SPAIN: Franchising Agreement – Unilateral modification of the franchising agreement by the franchisor.

Ignacio ALONSO | SPAIN | 2009-10-14

Ignacio ALONSO

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The parties had signed a franchise agreement in July 21st 1992 with the possibility for the Franchisor to establish unilaterally some temporal and general discount systems for franchisee with the possibility for the Franchisees to freely adhere to them.

This produced the 2×1 promotion which meant that a second pizza was given when the first one was purchased in the restaurants (not in home delivery) and only from Monday to Thursday (the days in which the sales were lower). In a first moment, Franchisor did not assume any cost of this promotion. Due to the success of this offer, the promotion was extended to the weekends. In order to convince the Franchisees, and due to the cost of the promotion, TELEPIZZA (Franchisor) accepted to pay during the week the payment of the bread and Franchisees will assume the rest of the ingredients and work force. Although the terms of the contract were not absolutely clear, the concrete promotion as well as the intention of the agreement was interpreted by the Court according to the original idea and its original promoter, the former President of TELEPIZZA who declared in these terms (in the meantime TELEPIZZA had changed its shareholders and the Court considered that the declarations of the promoter of the idea was essential).

Since 2001 the conditions for the promotion changed and TELEPIZZA obliged Franchisees to assume also, for the 2×1 promotion, the cost of the lump of bread. TELEPIZZA argued that the promotion was limited in time and therefore the new requisites were compulsory.

The Court has not accepted such arguments because it has considered confirmed that the promotion was accepted with no time limitation, that due to its success the promotion became a generalized commercial practice and that the Franchisee had the right to still remain with the previous conditions. The fact that TELEPIZZA introduced new elements for the promotion that were not expressly accepted by Franchisee did not imply that the Franchisee could lose his previous conditions, though, by doing so, he would not be entitled to the new benefits. On the other hand, the payment by the Franchisee during the first months of the new conditions of the bread (part of these new conditions) did not imply, in the opinion of the Court, the tacit acceptance of the new conditions because the correspondence between both companies was clear of the non acceptance of Franchisee.



Ignacio Alonso, Agency & Distribution Country Expert for Spain.



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