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.

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