Technical and operational problems at the Spanish Franchisor Registry (the "Registry") have resulted in the Spanish Authorities suspending the activities of the Registry. As a result, the obligation on franchisors to register with the Spanish Franchisor Registry when granting a franchise in Spain is suspended until further notice.
What was the requirement?
Spanish law required a prospective franchisor to register in the Registry within three months of the date on which the franchisee begins its franchised activities. The relevant legislation was contained in Article 62 of Spanish Act 7/1996 dated 15 January on the Regulation of Retail Trading and Royal Decree 201/2010 of 26 February 2010 on commercial activities of franchising and the registry of franchisors. The obligation did not apply to franchisors intending to grant Master Franchise or Area Development Service Agreements.
Why has the requirement been suspended?
The Spanish General Sub Directorate of Internal Trade has exercised its power to suspend all activities of the Registry as a result of long-standing technical and operational problems.
Since its foundation in 1998, the Registry has delivered a poor performance of its duties and has proved ineffective at monitoring Franchisors, as demonstrated by the fact that it has not issued a single administrative sanction in its 20 year history.
These operational problems have more recently been accompanied by technical problems with the Registry's website.
The Spanish Franchise Association is working alongside the Minister of Economy, Industry and Competition to resolve the Registry's ongoing issues.
For the meantime, however, Franchisors will not be liable if they grant franchise rights to a franchisee in Spain, without registration. However, Franchisors are encouraged to check in with their legal counsel or the Registry itself to monitor the on-going situation, as the suspension will not be permanent.
Written by David Bond and Alex Harbin