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The flag of RomaniaRomania

Capital City: Bucharest
Population (Millions): 22

ECONOMIC OVERVIEW

GDP Per Capita: US$
GDP per Sector:
Agriculture -
Industry -
Services -
Currency: Leu (RON)
Ex.Rates:
Big Cities (>100,000): Iaşi, Cluj-Napoca, Timişoara, Constanţa, Craiova, Galaţi, Braşov, Ploieşti, Brăila, Oradea, Bacău, Piteşti, Arad, Sibiu, Târgu Mureş, Baia Mare, Buzău, Botoşani, Satu Mare, Râmnicu Vâlcea, Piatra-Neamţ, Drobeta-Turnu, Severin, Suceava, Focşani, Târgu Jiu
Urban Population:
Languages: Romanian

National Franchise Association

Asociatia Romana De Franciza

Asociatia Romana De Franciza
Mr. Constantin Anton
anton@francizor.ro



LEGAL OVERVIEW

"According to the Centre for Entrepreneurship & Business Research (CEBR) in 2007, there were approximately 250 franchises in Romania, among which 36.42% of EU countries origin and 19.14% from non-EU countries (USA, Canada, Australia, Argentina, Turkey, Israel etc.), the rest of 45% being represented by the Romanian franchises. According to their fields of activities before the financial crisis, the franchises were as follows:

  • Clothes and accessories –13.66 %
  • Construction – 1.86 %
  • Services –12.42 %
  • Fast-food – 11.80 %
  • Food industry – 2.48 %
  • Home Appliances – 7.45 %
  • Hotels – 1.24 %
  • Personal services – 24.84 %
  • Real estate – 2.48 %
  • Restaurants and coffee shops – 5.59 %
  • Retail – 16.15 %

Nowadays, due to the global economical downturn, the franchises are stroked by the crisis as well. The lack of financial resources determined on one hand by the blockage of the bank system and on the other hand by the consumers, who are more cautious with spending their money, generated a stagnation of the franchises during 2009.

However, it appears that franchise systems still have not lost their attraction despite unfavorable economic climate, especially this concerns less expensive franchises. It is forecasted by operators of the market that luxury brands franchises might lose their turnovers and profits while the ones acting in food industry which are less expensive will overcome the crisis.

Romanian law does not require a franchise contract to take a standard form. The law only set out the main provisions and principles that should govern this specific type of contract. For example, Romanian law on franchising regulates the precontractual relationship, the main features of a franchising contract and the legal regime after the contract terminates.

Under Romanian legislation, the precontractual stage enables each party to make its business decision with full knowledge of the facts and to confirm to each other their desire to collaborate. Moreover, the law imposes certain obligations on a franchisor in order to protect the franchisee against any potential negative effects due to the franchisee’s potential lack of information or experience in connection with the future business. The franchisor is legally bound to disclose the following information:

  • Business experience (the law does not provide any details in this regard but we are of the opinion that in this case the information should make reference to the franchisor’s company, management, history of the company)
  • Contract financial terms (entrance fee, periodical royalties, products prices)
  • Relevant information enabling the franchisee to make the business plan and to forecast the financial results (the law does not stipulate any details in this regard, but according to the legal doctrine, such information should make reference to the competition, the general status of the market, development perspectives)
  • Objectives and territory (the information should refer to limits/restraints for the franchisee)
  • The contract duration and the renewal/amendment/termination conditions.

With respect to the franchise contract it should be noted that there are certain legal requirements provided for the franchisor and respectively for the franchisee. As regards the franchisor, the law stipulates the following obligations:

  • To own and operate a commercial activity for a certain period of time before launching the franchise network
  • To be the owner of the intellectual property rights
  • To provide a mandatory initial training for its franchisees and also to provide commercial/technical assistance on a permanent basis, during the contract existence
  • To supervise and preserve the franchise network name and reputation.

As for the franchisee, the law provides the following requirements:

  • To develop the franchise network and preserve the name and reputation of the franchise chain
  • To provide the franchisor with any relevant information regarding the financial status of the business
  • Not to disclose business know-how, to any third parties during the contract performance and after its termination as well.

Noerr is an international partnership of attorneys, tax advisors and auditors.
Christina Stamboli
tel +40 21 3125888
Str. General Constantin Budisteanu nr. 28 C, sector 1
RO-010775 Bucuresti
Romania

 

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