The

Franchise
Law Review

The Cartels and Leniency Review

Reproduced with permission from Law Business Research Ltd.

Second Edition

This article was first published in The Cartels and Leniency Review, 2nd edition
(published in January 2014 editor Christine A Varney).

Editor

For further information please email

Mark Abell
nick.barette@lbresearch.com

Law Business Research

The Franchise
Law Review

The Franchise Law Review

Reproduced with permission from Law Business Research Ltd.
This article was first published in The Franchise Law Review - Edition 2
(published in January 2015 editor Mark Abell).
For further information please email
Nick.Barette@lbresearch.com

The
Franchise
Law Review
Second Edition
Editor

Mark Abell

Law Business Research Ltd

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ACKNOWLEDGEMENTS

The publisher acknowledges and thanks the following law firms for their learned
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ADVOKATFIRMAN NOVA
ARAMIS
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Acknowledgements

PLESNER LAW FIRM

PORZIO, ROS & ASOCIADOS
SARAH CHARLES PRACTICAL STRATEGY
SMITH & HENDERSON
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SUBIDO PAGENTE CERTEZA MENDOZA & BINAY (SPCMB) LAW FIRM
TAY & PARTNERS

ii

CONTENTS

Editors Preface

vii
Mark Abell

Chapter 1

WHAT IS FRANCHISING?1
Mark Abell

Chapter 2

FRANCHISING AS PART OF AN INTERNATIONAL

MULTICHANNEL STRATEGY3
Mark Abell

Chapter 3

THE REGULATION OF FRANCHISING AROUND

THE WORLD8
Mark Abell

Chapter 4

COMMERCIAL PLANNING29
Sarah Charles

Chapter 5

SUSTAINING RELATIONSHIPS37
Steven Frost and Mark Abell

Chapter 6

INTELLECTUAL PROPERTY45
Allan Poulter and Robert Williams

Chapter 7

DATA PROTECTION52
Ruth Boardman, Francis Aldhouse and Elizabeth Upton

Chapter 8

TAX CONSIDERATIONS60
Mathew Oliver

Chapter 9

TRADE SECRETS AND FRANCHISING110

Warren Wayne and Mark Abell

Chapter 10

RESOLVING INTERNATIONAL FRANCHISE

DISPUTES119
Victoria Hobbs

iii

Contents

Chapter 11

E-COMMERCE AND FRANCHISING133

Ben Hughes

Chapter 12
THE COMPETITION LAW OF THE EUROPEAN
UNION139
Mark Abell
Chapter 13

EDITORS GLOBAL OVERVIEW141

Mark Abell

Chapter 14

GCC OVERVIEW148
Melissa Murray

Chapter 15

AUSTRALIA159
Philip Colman

Chapter 16

AUSTRIA180
Eckhard Flohr

Chapter 17

BELGIUM195
Olivier Clevenbergh, Jean-Pierre Fierens, Nomie Verborgh
and EricGrald Lang

Chapter 18

BRAZIL208
Cndida Ribeiro Caff, Rafael Atab de Araujo,
Mariana Reis Abenza, Fernanda Souto Pacheco
and Juliana Bussade Monteiro de Barros

