use of their business formula, including the right to exploit their know-how (the set of "significant and useful" techniques and know-how and their distinguishing marks) together with other services and forms of assistance aimed at allowing the Franchisee to manage their business with the same image as the Franchisor company;

c)  promoting appropriate initiatives for the defence and affirmation of the common interests of its members towards any administration, body, association, public or private organisation;

d)  promoting the study of economic, legal, fiscal and commercial issues of general interest to its Franchisor members as well as those of specific interest, determining the criteria and guidelines to be followed for their resolution;

e)  carrying out information activities among members as well as in the economic circles on the development of franchising in Italy and in the world;

f)  promoting appropriate initiatives with public and private bodies to qualify franchising and therefore include it in events of an official nature related to home and foreign trade (fairs, trade shows, etc.);

g)  promoting an exchange of information, both nationally and internationally, with similar bodies in order to carry out joint initiatives;

h)  disseminating and enforcing compliance by the members of the “Assofranchising” Code of Ethics;

i)  developing assistance to its Franchisor members by analysing topics of common interest through the promotion of seminars, conventions, conferences, study days, round tables;

l)  fulfilling all other tasks related to the association activity approved by the Members’ Meeting. The Association shall not even indirectly distribute profits or operating surpluses as well as funds, reserves or capital during the life of the Association, unless the allocation or distribution is imposed by law.

Art. 5 -  RELATIONS WITH THE CONFEDERATION

5.1.  "Assofranchising" undertakes to accept:

  1. the resolutions of the Ethics Committee of "Confcommercio-Imprese per l'Italia", as well as the arbitration clause and the decisions of the Board of Arbitration, as set forth by art.41 of the confederal by-laws, with regards to it or its associates.
  2. The payment of the membership fee to the confederal system through payment to an extent and according to the procedures approved by the National Assembly of "Confcommercio-Imprese per l'Italia".
  3. The rules of articles 20, 21, 22, 23 of the Confederal by-laws.
  4. The rules laid down in art. 18, paragraph 2, letter i) of the Confederal by-laws on the use and implementation of the name "Confcommercio-Imprese per l'Italia" and/or the related confederal logo.

5.2.  The Confederation acts for the best operation and continuous development of the confederal system by supporting and offering assistance and services at every level thereof, developing and promoting initiatives and projects aimed at strengthening the potential for integration, mutual coordination, joint action among the various levels and supporting their operational abilities.

5.3.  For these purposes, the National Fund for System Development is established, sustained through a portion of the Confederation's membership fee revenue established annually upon preparing the budget.

5.4.  The National Fund finances, even with equalisation purposes, targeted and articulated projects for integration and coordination, rationalisation and development, which are resolved by the competent associative bodies of the levels of the system concerned or, if deemed necessary, by the National Council. The actions of the Fund are determined by the Committee, on the basis of a specific regulation approved by the National Council, following preliminary investigation by a Technical Commission of the Confederal Offices.

Art. 6 - EXCLUSION FROM THE CONFEDERATION

6.1.  Exclusion from the Confederation of Regional Unions, Territorial Associations, National Sector Federations and National Category Associations is resolved by the National Council, upon the proposal of the Committee.

6.2.  The proposal is notified in writing to the Chairman of the system level concerned. A term of no less than 20 (twenty) days should elapse between the date of the notice and the date set for the National Council meeting.

6.3.  Up to 10 (ten) days prior to the date of the meeting, the Chairman of the system level concerned may send his written observations to the National Council. The exclusion decision is notified to the Chairman of the system level concerned within 7 (seven) days of its implementation. Said resolution becomes effective from the date of the aforementioned notice.

6.4.  Upon receipt of the notice of the resolution of the National Council referred to in paragraph 3 above, the Associative board bodies of the excluded system level, may, within 15 (fifteen) days from the aforementioned notice:

  1. request a resolution from the Ethics Committee, which rules pursuant to art. 40, paragraph 7, letter a, of the Confederal by-laws, within the next 30 (thirty) days;
  2. or, apply for arbitration, pursuant to art. 41 of the Confederal by-laws.

6.5.  In the event of a request for resolution by the Ethics Committee, if said Body has ruled unfavourably to the excluded system level, or if said Body has not ruled and 30 (thirty) days have elapsed from the request, the application for arbitration may still be put forth within the following 15 days.

