Intellectual Property / Government Relations

The Economic Affairs Committee of the Federal Senate (CAE/SF) approved last week the opinion presented by Senator Kátia Abreu (PDT-TO) to the Bill of Law (PLC) No. 219/2015 (Project), authored by the former Deputy Alberto Mourão (PSDB-SP), which updates the legal framework of the franchising system in Brazil.

The Project, which revokes the current Franchise Law (Law No. 8,955/1994), corrects the terminology of the current law to avoid the possibility of framing this type of agreement as a consumer or employment relationship, especially in cases regarding the training and evaluation period.

Additionality, the Project adopts a clearer terminology to enforce the franchisor’s obligation to provide the franchisee with a Franchise Offering Circular (COF) at least 10 days prior to signing the agreement or paying of the franchising fees by the franchisee. The text continues to privilege contractual freedom, provided that the contractors’ options are previously stipulated in the COF. Among other aspects, information regarding transfer rights, possibility of refusing products, minimum quotas for acquisition and the territorial scope for the exclusive use of the franchisee are some of items that must be included in the COF.

The Project has also brought specific sections that represent advances in terms of intellectual property rights, once this topic is expressly addressed in the Project. The Project, for example, adopts the terminology “trademarks and other intellectual property rights” rather than providing only the right to use “trademark or patent”, expressly expanding the scope of industrial property rights that can be licensed by the franchisor to the franchisee.

For international franchises, the text of the Project provides that the contracting parties shall be free to state the applicable law to the agreement between the domicile of the franchisee or the domicile of the franchisor, no longer being mandatory the application of the law of the place where the agreement was executed.

The text also allows government-owned companies, mixed-capital companies and entities controlled by the Federal Government, states, municipalities and the Federal District to adopt the franchise system in accordance with bidding procedure, in compliance with Law No. 8,666/1993. In this case, the adoption of the franchising system shall be preceded by a public offer, through publication in a newspaper of large circulation of the State where the franchise will be offered and the COF shall indicate the objective criteria for selecting the franchisee.

The Senate Constitution and Justice Committee had already approved the Project on June 2018, when it received a favorable opinion from the reporter in the Committee, former Senator Armando Monteiro (PTB-PE), with a wording amendment.

Now, the Project will proceed to the Plenary Senate for deliberation by simple majority. If approved, the text will progress to the President of the Republic, who will have 15 working days to approve or reject the Project, totally or partially.

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