Advertising a franchise in Italy is subject to a complex legislation, aimed at ensuring the proper functioning of the market and competition. The applicable rules are different depending on whether the advertising is aimed at potential affiliates or end customers. Italian law adopts therefore a very broad concept of advertising, which includes business plan and disclosure information to potential franchisees
1. How is advertising in franchising legally regulated in Italy
As for any other business activity, advertising – carried out according to traditional methods (off-line) or via the Internet (online) – is very important also in the franchising context.
In general, advertising promotion in franchising can have two different recipients:
- potential affiliates, who are attracted by the franchisor to join the franchise network;
- end customers (mostly consumers), recipients of the activities carried out by franchisees within the franchising network.
While the first form of advertising (the one directed to potential franchisees), is performed only by the franchisor, the second type of advertising (directed to end-consumers), can instead be carried out also by franchisees, usually under the coordination and direction of the franchisor, to ensure the need for uniformity of the franchise network and protection of the image of the network itself.
Advertising a franchise in Italy is subject to a complex and varied legislation, aimed at ensuring the proper functioning of the market and competition.
The applicable rules are different depending on whether the advertising is aimed at potential affiliates or end customers.
In the first case, since the (potential) franchisees are considered from a legal point of view as entrepreneurs (and not consumers), Italian Legislative Decree n. 145/2007 on misleading and comparative advertising between companies (B2B), applies.
If, on the other hand, advertising is aimed at final customers, Italian Legislative Decree n. n. 206/2005 (Consumer Code), which regulates unfair commercial practices in relations between businesses and consumers (B2C), applies.
2. What is considered “advertising” in franchising from a legal point of view
According to the art. 2, paragraph 1 of the Legislative Decree. n. 145/2007, “advertising” is “any form of message that is widespread, in any way, in the exercise of a commercial, industrial, craft or professional activity in order to promote the transfer of movable or immovable property, the provision of works or services or the constitution o the transfer of rights and obligations on them “.
Italian law adopts therefore a very broad concept of advertising, regardless of the means by which the advertising message is disseminated, provided that it is aimed at promoting a specific business activity.
In fact, according to Italian Law, in the franchising context constitute advertising not only advertising messages in the strict sense (such as slogans, flyers, brochures, banners, etc.), but also business plans, disclosure information to potential franchisees pursuant to the Law. n. 129/2004 and journalistic articles, if the advertising aspect is predominant on the informative one, from the point of view of the communication impact for the recipient.
3. What characteristics must the advertisements have in the franchise to be lawful
Article 1, 2nd paragraph of Legislative Decree 145/2007 provides that advertising must be:
These characteristics must be present in the advertisement since the first contact with the recipient. The business communication must therefore be clear and complete from the beginning, regardless of whether the recipient can learn further items later, by referring to other information sources.
It follows that a misleading advertising message is not remedied by the fact that subsequently, during negotiations, the potential franchisee receives clarifications and information by the franchisor, pursuant to the Law n. 129/2004.
Art. 5 of the Legislative Decree 145/2007 also provides that advertising must always be “clearly recognizable” as such, and that advertising in the press must be distinguishable from other forms of communication to the public, with graphic modes of clear perception.
The recipients of the advertising message must therefore be allowed to recognize the promotional and non-independent nature of the same, so that a sufficient critical reaction and attention threshold is activated.
This rule may provoke critical issues with regard to online advertising messages, due to the particular ways in which they are sometimes widespread. For example, banners can cause problems when their characteristics are such as to generate confusion with the context in which they are present.
Consequences of non compliance with the Italian Law on advertising might be quite severe for foreign franchisors. Therefore, careful planning and adequate legal counseling from a local law firm is highly recommended.
Avv. Valerio Pandolfini
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The information contained in this article is of a general nature and is not to be considered an exhaustive examination of the various issues, nor is it intended to express an opinion or provide legal advice. Specific legal advice must be provided with regard to individual cases.