6.6.  The ruling of exclusion becomes incontestable:

  1. in the absence of the request for resolution by the Ethics Committee or putting forth application for arbitration within the term of 15 (fifteen) days under paragraph 4;
  2. or, in the cases referred to in paragraph 5, in the absence of an application for arbitration within 15 (fifteen) days from the unfavourable or omitted ruling by the Ethics Committee.

6.7.  Exclusion from the Confederation is resolved for serious reasons. The following always constitute serious reasons:

  1. failure to pay the previous and/or ongoing "AIF" membership fee to Confcommercio, or failure to repay debts of any kind to the Confederation, despite formal reminder notified in writing;
  2. breach of the principles contained in the Confederal by-laws or the By-laws of the system level concerned, the Code of Ethics or Regulations or resolutions of the Confederation's governing bodies;
  3. loss of even one of the requirements set forth by art. 18, paragraph 1) (except the last one in paragraph 1 and except paragraph 2), of the Confederal by-laws

6.8.  The exclusion does not nullify the obligation to pay the membership fees due, past and for the whole current year, and does not extinguish any other debts due to the Confederation.

6.9.  The Confederation, upon resolution of the National Council, may undertake establishment of a new confederal system level, having the same territorial scope and the same scope of representation of the excluded level.

6.10.  The effectiveness of "AIF" exclusion automatically implies exclusion of all its members from the Confederation.

Art. 7 – MEMBERS: CATEGORIES, ADMISSION

7.1.  There are 3 (three) categories of Members:

  1. Current Franchisor members i.e. companies or sole traders who have managed for at least 12 (twelve) months a minimum number of 3 (three) operating Franchisees;
  2. Potential Franchisor members, i.e. companies or sole traders who intend to set up and manage franchise networks, but who do not yet operate or do not meet all the requirements established for Current Franchisor members at the date of registration;
  3. Honorary members, i.e. the natural persons, companies and organisations that, through their activities, have contributed to spread, support or improve the franchising sector by contributing their experiences and/or financial/economic aid.

7.2.  The requirements to be registered in one of the above categories shall be subject to specific resolutions of the Board of Directors and may be amended by subsequent resolutions.

7.3.  To be admitted to become a member of the Association the specific application must be sent to the Board of Directors, with the indication of the company name, registered office, legal representation (or details) and the activity carried out in relation to franchising. Acceptance of a member is resolved at the sole discretion of the Board of Directors and shall start from the date when the first membership fee is paid to the Association's treasury by the approved candidate.

7.4.  Members are required to comply with these by-laws and the resolutions of the corporate bodies adopted on the basis of the by-laws and internal regulations, under penalty of exclusion from the Association.

ART. 8 – REGISTER OF AFFILIATES, CONSULTANTS AND EXPERTS

8.1.  The Register of Affiliates, Consultants and Experts (hereafter "Register") is set up. Companies, sole traders or natural persons who supply goods and/or services to the Current Franchisor members and/or Potential Franchisors, as well as companies, sole traders, natural persons, bodies, associations, institutions that have an interest in the dissemination and qualitative promotion of franchising may register, by submitting an appropriate application to the Board of Directors.

8.2.  Registration is decided at the sole discretion of the Board of Directors and shall commence on the date on which the first membership fee is paid to the Association by the approved candidate.

8.3.  The members of the Register may deal with study, dissemination and qualitative promotion of franchising, according to the methods chosen by them; to this end they may also organise cultural and popularisation events always within the scope and in compliance with the aims of the Association.

8.4.  However, they cannot organise events that fall outside the cultural scope without prior agreement with the Board of Directors of the Association.

8.5. The members of the Register undertake to comply with the Code of Conduct of the Register, Regulations of the Association or Code of Ethics as applicable.

ART. 9 – MEMBERSHIP FEE AND TERM

9.1.  Current and Potential Franchisor members and those registered in the Register of Affiliates, Consultants and Experts are required to pay the membership fees set by resolution of the General Meeting, upon proposal of the Board of Directors, on approval of the financial statement/budget.

9.2.   Current Franchisor members are required to pay a variable membership fee annually, with a minimum and maximum limit, which shall be commensurate with the number of operational Retail Outlets and their area in square metres. Current Franchisor members shall be required to provide the number of operational Retail Outlets as at 31 December of the year prior to payment of the fee and the related area in square metres for calculation of their fee, according to the procedures and times to be established by the Board of Directors.