Chapter 19

CANADA227
Peter Snell

Chapter 20

CHILE236
Cristbal Porzio

Chapter 21

CHINA250
Sven-Michael Werner

Chapter 22

CZECH REPUBLIC262
Vojtch Chloupek

Chapter 23

DENMARK273
Jacob rskov Rasmussen

iv

Contents

Chapter 24

FINLAND286
Patrick Lindgren

Chapter 25

FRANCE298
Raphal Mellerio

Chapter 26

GERMANY309
Stefan Engels and Bahne Sievers

Chapter 27

HONG KONG315
Michelle Chan and Alex Wong

Chapter 28

HUNGARY324
Pter Rippel-Szab and Bettina Kvecses

Chapter 29

INDIA338
Nipun Gupta, Divya Sharma and Mumuksha Singh

Chapter 30

INDONESIA352
Risti Wulansari

Chapter 31

IRELAND364
Imelda Reynolds

Chapter 32

ITALY382
Claudia Ricciardi

Chapter 33

MALAYSIA396
Lin Li Lee

Chapter 34

MEXICO417
Jorge Mondragn

Chapter 35

NETHERLANDS433
Hans E Urlus

Chapter 36

NEW ZEALAND451
Stewart Germann

Chapter 37

PHILIPPINES463
Claro F Certeza

Contents

Chapter 38

POLAND484
Maciej Gawroski

Chapter 39

RUSSIA495
Margarita Divina

Chapter 40

SINGAPORE512
Sheena Jacob, Angelique Chan and Just Wang

Chapter 41

SOUTH AFRICA524
Ian Jacobsberg, Charles van Staden, Janine Reddi,
Phillip Lourens and Cara Shahim

Chapter 42

SPAIN538
Mnica Esteve Sanz, Remedios Garca Gmez de Zamora
and Brbara Sainz de Vicua Lapetra

Chapter 43

SWEDEN552
Anders Fernlund

Chapter 44

UKRAINE561
Volodymyr Yakubovskyy and Graeme Payne

Chapter 45

UNITED KINGDOM571
Graeme Payne

Chapter 46

UNITED STATES592
Steven Feirman, Sara Farber, Gina McCreadie, Keri McWilliams,
Vincent Napoleon, Kendal Tyre and Diana Vilmenay

Chapter 47

CASE STUDY THE DWYER GROUP614

Duke Johnston

Chapter 48

DISPUTE RESOLUTION APPENDIX618

Fidel Porcuna

Appendix 1

ABOUT THE AUTHORS621

Appendix 2

CONTRIBUTING LAW FIRMS CONTACT DETAILS647

vi

EDITORS PREFACE

Since the publication of the first edition of The Franchise Law Review, there have been
some significant economic and geopolitical developments that have had a significant
impact on world trade. The apparently inexorable march towards the globalisation of
commerce, however, has again continued unabated despite, or perhaps even because of,
these changes.
Despite the slow emergence of a few economic bright spots, the economy of
what was once called the developed world continues on the most part to struggle, while
even Brazil one of the much-vaunted BRICS nations has fallen into recession. As a
consequence, businesses are often presented with little choice but to look to more vibrant
markets in Asia, the Middle East and Africa for their future growth.
At the same time SouthSouth trade is on the increase, perhaps at the
expense of its NorthSouth counterpart. All of this, coupled with the unstable wider
geopolitical landscape, presents business with only one near certainty: there will be
continued deleveraging of businesses in the coming years and, thus, growing barriers to
international growth for many of them. All but the most substantial and well-structured
of such businesses may find themselves facing not only significant difficulties due to their
reduced access to funding to invest in their foreign ventures, but also challenges arising
from their lack of managerial experience and bandwidth.
Franchising, in its various forms, continues to present businesses with one way
of achieving profitable and successful international growth without the need for either
substantial capital investment or a broad managerial infrastructure. In sectors as diverse
as food and beverages, retail, hospitality, education, health care and financial services, it
continues to be a popular catalyst for international commerce and makes a strong and
effective contribution to world trade. We are even seeing governments turning to it as an
effective strategy for the future of the welfare state as social franchising gains still more
traction as a way of achieving key social objectives.
Given the positive role that franchising can make in the world economy it is
important that legal practitioners have an appropriate understanding of how it is

