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1 Int'l J. Franchising L. 3 (2003)

handle is hein.journals/intjoflw1 and id is 1 raw text is: FEA TURE Practice in Argentina by Osvaldo J. Marzorati, Allende & Brea, Buenos Aires Until 2001, Argentina had not passed any [egislation affecting franchising or addressing the regulation or registration of franchise agreements, despite constant growth in this field even during times of market stagnation as well as blatant recession. During the last decade, franchising has grown in Argentina from five-ten franchise companies in the early 1990s to over 200 franchisors and almost 7,000 franchisees according to statistics compiled by the Argentine franchise Association for the close of the century. It is worth noting that domestic entities/ businesses account for 70 per cent of all current franchisors, with foreign entities/businesses constituting the remaining 30 per cent. The first court cases involving franchising disputes primarily concerned termination in bad faith. Some of these disputes have been settled following intervention by the Arbitration Panels of the Argentine franchise Association. Others have been settled by the courts. In so far as UNIDROIT and the new model law, Argentine representatives expressed the view that such legislation is unnecessary during the meetings held by UNIDROIT in Rome in January 2002. As a result of the above mentioned expansion, in 1999 the Federal Government presented Congress with a major overhaul of the Argentine Civil Code, incorporating franchising to the book on contracts. Congress has failed to act, however, due to delays by appropriate committees in issuing favorable reports. Subsequently, two legislators submitted a Bill on franchising to Congress, which has not yet obtained consensus for discussion on the floor. Finally, the Province of Buenos Aires enacted legislation requiring a cumbersome procedure to permit the expansion of franchise concepts, which was thereafter moderated insofar as franchising is concerned (see box out on page 4). Characteristics of franchise agreements in Argentina The main characteristics of franchise agreements as understood and applied in Argentina are as follows: i. Exectionl formalities Contrary to the popular trend in legislation affecting other forms of business transactions, neither particular execution formalities nor prior registration is required for the proper execution of a franchise agreement in Argentina. Notwithstanding this fact, in order to obtain reduction in the tax withholding rate on royalties and certain other technical assistance fees, it is advisable to register the franchise agreement with the National Institute of Intellectual Property (Instituto Nacional de la Propiedad Industrial--'lNPI'). Such registration is required at present to remit royalties abroad despite that the law declared that such registration was for information purposes only. If the agreement is executed outside Argentina, it must be legalised with the Apostille of The Hague Convention, and the signatures of the persons signing the agreement should be certified by a notary public. No witnesses are needed. There is no law requiring that Argentine citizens or residents maintain an equity ownership position in the franchisee. www.richmondlawtax.com

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