9.3.  Potential Franchisor members are required to pay a fixed membership fee annually. Registered members shall pay an annual fee that will differ according to the type of members.

9.4.  Membership expires on 31 December each year and shall be automatically renewed for the same period of one year if the member does not withdraw by registered letter with return receipt at least three months prior to expiry.

9.5.  The effectiveness of the membership relationship explicitly excludes temporary participation in the association’s life.

9.6.  In exceptional cases, if the withdrawal is notified later than 30 September and the member requests it to take effect before the end of the following year, the Board of Directors may at its sole discretion accept the request, provided that 50% (fifty percent) of the following year's fee is paid plus the balance of accrued and unpaid fees.

9.7.  The membership fee is non-transferable except for transfer due to death. The value of the same cannot be revalued.

ART. 10 – MUTUAL FUND – FINANCIAL YEAR – FINANCIAL STATEMENT

10.1.  The mutual fund consists of the membership fees and any other income.

10.2.  The financial year of the Association is from 1 January to 31 December of each year.

10.3.  The Board of Directors draws up and submits for approval by the Members’ Meeting the final financial statement and budget together with their report.

Art. 11 – CHAIRMAN

11.1.  The Association Bodies are:

  1. Members’ Meeting;
  2. Board of Directors;
  3. Chairman;
  4. Honorary Chairman, if appointed;
  5. Deputy Vice-Chairman, if appointed;
  6. Vice-Chairmen, if appointed;
  7. Auditors;
  8. Ethics Committee.

11.2.  The term of office of the elected bodies referred to in points b), c), d), e), f), g) and h) above is three years. The members in office may be re-elected. The Chairman may be re-elected once, but for further re-election he/she will have to wait one election period.

11.3.  With the exception of the Ethics Committee and of the Auditor, whose members shall be chosen from people not belonging to the Association, specifically delegated representatives of Current Franchisor members, who comply with the principles and values of "Confcommercio Imprese per l’Italia” and who are of full moral and professional integrity, may be elected to association position.

11.4.  The association bodies cannot include individuals that have been responsible for breaches to these By-laws or the confederal ones.

11.5.  The candidates to the Association bodies must not be in the exclusion conditions referred to in article 4, paragraph 1 of the Confederal Code of Ethics, notwithstanding application of art. 178 of the Italian Penal Code and art. 445, paragraph 2 of the Italian Code of Criminal Procedure. Candidates undertake to certify they possess these requirements and to provide all necessary information upon request.

11.6.  The loss of the requisites referred to in paragraphs 4 and 5 entails forfeiture of the office held, which shall be declared by the Body in question at the first useful meeting.

11.7.  The members of the Board of Directors of "Assofranchising" are elected by secret ballot and cannot delegate their functions to others except in the cases set forth in these By-laws.

Art. 12 – INCOMPATIBILITY

12.1.  At "Assofranchising" the office of Chairman, Vice Chairman and Secretary General are incompatible with elected offices and positions of European, national, regional, provincial government and with political and organisational positions in political parties and movements, associations, groups that are related or in any case connected to political parties.

12.2.  The assumption of incompatible offices or positions entails forfeiture from the office held.

12.3.  The incompatibility referred to above does not exist for the positions assigned by virtue of institutional representations acknowledged to "Assofranchising".

Art. 13 – MEMBERS’ MEETING

13.1.  The Members’ Meeting is made up of all Current Franchisors, Potential Franchisors, as well as Honorary Members. Only Current Franchisor members are entitled to vote.

13.2.  The Ordinary Members’ Meeting:

13.2.1.  approves the final financial statements and budget and sets the membership fees. The final financial statement approved by the Members' Meeting must be forwarded to Confcommercio with the Auditors’ report and the written declaration of the general secretary of the meeting certifying compliance of the report with the accounting records.

13.2.2.  It elects the members of the Board of Directors, appoints the Auditors and the members of the Ethics Committee.

13.2.3.  Resolves on all matters set out in the Agenda by the Board of Directors.

13.2.4.  The Ordinary Members' Meeting is validly constituted on first call with the presence of a number of Current Franchisor members representing at least 51% (fifty-one percent) of the votes. The meeting resolves by a majority of votes of those present. On second call the Ordinary Members' Meeting is validly constituted regardless of the number of Current Franchisor members present and resolves by majority of the votes present.

