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4 Int'l J. Franchising L. 3 (2006)

handle is hein.journals/intjoflw4 and id is 1 raw text is: I FEATU RE Regulation setting up Franchise Rules in Italy: Commentary and Unofficial Translation by Professor Aldo Frignani, Frignani e Associati, Turin Professor Frignani provides a translation of and Commentary to the 'Regulation setting up Rules on Franchise, under Article 4, paragraph 2, of law n. 129 of 6 may 2004', Decree of the Ministero dele attivit6 produttive (Ministry for production activities) n. 204 of 2 September 2005.1 With the above decree,2 the legal framework relating to disclosure in franchising is now complete. Article 4.2, part 2, of law n. 129 of 6 May 2004, provides that 'as to the information under (d)', '(list of current franchisees and of the franchisor's direct outlets)', (e) '(annual variation in the number of franchisees with their locations and addresses in the last three years)' and (f) '(summary of judicial or arbitral disputes concerning the franchising network)', the franchisor 'can supply the information related to the franchise business carried out in the Italian market only' while 'the information to be supplied under (d), (e) and (f) by a franchisor who has carried out his activities only abroad, will be regulated by a decree of the Ministry for Production Activities' (the 'Regulation'). Such provision represents a novelty and appeared in the text of the statute as a last minute insertion. In fact a double problem then arose: whether or not a franchisor that already carried out his activity in a foreign country other than Italy, was obliged to provide, in the disclosure under letters (d), (e) and (f), all the information related to its business everywhere else abroad. On this issue it was then decided that if a party is dealing with the opening of a franchise business in Italy, only the information related to this territory is relevant for the purpose of evaluating the franchise: hence the limitation provided by paragraph 2, first part,3 art. 4.2. - The information concerning the foreign markets in which the franchisor already has a franchise network becomes relevant only when there is no other information available concerning Italy, once it has been assumed - as the law (tacitly) allowed - that the testing carried out abroad4 has been done in a suitable manner. On the other hand, it is also necessary to take into account the case of the franchisor who, until that time, has only been operating his business abroad but wishes to expand his business in Italy. Requiring such an investor to provide the prospective franchisee with information relating to all the countries in which he is present, with the same accuracy of an investor operating in Italy has, as a first drawback, the fact that the franchisee, when he deals with this mass of non selective information, is not in a position to get out (this is the phenomenon, underlined by economists and sociologists, according to which too much information is equivalent to the lack of information).5 Bearing this in mind, with reference to a foreign franchisor who has carried out his activities in many foreign countries, one proposal was to be selective and provide only that information which related to those countries with a market similar to that of Italy, which information would appear therefore to be of greater value to the prospective franchisee.6 Such a proposal has not been included in the final text of the law. Therefore the concern felt by some during the drafting of the text of the regulation, that the intention of the legislators was to treat foreign franchisors in a privileged way compared to the Italian ones, must be discounted. The law pursues the objective to provide a service to the prospective franchisees by rendering intelligible the disclosures. www.richmondLawtax.com

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