Relevant Issues Related to Franchise Agreements
Relevant Issues Related to Franchise Agreements

Summary/Abstract: Franchising has entered a mature stage in Hungary, and the creation of the new Civil Code has questioned the need for codification. However, the Codification Committee has finally voted for codification. The franchise is a complex relationship between market players based on a specialised agreement. It is highly important from a market perspective, as the number and influence of franchise-based enterprises have increased significantly. The franchise agreement is an atypical, sui generis agreement unregulated by the Civil Code; it is an independent type of contract which combines distinct types of legal transaction. A major issue in national law is the need for codification in each country. Due to the complexity of the typical franchise document, the basic franchise agreement, it has not appeared in Private Law codes. However the need for creating a legal framework and for regulating this type of contract is increasing. The rules and regulations under the aegis of UNIDROIT suggest that the franchise is, perhaps, ready to be taken into national legislation. In Hungary the current Civil Code does not regulate such types of contract and only statutes and basic laws restrict the actions of the parties. Hence a franchise agreement must comply with the national rule of law and with the Ethical Code, although the new Civil Code will treat it as a distinct and separate type of contract.

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