13.2.5.  The Ordinary Members’ Meeting meets at least once a year by 30 April and may be called whenever the Board of Directors deems it appropriate or on request by a number of Current Franchisor members representing at least a quarter of the votes.

13.3.  The Extraordinary Members’ Meeting:

13.3.1.  approves amendments to the by-laws and in particular on continuation or withdrawal from Confcommercio. The call for the meeting to resolve on withdrawal from Confcommercio is notified and sent in copy to the Confederal Chairman by registered letter with return receipt or equivalent. Any withdrawal decision becomes effective, in respect of Confcommercio, and of third parties, after 90 (ninety) days from the date of the resolution. Withdrawal does not nullify the obligation to pay the membership fees due, past and for the whole year in progress, and does not extinguish any other debts due to the Confederation. The Confederation, upon resolution of the National Council, following the decision to withdraw, may set up a new confederal system level, having the same geographical area and the same scope of representation as the withdrawn level.

13.3.2.  Resolves on the dissolution of the Association determining the methods, appointing one or more liquidators and defining their powers.

13.3.3.  The Extraordinary Members' Meeting is validly constituted on first call with the presence of a number of Current Franchisor members representing at least 51% (fifty-one percent) of the votes. The meeting resolves by a majority of favourable votes of those present. On second call the Extraordinary Members' Meeting is validly constituted with the presence of members representing one third of the votes and resolves by majority of the votes present.

13.3.4.  In any case, for the resolutions concerning dissolution of the Association and withdrawal from Confcommercio, the favourable vote of as many members as representing at least 3/4 (three quarters) of the votes of the members is required.

13.3.5.  The Extraordinary Members’ Meeting is called whenever the Board of Directors deems it appropriate or on request by at least a number of Current Franchisor members representing a quarter of the votes.

13.4.  The Members’ Meeting is convened by registered letter and/or through certified email, sent to each member at least twenty days before the established date.

13.5.  The member may be represented in the Meeting by written proxy. The same person (whether a member or non-member) cannot represent more than two members in the Members' Meeting.

13.6.  Each Current Franchisor member is entitled to 5 (five) votes plus other votes, for a total maximum of 70 (seventy) overall votes, which shall be assigned as follows:

* franchising of products

  • 5 (five) votes every 30 (thirty) shops with surface from 0 (zero) to 100 (one hundred) square metres;
  • 7 (seven) votes every 30 (thirty) shops with surface from 101 (one hundred and one) to 400 (four hundred) square metres;
  • 10 (ten) votes every 30 (thirty) shops with surface over 400 (four hundred) square metres;

* franchising of services

  • 2 (two) votes every 30 (thirty) shops with surface from 0 (zero) to 20 (twenty) square metres;
  • 7 (seven) votes every 30 (thirty) shops with surface from 21 (twenty one) to 100 (one hundred) square metres;
  • 9 (nine) votes every 30 (thirty) shops with surface over 100 (one hundred) square metres;

13.7.  The Meeting is chaired by the Chairman of the Board of Directors or, in their absence or momentary unavailability, by the Deputy Vice-Chairman or, in their absence, by a person designated by the Meeting.

13.8.  The Meeting’s Secretary is designated by the Meeting. For Extraordinary Members’ Meetings, the minutes shall be taken by a Notary designated by the Chairman.

13.9.  The resolutions of the Members' Meeting shall be evidenced in the minutes signed by the Chairman and the Secretary.

Art. 14 – MANAGING BODY

14.1.  The Managing body consists of no less than five and no more than twenty-five members.

14.2.  It is formed as follows:

  • by those who, among those designated by Current Franchisor members, shall be elected by the Meeting;
  • by the outgoing Chairman.

14.3.  In order to assure adequate representation within the Board of Directors of the Current Franchisor members who are entitled to 30 (thirty) votes or fewer than 30 (thirty) votes, at least 20% (twenty percent) of the members of the Board of Directors must be representatives of the latter.

14.4. The legal representative of the company, the managing director or general manager or however a shareholder with power of attorney may be appointed as member of the Board of Directors. Only for companies that manage diversified activities, the highest manager in charge of the franchising network may be appointed as member of the Board of Directors.

14.5.  The outgoing Chairman is legally a member of the new Board of Directors for the term of office of the latter with voting right.

