Explanations related to the main updates to the Romanian franchise law, especially with regard to the online Franchise Registry.
1. Romanian legislation regarding franchise agreements
Franchise agreements in Romania are regulated by Government Ordinance No. 52/1997 as amended and completed by Law No. 179/2019. One of the main amendments introduced by Law 179/2019 refers to the creation of the Franchise Registry by the Romanian Association of Franchise, association of public utility. The Franchise Registry was established by Order No. 1478/2019 issued by the Minister of Business Environment, Trade and Entrepreneurship, effective since November 5th, 2019. The organization and functioning of the Franchise Registry are regulated by the Methodological Norms approved by the aforementioned Order.
2. Main updates to franchise law
The main updates introduced by Law No. 179/2019 are the following:
(i) Introduce by law the term “franchisee” to nominate the franchisor’s partner (replacing the term “beneficiary”);
(ii) Use the term of “disclosure document” by all franchisors, in order to unify all the disclosure and information procedures for all potential franchisees. While there is no format for the Disclosure Document, the law states the concept and mentions the main information which must be included in this document;
(iii) Introduce the concept of “pilot-unit”. The pilot-unit is defined by the law as the equivalent of a prototype, meant to ensure the most facile implementation of the franchisor’s successful network, to test the franchise system and its infrastructure, supporting the franchisors to design the franchise program and elaborate the training manuals and daily operations. There is a one-year period established by the law in which franchisors must test and finalise their franchise business types, after which the business may be further sold as franchise business. Therefore, until the initiation of the franchise network, franchisors must test and operate the business concept during the pilot-unit for one year time. This however is a requirement applicable only to franchisors incorporated under Romanian law. Therefore, in case of a franchisor which is a foreign legal entity, only its first franchise unit and year of establishment should be mentioned.
(iv) Setting up the National Franchise Registry, to monitor the franchise business and obtain statistical data.
3. Franchise Registry
The Franchise Registry is an on-line means of evidence of the information provided by the franchisors / master franchisees through the Disclosure Document. The Franchise Registry requires the completion of certain information, but not the submission of the Disclosure Document itself. The Franchise Registry covers the following main sectors: registration, amendment / completion, and cancellation.
The Franchise Registry is run by the Romanian Association of Franchise. The registration with the Franchise Registry is free of charge. The registration with the Franchise Registry is performed online, with the following website: https://rnf.ro/. If the applicant is a legal entity, the registration is made by a legal or conventional representative of the franchisor / master franchisee. The person who performs the filing must sign an affidavit attesting that the statements made are true and accurate.
The Association has developed a template of the information to be filed with the Franchise Registry. The information contains the following sections: General Data; Financial Data; Other information; Support provided; Locations of interest.
Romanian legislation on franchising and Franchise Registry available at the Romania's legislation page
Cristina Tararache, IDI Country Expert for agency & distribution in Romania