New legal framework for franchising (PLC no. 219/2015) was approved by the Senate and awaits presidential sanction

On November 6, 2019, the Senate approved House Bill No. 219/2015 (“PLC 219”), which modernizes the business franchising system in Brazil.

Pending only presidential sanction, PLC 219 will revoke the current Franchising Law (Law No. 8,955/1994) and bring relevant changes, such as:

(a) The franchisor’s obligation to present to the interested party, a Franchise Offer Circular (“COF”) at least 10 (ten) days prior to the contract signing or the payment of fees.

(b) New conditions for subleasing of the franchisee’s commercial enterprise. Unlike the provisions of Law No. 8,245/1991 (“Tenancy Law”), PLC 219 provides for the possibility to establish a sublease value in excess of the lease value, provided that there is a relevant provision in the COF and it does not constitute an excessive burden on the franchisee.

(c) The possibility for public and semi-public companies to adopt the franchising system. In such cases, the COF must be disclosed at the beginning of the selection process.

(d) The possibility to terminate the contract if information in the COF is false or if there is any change by the franchisor that is not on the COF.

(e) Greater autonomy with regard to international franchises, allowing the parties to freely choose the applicable law, provided that it refers to the domicile of one of the contracting parties.

Therefore, PLC 219 represents another trend towards broad economic freedom, since it establishes great contractual freedom, provided that the options are provided for in the COF, while also ensuring greater legal certainty, transparency and simplification for both the franchisor and the franchisee.

The Corporate Law Department of Kestener, Granja & Vieira Advogados is available to provide any further information required on this subject.

Fabio Alonso Vieira
Phone.: +55 11 3149-6111
fabio.vieira@kgvlaw.com.br

This article is intended exclusively to provide information and does not contain any opinion, recommendation or legal advice from KGV Advogados in relation to the matters herein addressed. Copyrights are reserved to Kestener, Granja & Vieira Advogados.