14.6.  The Board of Directors is vested with all the powers of ordinary and extraordinary management for the implementation of the purposes of the Association that have not been expressly assigned to the General Meeting by these by-laws.

14.7.  The Board of Directors elects a Chairman from among its members; if required, a Treasurer to manage the Association’s funds and if required, a Secretary-General to act as secretary of the Board and manage the organisational and executive aspects of the Association. In addition, the Board of Directors may elect an Honorary Chairman, a Deputy Vice-Chairman, one or more Vice Chairmen from among its members, the most senior one of whom in the Board of Directors shall act as Chairman in the absence or in the event of vacant positions of the Chairman and Deputy Vice-Chairman. If a candidate for the office of Chairman of the Association requests it, with formal support by at least 20% (twenty per cent) of members in good standing with the payment of membership fees, the last approved financial statement before said election is certified, by a person registered in the Register of Statutory Auditors pursuant to art. 2 of Italian Legislative Decree 27 January 2010 no. 39 who holds a third-party position.

14.8.  The Secretary-General may also be chosen from among persons who are not members of the Board of Directors; in this case the Secretary General is co-opted as a member of the Board. Should they step down as Secretary General, their term of office in the Board shall automatically cease. The office of Secretary General is incompatible with any office of associative, collective or single body held at every level of the confederal system, as well as with the performance of self-employment activities carried out continuously or professionally with the exercise of any business activity carried out in their own name or in the name or on behalf of others, with the status of member or with the office of director of companies and/or bodies, except, for the aforesaid position, the companies and/or the entities forming part of the confederal system or those other than the latter, if the office is held by virtue of institutional representation recognised at the level concerned, by appointment, and in the name and on behalf of said level.

14.9.  The Board of Directors may appoint competent Committees to study specific sectors or problems.

14.10.  The Board of Directors has the right to establish the emoluments of the administrative bodies or individual members thereof.

14.11.  The Board of Directors is convened by the Chairman or, in their absence, by one of the Vice Chairmen at least once every quarter.

14.12.  The Board of Directors must be called when a request is made to the Chairman by at least three members of the Board.

14.13.  The notice of call indicating the items on the Agenda must be sent to each member of the Board at least eight days prior to the date set for the meeting or, in case of urgency, at least three days prior to the date set for the meeting.

14.14.  The resolutions of the Board are valid and passed if expressed with attendance by the majority of the Directors and by a majority vote by those present.

14.15.  In the event of a tied vote, the Chairman's vote shall prevail.

14.16.  At the third consecutive unjustified absence, the Board of Directors may replace the absent member by co-opting a new member.

14.17.  In case of resignation from the Board of Directors of one or more members, the Board is entitled to co-opt the missing members. The new co-opted Directors shall remain in office until the next elections.

14.18.  In the event of simultaneous resignation of more than half of the Directors, the entire Board of Directors shall be deemed to have resigned, and a Members’ meeting must be specifically convened to elect a new Board of Directors.

14.19.  The Director cannot be a member of other Industry associations with similar purposes (pursuant to art. 4 of these By-laws), with similar institutional roles.

14.20.  The resolutions of the Board of Directors must be evidenced in the minutes signed by the Chairman and the Secretary.

Art. 15 – CHAIRMAN

15.1.  The Chairman has the following functions:

  1. legally represents the Association before third parties and in court;
  2. convenes the Members’ and Board of Directors’ Meetings and presides over them;
  3. implements the resolutions of the Members' and of the Board of Directors’ Meetings;
  4. supervises the activity of any Committees;
  5. represents and protects the interests of members with Confcommercio, as long as its admission is in force;
  6. implements Confcommercio's decisions concerning "AIF" or its members.

15.2.  The Chairman is elected by the members of the Board of Directors from among its members. Election shall take place by secret ballot. A majority of 50% (fifty percent) plus one of the members of the Board shall be sufficient for election.

15.3.  The Chairman remains in office for 3 (three) years, and may be re-elected for a maximum of two further consecutive terms. The term is considered completed after at least 18 (eighteen) months and 1 (one) day.

Art. 16 – DEPUTY VICE-CHAIRMAN

16.1.  In the event of absence or temporary unavailability of the Chairman, the Deputy Vice-Chairman has the following duties:

  1. legally represents the Association before third parties and in court;
  2. convenes the Members’ and Board of Directors’ Meetings and presides over them;
  3. implements the resolutions of the Members' and of the Board of Directors’ Meetings;
  4. supervises the activity of any Committees.

