Argentine franchise law is contained in 12 articles 1512-1524 of the CCYC.
Labor law infringements constitute the bulk of the cases that we shall quote and deal with a specific provision or the laws declaring that (section 1520) there is no labor relationship between franchisor- franchisee since each party is an independent company, except if the law establish a special legal obligation. To the contrary and in second place declares section 1520(b) the employees of franchisee do not have labor relation with franchisor except in case of labor fraud.
However there has been different views between the labour courts including the Labor Court of Appeals which have declared that the contract of franchise is governed by commercial law but the labor relation is special legislation that have its own rules.
Historically, before the franchise law was enacted in 1993 the Argentine Supreme Court in case Rodriguez declared with respect to section 30 of labor legislation that franchisor was not jointly liable for the employment and social security obligations of franchisor distributor or agents, when the company has been subcontracted or hired to carry out tasks that are specific to the sub-contracting party. This doctrine was subsequently confirmed in 1995 case Sandoval and SC went a step further stating that concession, distribution and franchise agreements allowed a manufacturer to disengage from the distribution stages.
However, in April 6, 2004, the National Labour Court of Appeals in a case that Coca Cola and its distributor of products were the defendants hired a transport company to deliver their products, has ruled otherwise and ruled that franchisor was jointly liable for payment of such debts. The decision of the Supreme Court was only binding for the case where such holding was stated, except in federal matters which was not the case. From then on labor courts started to claim that labor relationship is subject only to the labor Code LCT, which states that labor relationship between independent parties is subject to section 30 of the LCT to the extent that there is an assignment of the principal activity to another company or the activity is subcontracted to another party.
The commercialization of all the products to a third party to two franchisees is sufficient to declare the joint liability according to section 30 of the LCT.
LCT CNAT Chamber IIII. Huertas Hernandez vs VAleria Janina et alter on dismissal. 20-08-2021.
CNAT Chamber VII Suarez Paola A. vs Puerto Enzo Cafe et Alter 7-05-2019 oTr Chamber VII Boeris hector M vs Fremen S.A. et alter on dismissal 19-10-2020.
The Court pointed out that franchising activity in the election capacitation and control of franchisee personnel make section 26 and 30 of the LCT applicable.
The Court pointed out that franchisee intervention constituted the normal and specific activity of franchisor establishment.
The above cases constitute the position of the CNAT section majority that the franchise contract which excludes the Civil and Commercial Code in article 1520 that parties to a franchise agreement are independent and the employees of franchisee do not have legal labor relation with franchisor without prejudice of the application of labor fraud norms. The only light and hope to avoid the joint liability is based on the recent solitary position of Chamber X in labor law that have applied section 1520 of the franchise law in case Nigrelli ca where the aforesaid Chamber X of the Labor Court of Appeals decided to apply the lack of responsibility of franchisor for the labor unpaid debts of franchise personnel choosing to apply the commercial law and dismissing the application of section 30 of CNAT. Nigrelly Ezequiel vs Dia Argentina S.A. on dismissal dated 12//5/2021, dossier N 1727/2017.
Prior to his decision there is an isolated decision of same Chamber X in re Lambardi Santiago Ignacio vs Dia Argentina S:A. on dismissal 13/07/2018 and old decision of the same Chamber X of the CNAT in re Leiva Martin vs Sucharkiewicz and others on dismissal 14/07/2017, dossier 27604.
The position taken by Chamber X is supported by diverse authors such as Dres Lorenzetti, Marzorati, Alterini Maddaloni, who are of the view that the language of the CCyC excluding the joint liability of franchisor for the labor debts of franchisee personal and therefore section 30 of LCT is not applicable.
Franchisor and franchisee are both independent companies and therefore the assistance of technical and commercial assistance are not essential but the collaboration.
If the labor courts maintain their pre Nigrelli case position until the Supreme Court reviews the case there is contingency that has to be addressed in contract.
Osvaldo Marzorati, IDI Country Expert for Argentina
