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Measures to protect economic agents operating under a franchising regime

PRESS RELEASE

 

Measures for increasing the information of the franchisor and the franchisee were the yesterday’s items on the agenda of the Romania’s Executive meeting, which approved the draft Law amending and supplementing the Government Ordinance no. 52/1997 regarding the legal status of franchising with its subsequent amendments and completions, as well as for amending item 15 of art. 7 of the Law no. 227/2015 on the Tax Code. The new legislation establishes new rules of simple and transparent information before the signing of the franchise agreement, which will result in successful partnerships between the franchisor and the franchisee.

“The development of the SMEs sector is an essential element for increasing Romania’s national competitiveness, and this Governmental Ordinance brings new ways of supporting the entrepreneurial spirit. Clarification of the franchise status protects franchisees and franchisors equally. Thus, the chances the two partners will profitably benefit from the development of a franchise business are increasing”, Minister Radu Oprea said.

Among the novelties brought by the legislation are:

  • the terms alignment with those internationally used in relation to a franchise for better clarity of the wording,
  • the introduction of the term “franchisee”, used for naming the franchisor’s partner,
  • the introduction of the “pilot unit” concept
  • the use of the term “franchise disclosure document” by all franchisors to streamline information procedures for potential franchisees, a document through which disclosure of information between future partners is advisable,
    • establishment of the National Franchise Register in order to make the evolution of the local franchise market transparent.

 

Within the pilot unit, over a year, the franchisor tests and finalizes the type of business which is going to sell as a franchise. Thus the franchisee will take over a verified business, making it easier for them to develop a business after a functional model in the absence of an earlier entrepreneurial experience.

We think that the impact will be positive at a macroeconomic level, as new business opportunities will arise along with job creation, diversification of the product and service market and increased market competition. “Therefore, there is an extremely high potential for prosperous business that can be launched on the market, and a franchise firm may be one of the best business development solutions at the beginning of the road, given the low value of the investment. Those who will apply this year through the Start-Up Nation program will benefit from such opportunities, and we anticipate a much higher competition than last year amongst entrepreneurs who will certainly have innovative ideas, reliable, consistent business plans, with predictions of success over several years”, Minister Oprea said.

The National Franchise Register has the role of monitoring franchise businesses and pointing out useful statistical data. In this way, successful Romanian entrepreneurs will be encouraged to franchise their businesses, and foreign franchisors will expand their networks in our country, thus increasing the likelihood that a larger number of Romanian entrepreneurs will be attracted to develop a franchise business.

Within 60 days from the entry into force of the Law amending and supplementing the Government Ordinance no. 52/1997 on the legal regime of the franchise with its subsequent amendments and completions, the Romanian Franchise Association will establish the National Franchise Register. Franchisors in Romania have the possibility to register the franchise disclosure document (DI) in the National Franchise Register free of charge.

 

 

Ministry for Business Environment, Commerce and Entrepreneurship

Press Office

 

 

 

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