vii

Editors Preface
regulated around the globe. This book provides an introduction to the basic elements of
international franchising and an overview of the way that it is regulated in 32 jurisdictions.
As will be apparent from the chapters of this book, there continues to be no
homogenous approach to the regulation of franchising around the world. Some countries
specifically regulate particular aspects of the franchising relationship. Of these, a number
try to ensure an appropriate level of pre-contractual hygiene, while others focus instead
on imposing mandatory terms upon the franchise relationship. Some do both. In certain
countries there is a requirement to register certain documents in a public register. Others
restrict the manner in which third parties can be involved in helping franchisors to meet
potential franchisees. No two countries regulate franchising in the same way. Even those
countries that have a well-developed regulatory environment seem unable to resist the
temptation to continually develop and change their approaches to regulation as is well
illustrated by the new changes in the Australian regulations.
Many countries do not have franchise-specific regulation, but nevertheless strictly
regulate certain aspects of the franchise relationship through the complex interplay of
more general legal concepts such as antitrust law, intellectual property rights and the
doctrine of good faith. This heterogeneous approach to the regulation of franchising
presents yet another barrier to its use as a catalyst for international growth.
This book certainly does not present readers with a full answer to all the questions
they may have about franchising in all the countries covered that would require far more
pages than it is possible to include in this one volume. It does, however, try to provide
the reader with a high-level understanding of the challenges involved in international
franchising in the first section and then, in the second section, explain how these basic
themes are reflected in the regulatory environment within each of the countries covered.
I should extend my thanks to all of those who have helped with the preparation of
this book, in particular Graeme Payne, Victoria Hobbs, Caroline Flambard and Melissa
Murray, who have invested a great deal of time and effort in making it a work of which
all those involved can be proud.
It is hoped that this publication will prove to be a useful and often-consulted guide
to all those involved in international franchising, but needless to say it is not a substitute
for taking expert advice from practitioners qualified in the relevant jurisdiction.
Mark Abell
Bird & Bird LLP
London
February 2015

viii

Chapter 38

POLAND
Maciej Gawroski 1

I INTRODUCTION
Poland is one of the fastest-growing franchise markets in the central and eastern European
region. According to the Report on the Franchise Market in Poland,2 there were 941
franchisors operating in Poland in 2013, with an expected 1,000 by the end of 2014.
Franchise is a popular form of running a business in Poland. The majority of the
franchise systems are Polish (approximately 85.5 per cent). The largest Polish players on
the market are wholesaler Eurocash Group, convenience store chain Zabka, banks Getin
Bank and BPH Bank, clothing retailer LPP Group, cosmetics retailer Inglot, petrol
station franchisor Lotos and restaurant chain Sphinx.
Franchise is perceived as a safe business concept by Polish entrepreneurs. The
growing number of multi franchisees (entrepreneurs that own more than one branch) is
evidence of the high confidence in the franchise system.
Polish franchisors are also focusing on foreign markets, with 93 domestic franchise
systems having at least one franchise outlet abroad.
Companies belonging to the Polish Franchise Organisation use the Franchising
Code of Ethics adopted by the European Franchise Federation.
II

MARKET ENTRY

i Restrictions
Non-EU companies are obliged to establish a branch or subsidiary company to operate
a business in Poland. Ownership of real estate is restricted for non-EEA franchisors and
requires government approval.

1
2

Maciej Gawroski is a partner at Bird & Bird.

Report on the Franchise Market in Poland, 2014, issued by Profit System, 2014.

484

Poland
Conducting business activity in Poland requires registration. Apart from
registering, in general, there are no strict rules on starting a business in Poland.
ii

Foreign exchange and tax

No exchange controls are in force.

The standard Polish withholding tax rate due on franchise fees and dividends is
20 per cent. If a double tax agreement (DTA) applies, both franchise fees and dividends
payable to foreign entities are subject to tax established thereunder. The Polish franchisee
is a remitter of withholding tax in Poland and remains liable for payment of due amounts
to the Tax Office.
III

