Italy: The New Italian Franchise Law

Last Updated: 13 May 2004

Last week Italy became the latest nation to adopt a law regulating the sale of franchises and the conduct of franchisors and franchisees. Two other European countries, France and Spain, already have such laws.

The Italian law is principally a form of disclosure legislation, but with some provisions that would normally appear in a "relationship" law. It imposes obligations upon franchisees as well as franchisors and affects pre-contractual conduct as well as the fundamental elements of the relationship.

The law had been debated within the Italian parliament for more than a year, and the version which was finally adopted underwent significant change during the course of debate and negotiation. Those changes brought substantial improvements to international franchisors considering entering the Italian market. But the law as adopted retains a number of troublesome or problematic provisions which will likely prompt franchisors to give careful consideration to the nature of the burdens imposed upon them. The Franchise and Distribution practice group of Piper Rudnick LLP will shortly prepare a more detailed examination of the new law. In the interim, this summary is designed to alert our clients and colleagues to some of the more salient features of the legislation. –

Changes Beneficial to International Companies

As originally proposed, the Italian legislation would have prevented a non-European franchisor from entering Europe via franchising in Italy. Any franchisor planning to do so would have been required first to test its system in another European Union country for a minimum period of time, with a minimum number of units, a portion of which to be operated by "pilot franchisees." Franchisors from the United States and from other European countries joined those from Italy in arguing to legislators that the proposal was manifestly unworkable; that it was treating other EU markets like guinea pigs; and that it barred Italian consumers from access to the products and services of well-known non-European franchisors. That proposal has been dropped in the version as adopted.

The original provisions called for the franchisor to provide "a business plan forecast-based, if possible, on the experience of franchisees in a similar position." Since few non-Italian franchisors would be willing to "forecast" the experience in Italy based on the experience of franchisees "in a similar position" elsewhere, this requirement would have caused many franchisors to hesitate before entering the country. That provision has been removed.

Among the required disclosures by a franchisor to a prospective franchisee are a list of franchisees currently operating; information on franchisees who have left the system; and information on judicial or arbitral proceedings initiated against the franchisor both by franchisees and other private parties, or by public authorities. Fortunately, however, the drafters have recognized that this information is far more difficult to provide and, in the case of non-Italian franchisors, of more attenuated relevance. As a consequence, the franchisor is permitted to limit the disclosed information to its activities in the Italian market. Within ninety days, a regulation will be issued outlining the information to be required in the case of franchisors based elsewhere who have not previously operated in Italy. This level of sensitivity to the different position in which non-Italian franchisors find themselves reflects a greater sophistication and appreciation of the realities of international franchising than was demonstrated in the earlier debates on the legislation.

Aspects of the Italian Franchise Law

A principal provision of the new law is a requirement of pre-contractual disclosure to prospective franchisees. The elements of disclosure are rather typical and represent a selection of the more fundamental information required by traditional U.S. disclosure laws. That list is considerably more limited than in the United States.

A second element of the law is a set of requirements as to provisions of the agreement itself. In fact, however, these are largely of a "disclosure" nature themselves. In other words, the requirement is simply that certain elements of the relationship be explicitly articulated in writing. Thus, the agreement must express the "terms and conditions for renewal, termination or assignment, if any." Few of these provisions will trouble experienced franchisors.

The Law Also Raises Serious Questions for Franchisors

In a number of respects, however, the new law raises questions and issues for franchisors. Among them:

  • There is a strong suggestion that it will be necessary for a franchisor to acknowledge that at least some portion of the "know-how" has been contributed by the franchisee, perhaps presaging an obligation to accord to the franchisee certain rights of ownership of that intellectual property.
  • The franchisor must "guarantee the franchisee a minimum term which would allow the amortization of the investment," but which in no event is less than three years. The notion that there could be a much longer term required, and the ominous ring of the term "guarantee," will be offensive to many franchisors.
  • There are several passages in the law which impose obligations (on franchisees as well as franchisors) of a rather vague nature; for example, the franchisor "must behave toward the prospective franchisee according to the standards of loyalty, fairness and good faith."
  • The information which must be provided is not limited to that which is explicitly detailed in the statute. The franchisor is required, in addition, to provide the prospective franchisee with "any data and information... necessary or useful." The open-ended nature of obligations of this sort will surely be vexing to many companies considering entering the marketplace.

The Law Applies Now

The statute will apply, immediately upon publication in the Official Gazette, to all new contracts. Contracts already in force must be made compliant with the statute within one year (although much of the statute would appear to be inapplicable to existing agreements, since directed at pre-contractual conduct).

Italy has created a major new law for a major marketplace. There is much here for international franchisors and their lawyers to study, and one can expect a stream of commentary to come.

Note: Our firm wishes to express its appreciation for the translations of the new law which we have received from the Milan office of DLA; Frignani e Association Studio Legal; the European Franchise Federation; and the U.S. Commercial Service, Italy. We expect to be in further consultation with these and other sources of information; and, as noted, will shortly prepare a more detailed examination of the new statute.

This article is intended to provide information on recent legal developments. It should not be construed as legal advice or legal opinion on specific facts. Pursuant to applicable Rules of Professional Conduct, it may constitute advertising.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.