Franchise Romania Business BLOG

Stipulates, among others:

• setting the duration of the franchise agreement of such manner that the franchisees has the time to get the return of his/her investments,
• setting clearly and without any ambiguities the termination clauses,
• setting the financial obligations of the beneficiary,
• protection of the know-how conveyed by the franchiser by including non-competition clauses and precisely ruling the terms in which the shares can be assigned. (more…)

The terms of the franchising agreements usually range between 2 to 6 years. Big franchisers tend to offer contracts with shorter terms in order to be able to adapt quickly to the changes of a developing market or still not established, like the Romanian market is. (more…)

Even since 1998, Romania has recognized the necessity of promoting and supporting the franchising by setting a franchise specific legislation, the Law no 79/1998. The Law defines the basic principles of a franchise agreement as a sustained communication between persons or corporate entities whereby the Franchiser grants a Franchisee the right to exploit or develop a particular know-how or intellectual property right. (more…)

Environment agreements that do not impose an individual obligation upon the parties, or whereby the parties generally undertake to contribute in the achievement of the environment target at the level of a sector, do not fall under the restriction scope of art. 5 paragraph 1 of the Competition Law.

Environment agreements fall under art. 5 paragraph 1 of the Competition Law when the real target of the cooperation does not refer to an environment-related issue, but it represents an instrument for the creation of a disguised coalition, intended for the setting of prices, a limitation of production or a division of markets.

In Romania, horizontal cooperation agreements are regulated by art. 5, paragraph 1 of Competition Law no. 21/1996, as republished (hereinafter called “Competition Law”) and represent joint agreements or practices between two or more undertakings that operate at the same market level. Said agreements or practices have as an object or may have as an effect the restriction, prevention or misrepresentation of competition, and are prohibited, as they are rightfully invalid.

Horizontal agreements may involve both real competitive undertakings (which act on the same relevant market or which, in the absence of the agreement, have the capacity to rapidly modify their production in order to enter the relevant market without significant additional costs or risks), as well as potential competitive undertakings (which, in the absence of the agreement, could make additional investments in order to enter the relevant market).

Single branding exclusivity – resulting from the imposed obligation, or from the financial incentives granted by a supplier to the purchaser, in order to persuade the latter to purchase products only from the respective supplier or from a certain market.
Exclusive distribution – the supplier agrees to sell its products to a single distributor within a certain territory, while at the same time restricting the distributor’s possibility to carry out active sales in a territory different than the assigned territory.
Selective distribution – restricts the number of authorized distributors and the product resale channels, on the basis of selection criteria imposed, firstly, by the product’s nature.
Exclusive allocation of consumers – under an agreement of exclusive allocation of consumers, the supplier agrees to sell its products to a single distributor for purposes of resale to a certain consumer segment.
Recommended and maximum resale products – under a vertical agreement, the supplier may recommend to the distributor the (maximum) resale prices.

By the end of 2004, the Competition Council completed, to a large extent, the process of harmonizing national legislation with the community legislation in the field of competition.
A first consequence of this proceeding is the enactment, in Romania as well, of a new regulation in the field of vertical agreements which implements, as a major novelty element, the policy of self-assessment of the anti-competition effects which this category of agreements is likely to create on a relevant market, and which materializes in the safe-harbor provided, by way of block exemption, with respect to the vertical agreements concluded between undertakings holding a market share of up to 30%, and which contain vertical restraints save for the so-called “hardcore restraints”, the notification of such agreements no longer being required.
Solely in the event that the market share of the undertakings involved exceeds the threshold of 30% or if the vertical agreement contains restraints that are not subject to the block exemption, obtaining an individual exemption shall become necessary.

Vertical agreements are defined as agreements or combined practices executed between two or several undertakings – which operate at different levels of the production-distribution chain – referring to the circumstances in which the parties may purchase, sell or resell certain products or services. Said agreements may be: exclusive or selective distribution, single branding, franchise, the purpose of this listing being of an exemplifying nature. Vertical agreements, by way of interposing in the producer-consumer distribution chain, are also likely to affect and restrict competition, especially by means of the so-called vertical restraints, the most frequent ones are as follows: trademark exclusivity, non-competition, exclusive-selective distribution, recommended resale prices.

The procedure related to the reestablishment of the right of ownership is similar to the aforementioned procedure of return of the real estate properties abusively taken over. According to the provisions of Law no. 247/2005, the term for lodging the petition expired on September 25, 2005. The petition for return should have been registered with the Mayor’s Office in the locality where the claimed land is located.
In this situation as well, the notifications should have been accompanied by justifying documents, proving the capacity of owner of the petitioner or the petitioner’s family, as well as the petitioner’s capacity as heir or legal representative of the former owner.
Also, Law no. 18/1991 and Law no. 1/2000, as amended and supplemented by Law no. 247/2005, added clarifications with respect to the items of evidence that may be produced for the reestablishment of the right of ownership for the agricultural and forest lands.