INTELLECTUAL PROPERTY

Brand search

Brand search allows assessment of the availability of a mark in the light of earlier
registrations and applications. When conducted prior to filing, a brand search avoids
the undesired costs of potential infringement proceedings or the unexpected necessity of
changing the brand due to earlier registration of an identical or similar trademark.
There are no mandatory searches in Poland. The Polish Patent Office (PPO) provides
online access to all published trademark applications and registrations, which can be used
as a database for the brand search. Adequate appreciation of the potential risk of confusion
with earlier trademarks usually requires some level of proficiency. Therefore, the assistance
of trademark or patent attorneys is strongly recommended when analysing search results.
Unlike the Office for Harmonization in the Internal Market (Trade marks and
designs) (OHIM), the PPO conducts a full examination of a filed trademark within the
application proceedings, meaning that it examines both absolute and relative refusal
grounds. Trademarks are compared on visual, aural and conceptual levels. The likelihood
of confusion is determined in cases of identical or similar registered trademarks or those
applied for in relation to identical or similar goods or services. In such cases the PPO
informs the applicants of the grounds for potential refusal and requests that they file a
written reply presenting their standpoint.
Brand searches are usually limited to earlier trademark applications and
registrations; however, to identify all potential risks connected with the launch of a
new brand, it is also worthwhile conducting a freedom to operate search. This search
concerns non-trademark prior rights, such as company names, trade names, unregistered
trademarks and all other designations used on the relevant market. The simplest way to
conduct it is by using an internet search engine.
ii

Brand protection

In Poland, a trademark application can be filed either in paper or electronic form. The scope
of protection is determined by the list of goods and services attached to the application,
classified in accordance with the Nice Classification. The application proceedings can take
as long as between 12 and 18 months before completing registration. The application
is published three months after filing and from this time any third parties may file their
oppositions regarding, for example, conflicts with prior rights.

485

Poland
Foreign persons or entities must be represented in application proceedings by
Polish patent or trademark attorneys.
If the PPO establishes that a trademark is capable of registration, it issues a decision
on registration on condition of payment of the relevant registration and publication fees.
Only after the registration, within six months from the publication of the registration,
can a third party file an opposition against the registration. An opposition, as an actio
popularis, may be based on grounds that are not related to the applicant (e.g., similarity
to the third partys trademark or company name). If the trademark holder fails to respond
to the opposition, the decision on registration is reversed.
Trademark protection initially lasts for 10 years with the possibility of unlimited
extensions for subsequent 10-year periods.
A motion for invalidation of a trademark may be filed at any time after the
registration by an applicant with legitimate interest therein. The same applies for a
motion for cancellation. Non-use cancellation is acceptable after five years of non-use, as
long as there are no reasonable grounds for non-use.
Brand protection is complementary to industrial protection rights. A trademark
as a logo, word mark or word or figurative mark can also be protected by copyright law.
iii Enforcement
Poland has a bifurcated system, which means that trademarks can be invalidated only
in proceedings before the PPO, whereas infringement cases are decided by courts.
Accordingly, invalidity arguments may not be raised as a counterclaim defence in court
proceedings. There are no specialist IP courts in Poland, apart from the court dealing
with Community Trade Marks and registered Community designs.
In the case of a pending infringement case a court would usually stay the
proceeding if a request for invalidation is filed before the PPO; however, as there is no
legal provision addressing this particular issue, it is not obligatory, and in principle the
decision to stay the infringement proceeding is left to the courts discretion.
In Poland, preliminary injunction (PI) requests are decided in ex parte proceedings,
so defendants are not informed about the PI request and generally have no opportunity
to defend their rights until the decision on PI grant is issued and served upon them. There
is also no formal way of submitting protective letters (common in Germany) as they are
generally not legally recognised in Poland. To obtain an injunction, the trademark holder
has to prove that infringement is probable and that the trademark holder has legitimate
interest in the injunction, for example, the lack of injunction may cause it irreparable
damage. In the event that a PI is granted, a claim should generally be filed within 14 days
from receipt of the PI decision.
In general, an action should be brought before the district court of the defendants
seat. However, if the infringing product is available on the whole territory of Poland
(e.g., through an Internet shop), a PI request or the claim itself may be filed with any
of the 45 district courts in Poland. This is because the jurisdiction ratione loci can be
determined by the place of an alleged infringement.
In an infringement action the claimant may claim cessation of infringement,
return of unlawfully obtained profits, compensation for damages, and publication of
the final judgment (or information about it). Moreover, the court may also decide on

