The franchising business implies the application of a successful business format in another economic area. In order to obtain a maximum of profit from franchising in Hungary there are a set of practical issues that you should not overlook. You might need the guidance and legal support from a law firm in Hungary, in order to check the framework which regulates franchising, and the contractual aspects of the franchise agreement that you intend to sign.
Franchising regulations in Hungary
The Hungarian Company Law allows all types of entities to become franchisors; however the most common business forms that sign a franchise agreement are the limited liability companies. Depending on the structure of your enterprise you might be required to provide different documents, but in general you should elaborate a memorandum of association describing the operational aspects of your entity and to have your company registered at the Company Court of Registration.
The foreign investors in Hungary intending to enter a franchise agreement benefit from the same rights and obligations as the Hungarian citizens. Regarding taxation, the royalties which should be payed to the franchisors are not subject to corporate tax. The double taxation treaties are also important for the regulation of taxation issues for franchisors.
The signing of franchise agreements in Hungary
Prior to the signing of a franchise agreement in Hungary, you will need legal assistance from our Hungarian lawyers, with a few preceding steps:
• analysis of the disclosure requirements of the pre-contract;
• a clear exposition of rights and obligations of the parties in the contract;
• being aware of the required fees and payments;
• stating a term of agreement and renewal;
• decisions concerning the termination of agreement and liability;
• issues regarding intellectual property;
• discussing employment issues.
Another important step is the implementation by the franchisee of the instructions provided by the franchisor in the operating manual. The franchisee might benefit as well of training programs in order to learn how to adjust the business to the successful format of the franchisor brand.
For all these legal aspects feel free to contact us and call on the legal services offered by our lawyers in Hungary. They can draft a franchise agreement and provide legal assistance throughout the entire franchising process.