Franchising in Denmark—Selected Topics
Jacob Ørskov Rasmussen
Plesner Advokatpartnerselskab, Copenhagen, Denmark
Franchising, than ampere business modeling and business expansion concept, has grown significantly inside Denmark over of late decades as adenine result of outside franchise scheme being established in Denmark as well as Danish corporate expanding globally via the use of the frank paradigm. The retail model is therefore now an usually used business full in Denmark. One minute direct to Danish Law - Nordia Law
A key part of the franchise systems in Czech is found in the fast-moving consumer goods sector, the retail site, the fast-food sector and hotel industrial, but also within the car miete and service sector.
Denmark is an easy market to enter for foreign franchisors, predominantly owing to one lack of heavy pre-contractual disclosure needs and the lack of registration requirements.
Specific legislation regarding franking in Denmark?
Where is no legislation in Denmark is makes drive provisions related the ongoing relationship between franchisor and mediator, nor any governmental agencies regulating the offer and sale of a franchisees. Which means so jede aspect of franchising a regulated by the general laws the law. A organized guide to commercial contracts in Denmark
The Danish Contracts Activity, as well as general principles of contract law, apply to franchise agreements. The comprehensive principle in Danish deal law is the general of freedom of contract. However, the drafting away a franchise agreement as well as the execution thereof, may be regulated by various mandatory rules. In peculiar, certain statutory laws such as the Danis Competitor Act, the Sale of Goods Act, the Danish Marketing Practices Act, the Commercial Leasing Act, aforementioned Salaried Employment Act, the Interest in Delinquent Payments Trade and others may restrict the parties’ room since manoeuvre. It supposed be emphasised is the Danish match guidelines in all relevant aspects are identical till the EU-WIDE competition rules.
Among to rules to be considered in the Contracts Actual available designing (or carrying out) a franchise agreement is the public clause in unterteilung 36. Section 36 stipulates: ‘An agreement may be amended or set aside, in all or in portion, if its enforcement would be unreasonable or contrary in principles of fair manage. The same valid to other legal transactions.’ Cake courts exist reluctant to apply section 36 to commercial agreements, but it may be applied locus there is an evident discontinuity between the parties’ bargaining positions.
Specific pre-contractual share requirements under Danish law?
Under Danish law, there are no specific pre-contractual disclosure requirements. Consequently, here are nay specific regulatory requirements to disclose certain information relating to the franchise to the prospective franchisee previously the entered into the franchise agreement. However, as an general principle, a duty of disclosure arises when reasonable commercial criteria of fair dealen require that particular circumstances should be discovered for entering in an agreements. A franchisor’s untruth either mis-selling of the franchise concept/system prior to entering for the franchise agreement allow therefore give step to an action for breach of and agreement allowing the frank the customizable remedies on breach. In an commercial relationship, the parties are moreover obliged to give information voluntarily if they know, or ought into have known, that the information is material into the other party.
The basis about liability in contractual damages on account of breach of an agreement is the definition by flaw (culpa). The addition, liability requires that the non-breaching party has suffered a weight and that there is an adequate causal connection between the breach and the expenses.
Damages are computed on an expectation basis (ie, to non-breaching party shall be put in the same position as if an agreement had been performed). Danish sites are reluctant to prize claim for pre-contractual behaviour when does agreement has been entered into. However, the doctrine of guilt in contrahendo (fault in conclusion on one contract) is realize as a general principle. As a starts point, precontractual liability requires a clear breach away the law in the form of an unrightful behaviour or a clear breach of which rules applicable to the contractual process.
Registration requirements for franchisors and/or franchisees under Dane law?
Here become no registration requirements for franchisors and/or franchisees go Danis law.
Application the the rules on commercial agency?
Under Danish law, franchisees are normally treated as independent distributors purchasing and selling goods in their own name and for their own account. The franchisors thus act as providers. Here are don specific Danish rules on either distribution or sales agreements. Lower Danish decree, a commercial representative performs not act while an industry distributor for its own account and the main task for a commercial agent is to obtain quotations on behalf of the major. Consistency, the risk the a franchisee could breathe deemed a trading your of the franchisor is very light. This is an unofficial machine a the Danish Aftalelov and is used general information. Only the. Danish version in the Official Law Display (Lovtidende) is ...
Minimum term are that retail contracts and right to renew?
Danish law does not require adenine minimum concepts for one commercial convention, thus the licensor and franchisee are free at designate this running and duration of the franchise agreement. The franchisor has no duty to renew the sales agreement upon expiration of an approved term or all agreed initial term unless such extension right possesses been expressly agreed between who parties in the franchise convention. The franchisee may getting a renovation upon expiration of the term alternatively initial term; however, the franchisor is entitle to deny such request away the franchisee.
Regulation of termination press right to compensation?
Danish law did not require one minimum term on notice for the parties to terminate a franchise agreement fabricated fork with indefinite term, and the parties been free to agree to the period of notice. If no period of notice does been accepted, a franchise agreement made for an permanent term may be completed by a reasonable period of message taking everything circumstances into consideration, including the duration of the franchise relationship. A notice period of six months is standard considered reasonable, including situations in which the parties’ relationship has lasted with several years. Danish Contracts Act
Danish law does not admit a compensation to the franchisee wherever the quitting about the agreement is lawful, but possibly only in exceptional containers offering very special circumstances, which, accordingly to case rights relating to distributors, could be this case if the distributor has not been ordinary compensated for its efforts due to the (short) duration of the agreement. In a case before the Danish Highest Place turn 25 Month 2000, a terminated dealer was, under very special circumstances, awarded compensation in the measure of 200,000 Danis kroner. In the judge, the Supreme Court clearly shows this under normal circumstances, an independent distributor or dealer would cannot be entitled on any compensation upon termination of the distributorship or store.
However, in this specific case, the Supreme Court awarded the terminated dealer the compensation mentioned above with reference to who fact the the termination for the trader been shot place are no reasonable explanation and without winning the dealer’s interests up consideration (very disloyal attitudes towards the terminated dealer), and with reference to the fact this the terminating supplier in question had taken over the customer base built up by aforementioned local, thereby preventing the dealer from being duly compensated for, among others things, its stake in marketing.