486

Poland
the destruction, withdrawal from the market, or transfer of ownership of the infringing
goods.
In practice, seeking damages in trademark cases may be quite difficult from an
evidential perspective. It is for the claimant to prove the actual damage it suffered and
the adequate causal relation between the infringement and the damage. Damages can be
also calculated based on the criterion of reasonable royalty, but this is very seldom used
as there are serious doubts regarding its interpretation. Obviously, the most credible
point of reference for a reasonable royalty would be the licence fee charged by the
claimant in a similar case based on an existing licence agreement. This is, however,
very rarely the case. Most typically, the rightholders rather claim handing over profits
unlawfully obtained by the defendant, meaning revenues made from sales of infringing
products, as it is much easier to calculate this figure and to obtain reliable data on sales
volumes and prices.
As a result of incorrect implementation of the Enforcement Directive into Polish
law, requests for disclosure of information can be made only for the purpose of securing
a particular claim (e.g., cessation claim, damages or return of unlawfully obtained
profits). These are proceedings similar to a PI action. In the request for disclosure of
information, the claimant has to indicate the claims that would be secured by the
request. In other words, we would have to show that the requested information is
necessary in order to establish the scope of claims (e.g., amount of damage or amount
of unlawfully obtained profits).
The period of limitation for all claims is three years.
iv

Data protection

The EU data protection rules have been fully implemented in Poland.

In the context of franchising relationships, the franchisor or franchisee can be
considered the data controller (the data owner) or the data processor (entity acting on
behalf of a controller), or both. If the franchisor as data controller outsources processing
to a franchisee (or vice versa) both parties must conclude a data-processing agreement
indicating at least the scope and purpose of processing.
The franchisee or franchisor (as controller) needs to have a legal basis for processing.
In the context of its activity several legal bases for processing are possible, in particular,
consent, legitimate interest of the data controller or data recipient, and performance of
the contract with the data subjects (the latter would only be reserved to franchisees as a
party to the agreement). For marketing purposes, the franchisee or franchisor can rely on
legitimate interest to promote its own products or services (except for e-communication,
where an opt-in is required). If, however, the franchisor would like to use the franchisees
clients data for marketing purposes, it must first obtain an appropriate consent.
If the franchise or franchisor, acting as a data controller, wants to transfer data
to third countries that do not provide adequate levels of personal data protection, an
additional legal basis is required. In practice, the most reliable legal basis would be

487

Poland
entering into standard contractual clauses3 between the Polish franchisor or franchisee
and the data importer from the third country. Standard contractual clauses have been
issued by the European Commission as data transfer contract models. From 1 January
2015, these standard contractual clauses will no longer be subject to approval by the
Polish data protection authority.
E-commerce
Polish law provides mandatory provisions protecting consumers in business to consumer
(B2C) relations. The protection exists regardless of whether the business is located in
Poland. For example, if the business is located in Germany, it is obliged to follow Polish
mandatory provisions protecting consumers.
As an EU Member State, Poland has implemented the New Consumer Directive,4
which provides consumers with, inter alia, the right to withdraw from distance sales
agreements within 14 days of signing and imposes obligations on e-businesses to
appropriately inform consumers of relevant information. Most importantly, in Poland,
however, the B2C sector is facing a problem of an overflowing register of abusive clauses
in the terms and conditions used by B2C firms. The problem particularly concerns the
online sector.
Any B2C e-business can be sued for its terms and conditions by any association
or other non-profit organisation established to protect consumer rights in order to obtain
a ruling stating that a specific clause is abusive towards a consumer. These concern, for
example, limitation of liability of the service provider or seller towards consumers, and
exclusive jurisdiction of the court applicable to B2C e-business. Abusive clauses are listed
in the register of abusive clauses.
Due to this easing of the right to file a claim, a new legal business model has
evolved. Lawyers have set up various associations that sue business for each clause
separately. The business logic behind this is very simple: either you pay for a settlement
or, if you resist the statement of claim, you pay the legal costs for each court instance.
As the register of abusive clauses is virtually useless containing more than
5,800 different clauses the Polish Ministry of Justice plans to amend the Polish Civil
Procedure Code to block such practice. These are plans, however, for the long term.

