Romania

• Author: Roxana Negutu - Bryan Wilson Jardine
• Pages: 388-408

388 International Franchise Sales Laws

Romania

I. What Is a Franchise?

A. Scope of Law

Romania has enacted specific franchise legislation, namely Government Ordinance

number 52/1997, as further amended (collectively referred to as the Franchise Law).

The Franchise Law defines “franchise” as a marketing system based on the

continuous collaboration between financially independent natural persons or legal

entities by which a person, called the “Franchisor,” grants to another person, called

the “Franchisee,” the right to exploit or develop a business, a product, a technology,

or a service.

B. Applicability to Master Franchises

The Franchise Law does not provide specific regulations for a master franchise

granted by a foreign Franchisor. The Romanian law does not provide for a distinc-

tion between Franchisees and Master Franchisees; therefore, the same legal regime

and requirements are applicable to both.

C. Exemptions

The definition of a franchise is very broad and covers a variety of types of distribu-

tion arrangements beyond those typically called “business format franchises” and

“product franchises.” The Franchise Law does not provide for any exemptions,

exclusions, or exceptions as to what constitutes a “franchise.” Thus, partnership

relationships, trademark licenses, wholesale distribution agreements, credit card

service arrangements, and specific industries, such as petroleum dealers and auto-

motive dealers, may fall within the Franchise Law.

D. Discretion of Regulatory Authorities

The Franchise Law does not grant to any governmental agency the responsibility of

interpreting or enforcing its provisions.

From a competition-law point of view, the modernized economic approach imple-

mented in the European Union by Regulation 1/2003 introduced a new method of

evaluation of agreements under article 101 of the Treaty on the Functioning of the

European Union (TFEU) and national competition provisions.

Romania 389

Thus, there is currently no need for prior notification of the agreements to the

Competition Council or the European Commission for the purpose of securing an

individual exemption. The parties themselves must now assess whether the agree-

ments comply with the competition requirements and/or whether their understand-

ings may benefit from the “safe harbor” as regulated by the relevant block exemption

regulation. This approach is considered to be substantially more flexible and also

encourages the assessment from an economic standpoint of possible anticompetitive

behavior on the market.

The Romanian Competition Council and the European Commission may evalu-

ate franchise agreements and even Disclosure Documents during investigations per-

formed on the market.

E. Jurisdiction

The Franchise Law applies to an offer or sale of a franchised business to be oper-

ated in Romania. However, it is unclear whether the Franchise Law applies to offers

or sales occurring in Romania for franchised businesses to be operated elsewhere.

According to Regulation (EC) no. 593/2008 of the European Parliament and of the

Council of June 17, 2008, on the law applicable to contractual obligations (Rome I)

applicable to EU Member States, the parties are free to choose the law applicable to

their contract (i.e., the law applicable to the franchise agreement). Pursuant to the

above-mentioned regulation, to the extent that the applicable law has not been cho-

sen, a franchise contract must be governed by the law of the country where the

Franchisee has his habitual residence.

In addition, the freedom of the parties to choose the law governing their con-

tract is stipulated in the Romanian Civil Code.

II. Who Must Provide Disclosure?

A. Franchisor

Prior to entering into a contract, the Franchisor must provide certain information to

a prospective Master Franchisee or Franchisee via a Disclosure Document. In rela-

tion to the “Disclosure Document” concept, please note that the Franchise Law

does not require a standard single document under this name. However, in practice

the Disclosure Document may be created to include all the obligations that the Fran-

chise Law imposes upon a franchise agreement.

In addition, the Franchise Law sets forth certain conditions to be met by the

Franchisor, namely:

1. The Franchisor is required to have operated the business, though not neces-

sarily in the Romanian market, for a certain period of time prior to launch-

ing a franchising network. The Franchise Law does not provide further details

with regard to the period of time; however, such period must be reasonably