The East Europe Franchise Association - A Comprehensive resource for effective franchise business in East & Central Europe.

East and Central Europe Market Intelligence

Legal Country Overviews
These are legal overviews of key CEE countries.

Slovakia

The flag of Overview:
After the significant political changes in the Slovak Republic, foreign investors focused on direct investments and began to establish Slovak subsidiaries in large numbers. Later on, growing trust in the stability of the Slovak economy led to an increase in franchising agreements, despite the caution showed by Slovak financial institutions due to a lack of experience. At the present time at least 100 franchising models are present on the Slovak market, about two thirds of which are engaged in retail trade and one third in services.

The outlook for the continued rapid development of franchising in the Slovak Republic are positive. In the past, one of the largest merchant banks (member of the Intesa Sao Paolo group), has developed a special scheme for the financing franchising operations in Slovakia. The buying power of the local population is also increasing steadily, but in numerous areas the competition situation is still favourable to foreign systems. The legal framework for franchising in Slovakia is already largely adjusted to European Single Market standards, so in this respect, the investor and be assured of a comfortable level of security for his investments.

Slovak law does not specifically regulate franchise agreement as such. According to the Slovak Commercial Code, such agreement is a so-called “unspecified” type of contract, which can contain elements of different types of contract, such as a license agreement, an agreement for the provision of know-how, a rental or leasing contract, a commercial agency agreement, a (framework) contract of sale (where goods are supplied) or a (framework) contract for the provision of services.

Apart from the general provisions of the Slovak Commercial Code and the Slovak Civil Code, Slovak antitrust and commercial law also must be taken into account in adapting a franchising system to Slovak conditions.

Following the accession of the Slovak Republic to the European Union (EU) on 1 May 2004, the competition law of the EU is in force in the Slovak Republic. Prior to the accession, Slovak competition law and related legal provisions were harmonized to be made consistent with EU antitrust law. This applies, in particular, to the Slovak Law for the Protection of Competition (the principal Slovak Competition Law), which prohibits agreements that restrict competition unless they are covered by the exemption for “minor cases. Slovak Competition Law sets a 10% threshold for such “minor cases” (calculated according to the collective market share of the participants) for an exemption from the ban on restriction of competition. The Office for the Protection of Competition and the European Union Commission monitor compliance with antitrust regulation.

Slovak law does not itself impose precontractual obligations on the franchisor to provide information, nor has any case law been handed down in this respect so far. However, some Slovak legal commentators have noted that the principle of good faith in contractual dealing could provide a legal basis for imposing such a duty of disclosure.

No national register for franchise agreements exists in the Slovak Republic. However, according to the Slovak Commercial Code and the Slovak Trademark Law, trademark licensing agreements must be registered. The consequence is that all contracts containing a trademark license, which would, as a rule, include franchise agreements, must be registered at the Office of Industrial Property in Banska Bystrica. Registration is made on request and does not require an examination. In addition, the Slovak Franchise Association (Slovenska franchisingova asociacia), which has accompanied the development and growth of franchise systems in the Slovak Republic since the foundation of the Association in 1994, plays an increasingly important role. The Slovak Franchise Association provides information to the public and advice and support to its members in carrying out their activities, represents its membership before the Slovak authorities: exercises influence on the Slovak legislature in order to obtain clear legal and tax framework conditions, and cooperates with other associations, especially other European franchise associations. The Slovak Franchise Association has adopted the European Code of Ethics for Franchising. A Slovak version of the Code is available on the website of the Slovak Franchise Association. Compliance with the Code is an essential prerequisite for membership in the Association and for the grant of loans within the context of the special franchise schemes of the banks.

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JUDr Pavol Rak
tel +421 2 591010 14
Palisady 29/A
SK-81106 Bratislava
Slovakia

 

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