FRANCHISE CONTRACT AND GOOD FAITH

Abstract

Franchise is a widespread business model in countries with developed economies. Although that in Albania there are few franchising relations, the Albanian Civil Code provides franchising as a contract. The franchise contract is a binding agreement where the franchiser grants the franchisee the right to use the trademark and the operating system of the franchiser, mutually fulfilling rights and duties derived by this contract. The most important duty of the franchiser is to make available to the franchisee a standardized set of immaterial rights, models, charts, profit, organization and trade ideas, and other appropriate knowledge for the development of trade. During the negotiations, the parties have to show each other the commercial affairs conditions dealing with the franchise agreement and the franchise obligations particular program. The information during the negotiations must be confidential and such must remain, even if the contract is not concluded. The Albanian Civil Code provides that in general during the contract negotiations, the parties must act in good faith towards each other. In case of franchise contract the good faith is specifically required by law, due to the fact that the parties normally provide each other with important and economical valuable information. The aim of this paper is to realize an overview of a new contract, as franchising and its importance in economic relations. This paper will clarify the Albanian legal provisions on franchise contract, the rights and duties of each party. It will be highlighted the role of good faith in negotiations, how the parties must act and the possibility to compensate potential damages. It is about one principle, the Good Faith Principle, that Civil Law jurisdiction and Common Law jurisdictions have generally two different approaches. The paper will show the changes in legal provisions of some European countries regarding good faith in franchise contracts.

DOI: 10.5901/mjss.2014.v5n22p313