Romanian Franchise Association Code of Ethical Conduct: Extension and Interpretation

This Extension and Interpretation forms an integral part of the Code of Ethical Conduct adopted by the Romanian Franchise Association and to which its members adhere.

Application

1. This Code of Ethical Conduct forms part of the membership agreement between the Romanian Franchise Association and its member companies. It does not form any part of the contractual agreement ‘ between franchisor and franchises unless expressly stated to do so by the franchisor in the franchise agreement. Neither should anything in this Code be construed as limiting a Franchisor’s right to sell or assign its interest in a franchised business.

Disclosure

2. The objectivity of recruitment literature (Clause 3.2) refers specifically to publicly available material. It is recognised that in discussing individual business projections with Franchisees, Franchisors are invariably involved in making assumptions which can only be tested by the passage of time.

Confidentiality

3. For the generality of this Code of Ethical Conduct, ‘know-how’ is taken as being as defined in the European Block Exemption to Article 85 of the Treaty of Rome. However for the purposes of Article 3.4 of the European Code of Ethics it is accepted that franchisors may impose non-competition and secrecy clauses to protect other information and systems where they may be reasonably regarded as material to the operation of the franchise.

Romanian Franchise Association

Contract Language

4. Franchisors should seek to ensure that they offer to franchisees contracts in a language in which the franchises is competent.

Contract Term

5. In suggesting in Article 5.4 of the European Code of Ethics that the minimum term for a franchise contract should be the period necessary to amortize those of a franchisee’s initial investment which are specific to the franchise, it is recognised:

(a) that for a minority of the largest franchise opportunities amortizing initial investments may not be a primary objective for the franchises. In such cases the objective should be to adopt a contract period which reasonably balances the interests of the parties to the contract.

(b) that this section could be subject to national laws concerning the restraint of trade and may need to be met through renewal clauses.

Contract Renewal

6. The basis for contract renewal should take into account the length of the original term, the extent to which the contract empowers the franchisor to require investments from the franchises for relinquishment or renovation, and the extent to which the franchisor may vary the terms of a contract on renewal. The overriding objective is to ensure that the franchisee has the opportunity to recover his franchise specific initial and subsequent investments and to exploit the franchised business for as long as the contract persists.

Adoption

7. This Code of Ethical Conduct comprising this Extension and Interpretation and the European Code of Ethics for Franchising was adopted by the Romanian Franchise Association, replacing its previous Code of Ethics on 30th August 1990, subject to a transitional period for full compliance ending 31st December 1991. During the transitional period members of the Association are nonetheless required to comply at least with the Code of Ethics previously in force. In October 1991 the Association agreed with the European Franchise Federation some amendments to the Code agreed in August 1990 and at the same time extended the transitional period to full compliance to 31st December 1992.

Additional Information Franchise

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