Macau

• Author: Rodrigo Mendia de Castro - Jorge Menezes
• Pages: 322-342

322 International Franchise Sales Laws

Macau

I. What Is a Franchise?

A. Scope of Law

The Macau Commercial Code (hereinafter MCC), approved in 1999, amended in

2000, 2009, and 2015, regulates and defines the franchise agreement under Articles

679 to 707. According to Article 679 of the MCC, in a franchise agreement the

Franchisor grants to the Franchisee the right, against direct or indirect payment, in a

defined zone and on a stable basis, to produce and/or to sell specified goods or

services under its entrepreneurial image, with the Franchisor’s know-how and tech-

nical assistance, and subject to its control.

Other than the MCC, there is no law or regulation promulgated or enforceable in

Macau specifically addressing issues relating to franchising.

B. Applicability to Master Franchises

The Macau Rules apply to a Master Franchise granted by a foreign Franchisor, pro-

vided that the Master Franchisee operates in Macau or the franchised outlets are in

Macau. On the other hand, if the Master Franchisee or the franchised outlets are

located outside Macau, the laws of the country or region in which the franchised

outlets are located govern the franchise relationship between the Franchisor and the

Master Franchisee, or between the Master Franchisee and the franchised outlets (as

the case may be), and as such, Macau law does not apply.

A Master Franchisee will be treated as a Franchisor if the Master Franchisee

grants franchises in Macau, regardless of the domicile of the Franchisor.

C. Exemptions

There are no statutory exemptions, exclusions, or exceptions as to what constitutes a

franchise under the MCC. Thus, in Macau, any kind of commercial contract or com-

mercial relationship that can fit under the general definition envisaged in Article 679

of the MCC shall be deemed a franchise agreement or a franchising relationship.

D. Discretion of Regulatory Authorities

There are no specific regulatory authorities in Macau regulating the franchise agree-

ment or determining whether a particular distribution or licensing arrangement is a

franchise.

Macau 323

E. Jurisdiction

The rules of the MCC apply when the franchise outlet is, or will be, located in

Macau. Therefore, regardless of the nationality of the Franchisor and the Franchi-

see, and regardless of where the offer or sale occurs, both an offer to sell a franchise

or a sale of a franchise that will operate in Macau fall under the jurisdiction of the

MCC.

If the franchise is operated outside Macau, any offer to sell or any sale of that

franchised business would not be subject to the rules of MCC or any other Macau

laws and regulations, but instead shall be subject to the laws applicable in that for-

eign jurisdiction.

II. Who Must Provide Disclosure?

A. Franchisor

According to Article 680 of the MCC (pre-contractual information and pre-contrac-

tual clarification), a Franchisor is obliged to provide written, timely (period not speci-

fied), complete, and truthful information to an interested party that would allow the

latter to form a balanced and informed assessment of the advantages and disadvan-

tages of concluding a franchise agreement. Moreover, the Franchisor must also pro-

vide to an interested party a model of the standard contract and, if it is the case, also

of the pre-contract of the Franchise that shall be adopted (full text and annexes if

any).

B. Master Franchisee

The duties of providing pre-contractual information and clarification apply also to a

Master Franchisee.

C. Franchise Consultant/Agent/Broker

The MCC does not allow sub-franchising unless the parties specifically enter into an

agreement for a sub-franchising relationship. On the other hand, the MCC does not

contain specific rules as to whether a consultant, agent, or broker acting on behalf

of the Franchisor must provide the pre-contractual information or/and clarification

to a prospective Franchisee. However, it is reasonable to construe that, if the

Franchisor is represented by a consultant, agent, or broker, the Franchisor would be

required to ensure that this consultant, agent, or broker provides the pre-contractual

information and clarification to the prospective Master Franchisee or Franchisee (as

the case may be) on behalf of the Franchisor.