The duties mentioned above may also be delegated, in whole or in part, by the Chairman to the Deputy Vice-Chairman.

16.2.  The Deputy Vice-Chairman is elected by the members of the Board of Directors from among its members. Election shall take place by secret ballot. A majority of 50% (fifty percent) plus one of the members of the Board shall be sufficient for election.

16.3.  The Deputy Vice-Chairman remains in office for 3 (three) years, may be re-elected for a maximum of two further consecutive terms. For this purpose (i.e. for the purpose of counting the terms of office) the term is considered completed after at least 18 (eighteen) months and 1 (one) day.

Art. 17 – HONORARY CHAIRMAN

17.1.  On the proposal of the elected Chairman, the Board of Directors may appoint an Honorary Chairman.

17.2.  The person put forth must have acquired particular merits for the activity benefiting the Association.

17.3.  The Honorary Chairman takes part in the Board of Directors’ meetings with an advisory function, without the right to vote; should the Outgoing Chairman be appointed Honorary Chairman, they shall still be a member of the Board of Directors, with voting rights, as established by art. 14.5.

17.4.  The term of office of the Honorary Chairman lasts 3 (three) years and they may be re-elected.

Art. 18 – AUDITORS

18.1.  The three Auditors of whom at least one registered with the register of auditors, supervise the administrative management of the Association and must submit the annual report to the financial statements. The Chairman must be registered with the Register of Statutory Auditors referred to in art. 2 Italian Legislative Decree 27 January 2010, no. 39 as amended and added.

18.2.  Any emoluments to the Auditors are established by the Board of Directors.

Art. 19 –ETHICS COMMITTEE.

19.1.  The Ethics Committee is elected by the Members' Meeting upon proposal by the Board of Directors and consists of five members, chosen from persons not belonging to the Association with appropriate professional competence in the legal or economic field.

19.2.  The Committee has the following duties:

  1. regulate conflicts of competence, representation and any other disputes that should arise between the bodies and/or members of the Association;
  2. ascertain any breaches of the Code of Ethics or Association Regulation by the members or the Registered Affiliates, in accordance with the procedures set out in the following art. 20;
  3. decide on any appeal concerning the statutory legitimacy of the decisions and resolutions taken by the corporate bodies;
  4. supervise on compliance with the by-laws and inform the Board of ascertained breaches.

19.3.  The Ethics Committee has the right to attend the Members' and the Board of Directors’ Meetings without voting rights.

19.4.  At the first meeting, which must be called by the Chairman of the Association, the Committee elects its President and Secretary from among its members.

19.5.  The Committee is based at the Association’s premises and meets upon being convened by its President each time the Secretary of the Association sends a request to that effect.

19.6.  The Ethics Committee, except for particularly demanding cases for which an extension may be arranged, must decide within sixty days from receipt of the request and, with regard to points a), c), d), of this article, notify the Board of Directors or, in relation to point b) of this article, inform the Board of Directors of its decision with any penalty put forth.

19.7.  The Ethics Committee is validly constituted with the presence of at least three members and adopts resolutions with an absolute majority. In the event of a tied vote, the President's vote prevails.

19.8.  The members of the Ethics Committee receive an attendance fee, the extent of which is decided each year by the Board of Directors.

19.9.  The meetings of the Ethics Committee are not public. The decisions of the Ethics Committee are final and cannot be appealed.

Art. 20 –BREACHES OF THE CODE OF ETHICS

20.1.  Any party concerned, even extraneous to the Association, may request the Ethics Committee to ascertain a breach of the Code of Ethics.

20.2.  The requests, made in writing and containing the description and documentation of the facts, must be sent to the General Secretary of the Association, who after having adequately investigated them, sends them to the Chairman or, in case of their absence or momentary unavailability, to the Deputy Vice-Chairman who shall convene the Ethics Committee. The parties may be assisted or represented by trusted professionals.

20.3.  The Ethics Committee, without prejudice to the rights of defence and the adversarial principle, ascertains whether the case examined breaches the Code of Ethics or Regulation of the Association and issues its decision, briefly substantiated, indicating in case of ascertaining the breach, the severity and any recurrence, filing it at the secretariat of the Association and forwarding a copy to the Chairman of the Association. Secretarial duties of the Ethics Committee are carried out by the Secretary General of the Association.

