Franchising can be defined as the practice of using someone else’s business method, in which the franchisor grants the franchisee, the right to sell a product or service under the franchisor’s systems, procedures and structure.
Under Maltese Law, franchise and franchise agreements are not specifically regulated, thus, this highlights the importance of having franchising arrangements and agreements. There are currently no mandatory elements prescribed by Maltese law concerning the form and content of a franchise agreement, however, such agreements fall under general contract law and anything regulating contracts in general would usually be applicable. Franchise agreements are not required by Maltese law to be registered.
There are a number of franchising formats available which one may opt for and these can be generally categorised as;
- Single-Unit Franchise – which allows a franchisee to open one facility
- Multi-Unit Franchise – which allows a franchisee to open several facilities
- Area Development Franchise – which allows a franchisee to open several facilities in a certain region
- Master Franchise – which allows a franchisee to open and sell the right to the franchisee
At GMX we can assist clients in the drafting of franchise agreements as well as giving advice on various matters related to franchising such as corporate licensing, group structuring, taxation and intellectual property.