Commission decision of 5 February 2010 on standard contractual clauses for the transfer of
personal data to processors established in third countries under Directive 95/46/EC of the
European Parliament and of the Council.
Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011
on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of
the European Parliament and of the Council and repealing Council Directive 85/577/EEC
and Directive 97/7/EC of the European Parliament and of the Council.

488

Poland
IV

FRANCHISE LAW

i Legislation
Franchise contracts are not subject to specific regulation and the geneal principle of
freedom of contract applies.
ii

Pre-contractual disclosure

There is no mandatory pre-contractual disclosure requirement in Polish law, but there

are some general rules that Polish law recognises, such as the pre-contractual principle of
good faith (culpa in contrahendo) and certain other rules of the Civil Code.
V TAX
i

Polish tax system

The Polish tax system is a complex combination of direct and indirect taxes based on
Polish regulations, international treaties and EU law.
Poland has been a member of the Organisation for Economic Co-operation and
Development (OECD) since 1996. The OECD issued and systematically updates the
Model Tax Convention on Income and on Capital, as well as the commentary to the
Convention. Most DTAs to which Poland is a party are based on the Model Convention.
Individuals and companies receiving income sourced in Poland are subject to
Polish income tax, personal and corporate, respectively. Within this scope Polish law
applies unless any international agreements including DTAs provide otherwise.
DTAs significantly affect the tax treatment of cross-border transactions, but
privileges under a DTA apply if a taxpayer submits a valid tax residency certificate issued
by its local tax authority. Foreign tax residency certificates remain valid for Polish tax
authorities throughout the validity period provided in the document. If a tax certificate
does not include an expiry date, from 4 January 2015, it will be valid for 12 months
following its issuance date unless the taxpayer changes its domicile within this period.
Poland is a member of the EU and thus is also a member of the harmonised VAT
system.
ii

Franchising taxation

Franchising is not expressly regulated under Polish contract and tax laws (mixed
contract). Therefore, income and costs derived from franchising are taxed in a manner
applicable to the taxation of those contracts to which franchising contracts are similar.
Under Polish law, following OECD guidelines, income derived from franchising
should be divided for income resulting from certain sub-arrangements covered by
the franchising relation, including provision of know-how, licensing and provision
of services. Each part is then subject to the different tax treatment applicable to each
particular type of income.
Moreover, in the event that any business arrangement including the franchising
contract is set up between related parties (affiliates), transfer pricing regulations apply.
If applicable, they should draft and store transfer pricing documentation reflecting the
market value of any payments made between parties under contract; any lack of respective

489

Poland
transfer pricing documentation may be challenged by the Polish tax authorities. Parties
may also be required to pay increased tax as a result.
As of 1 January 2015, partnerships, in the same way as companies and individuals,
are required to comply with transfer pricing regulations.
VI

IMPACT OF GENERAL LAW

Good faith and guarantees

Parties to a contract are expected to act in good faith and courts will take this into
account.
ii

Agency distributor model

Although Polish courts have not so far awarded franchisees the protection provided
under the Polish Civil Code,5 it is possible that this may happen in the future.
iii

Employment law

Franchise is commonly regarded as a form of business activity.

The franchisee cannot be treated as an employee, and operates under its own
name, bearing the economic risk of its own activities. The relation between franchisee and
franchisor can be described as cooperation, not as employeeemployer subordination.
Also, the franchisor receives remuneration under a franchising agreement, while the
employee receives remuneration in accordance with an employment agreement.
Franchisees are not entitled to the same social protection as employees.
iv

Consumer protection

As franchisees are considered businesses, they are not covered by the protection of Polish
consumer law, even in the case of sole traders.
v

Competition law

A franchise agreement is a type of a distribution (vertical) relationship between

independent entities. Under certain circumstances, such relationship may affect trade
by restricting or distorting competition. The Polish Competition Authority has issued
a number of decisions regarding franchising. In June 2013, it issued its most notable
decision, concerning fixing resale prices by Sphinx Polska, which is one of the largest
restaurant chains operating in the casual dining sector in Poland.6
Franchising is defined as a distribution system in which the franchisee is directly
or indirectly obliged to resell goods that have been bought from the franchisor, and to use
intellectual property rights and know-how that have been licensed from the franchisor.
Since the scope of this definition is fairly broad it is common in practice to apply more
specific EU rules.