20.4.  Should the Ethics Committee ascertain the breach of the Code of Ethics or Regulation of the Association, they shall put forth to the Board of Directors the sanctions to be imposed on the breaching member by assessing the seriousness of the breach and any recurrence by the infringer.

20.5.  The sanctions that the Ethics Committee may put forth are:

  1. formal notice;
  2. formal notice with warning of higher penalties;
  3. prohibition to use the "Assofranchising" mark or logo;
  4. exclusion from the Association.

20.6.  After receiving the proposed sanction from the Ethics Committee, the Board of Directors convenes, following urgent summons by the Chairman or in the event of their absence or momentary unavailability, by the Deputy Vice-Chairman to resolve, after consulting with the President of the Ethics Committee, acceptance or otherwise of the proposal, with final decision which is not subject to appeal. The Directors who may be involved in the infringement shall be excluded from the meeting.

20.7.  In the event of application of the sanctions referred to in paragraphs 3 and 4 of art. 20.5 under its own responsibility, but at the expense of the infringer, the Board of Directors may have an extract of the provision, containing the name or corporate name of the infringer, the reasons and the implemented sanction published in three newspapers with national circulation. The decision taken by the Board is notified to the parties.

Art. 21 – TERMINATION OF A MEMBER

Membership is lost due to:

  1. voluntary withdrawal that must be notified by registered letter with return receipt or equivalent to the Board of Directors by 30 September each year and to take effect from 1 January of the following year;
  2. when the member goes out of the franchise business. Also in this case termination must be notified to the Board of Directors by registered letter with return receipt or equivalent by 30 September and shall be effective from 1 January of the following year; notwithstanding the provisions of art. 9.6;
  3. if after two years since registration, the Potential Franchisor member has still not met, at the sole discretion of the Board of Directors, all the requirements for the category of Current Franchisor member;
  4. if the member is declared bankrupt.

Art. 22 – EXCLUSION FROM THE ASSOCIATION

22.1.  The following members are excluded:

  1. those who infringe the provisions of these by-laws or those relating to the use of the mark, logo and distinguishing marks of the Association;
  2. those who through their behaviour, undermine the principles of fairness, seriousness, loyalty and trust at the foundations of the Association. Furthermore, companies including firms which directly or indirectly, through their behaviour, undermine the principles of fairness, seriousness, loyalty and trust at the foundations of the Association are also excluded from the Association.
  3. breach the Code of Ethics or Regulation of the Association;
  4. are in default of payment of the annual membership fee and have not made payment within three months from the payment reminder sent by the Association or its lawyer;
  5. issue false statements or representations to the Association and/or its bodies.

22.2.  Any exclusion is decided by the Board of Directors. The decision is final and cannot be appealed.

Art. 23 – USE OF THE MARK, LOGO AND DISTINGUISHING MARKS OF THE ASSOCIATION

23.1.  Only the Association and its members have the right to use the mark, logo and other distinguishing marks of the Association on their letterhead, advertising and promotional material and other documents and publications according to the instructions provided for each category of members contained in the identification manual prepared for this purpose, always in conjunction with their company name, and for Franchisor members, in combination with the mark which identifies their franchise system.

23.2.  The mark, logo and distinguishing marks of the Association cannot be used by companies controlled by, or associated to, the members, which are not members as well.

23.3.  Members are obliged to inform the Board of Directors of any unauthorised use, misuse or use non-compliant with the rules contained in the identification manual, of the mark, logo and distinguishing marks of the Association.

23.4.  All rights and privileges for use of the aforementioned mark, logo and distinguishing marks of the Association shall cease to apply in any manner, upon termination of membership of the Association, pursuant to articles

21 and 22.

Art. 24 – TERMINATION AND LIQUIDATION OF THE ASSOCIATION

24.1.  The termination of the Association is resolved by the Extraordinary Meeting as established in article 13.3.4.

24.2.  In the event of its termination for any reason, the Body’s assets must be devolved to another association with similar purposes or for the purposes of public usefulness.

Art. 25 – GENERAL PROVISIONS

25.1.  The termination of the Association is resolved by the Extraordinary Meeting as established in article 13.3.4.

25.2.  In the event of its termination for any reason, the Body’s assets must be devolved to another association with similar purposes or for the purposes of public usefulness.

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