ARGENTINA: Two further decisions of Argentinean Labour Courts on franchising.

Osvaldo Jorge MARZORATI | ARGENTINA | 2007-05-17

Osvaldo Jorge MARZORATI

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Judgement: Fernandez Mirta Liliana c/Aquino Marciana y otro s/ despido, Buenos Aires, 28 February 2007.

In this case, the labour court condemned the franchisor for the labour debts owed by franchisee to a former employee on the basis that, despite the franchise agreement is made between independent parties and the franchisor does not exercise any control on franchisee’s employees, or is responsible for the effective sale of the products or the rendering of the services, the activity developed by the employee had nothing to do with the activity of franchisee but constituted the same activity of franchisor. The court distinguished that under the franchise agreement, the object of the contract was the authorization to use the mark, the pedagogic material, and the education programs, and the activity of the employee was to dictate courses that were the normal activity of the franchisor, and considered that there was an element of fraud made by franchisee to the detriment of the employee’s rights because such employee was discharging a job for the benefit of franchisor and not franchisee.

Judgement: Liliana María Del Milagro c/ Arista, Marcelo Daniel y otro s/ despido, Buenos Aires, 21 September 2005

This year, Chamber N 3 of the Labour Court of Appeals of the city of Buenos Aires has declared that the franchisor is liable for the labour debts of the franchisee with its personnel. The decision was based that franchising constitutes a technique whereby franchisor outsources its activity to an independent party and such outsourcing is within the frame of section 30 of the labour code which makes the outsourced and the outsourcerer jointly liable for the labour debts of the outsourced company (franchisee). In the case it was proven that the activity of both companies was the same.
This precedent contradicts a former case where another Chamber of the same Court of Appeals declared that, in the absence of fraud, the activity of the franchisor franchisee does not fall within the frame of section 30 of the labour code since they are two independent companies which perform different strategies.
So far the decisions may for one way or another depending on which Chambers shall have to decide on appeal a labour case.


Osvaldo J. Marzorati, IDI country expert for Argentina


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