5
6

Chapter XXIII of the Civil Code Agency agreements.

Decision of 25 June 2013, No. DOK-1/2013.

490

Poland
Provided that the franchise agreement contains some restrictive clauses it can be
exempted from the prohibition of anti-competitive agreements as long as the aggregate
market share of competitors on the relevant market does not exceed 5 per cent, or the
market share of each non-competing entity on the relevant market does not exceed 10 per
cent. This provision constitutes the de minimis principle, but it is not commonly applied
to franchise agreements as they tend to contain hard-core restrictions, particularly
clauses that are perceived as market sharing between the parties.
If the de minimis principle cannot be applied, the franchise agreement can be
exempted under the national and EU Block Exemption Regulations (the VBER), which
applies only to agreements that do not contain hard-core restrictions and where the
market share of the franchisor and the franchisee on the relevant market does not exceed
30 per cent.
The VBER lists the hard-core restrictions that will cause a franchise agreement
to fall outside the scope of the VBER. This list includes price fixing or resale price
management. A franchisor may impose maximum or recommended resale prices.
Nevertheless, a franchisor is only able to set fixed or minimum prices for low-price
campaigns of up to six weeks. It also includes restrictions on territories or customers to
which a franchisee can sell or provide services such as bans on passive sales outside an
exclusive territory or customer group.
The VBER also lists grey restrictions, which are invalid themselves, but do not
result in the invalidation of the entire agreement. One of these is the non-compete clause
(see Section VI.vi, infra).
Other provisions that should be analysed from a competition law perspective
concern intellectual property rights licensing, approving the franchisees advertising
campaigns, and combining selective and exclusive distribution systems.
If the VBER market share thresholds are exceeded or the franchise agreement
contains hard-core restrictions, the agreement is not exempted under the VBER.
Nevertheless, entities can apply the individual exemption arguing that the franchising
system has more advantages than anti-competitive effects in the relevant market. In such
case the burden of proof lies on the entities.
Franchise agreements may also be examined under the prohibition of abuse of a
dominant position and merger control rules. In both cases the general competition law
rules apply.
vi

Restrictive covenants

The VBER defines non-compete clauses as the franchisees obligation to buy more than
80 per cent of goods from the franchisor or its supplier, and the franchisees obligation
not to deal with goods that are substitutes for those offered by franchisor.
To be exempted under the VBER rules, in-term non-compete clauses have to
be limited to five years or to the duration of the sub-lease if the franchisor owns the
franchisees premises. Non-compete clauses that are concluded for longer periods can be
exempted under an individual exemption if certain conditions are met.
To protect the franchisors know-how, parties can conclude a post-termination noncompete clause that may last no longer than one year after the agreements termination.
Within that period the franchisee must agrees not to deal with goods that are substitutes

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for those offered by the franchisor from the premises in which the franchisee operated
during the franchise agreement under the national VBER.
If the franchisor provides the franchisee with know-how that is not in the public
domain, the parties can conclude a post-termination non-compete clause for a longer
period.
vii Termination
The franchise agreement is a long-term form of cooperation concluded for a fixed
term (usually five, 10 or 20 years) or an indefinite period. There are two ways of
terminating the agreement early under the Polish Civil Code: termination upon notice
and rescission.
Termination upon notice occurs especially in the case of legal relations concluded
for an indefinite period. The agreement can be terminated only upon notice ex nunc,
which means that the notice is valid only for the future and not the past. Termination
upon notice applies only to the relation expended in time. Generally, there is a notice
period after which the agreement terminates (it might be a contractual, statutory or a
customary term period). If a termination period is not provided, the agreement expires
immediately after the termination notice is delivered.
Rescission is a remedy to a breach of contract if one party commits a qualified
delay in performing the contract, the other party may rescind it provided that the
affected party notifies the defaulting party in writing of the intention to rescind, granting
appropriate additional time for proper performance. If the set time limit lapses, the
affected party is entitled to rescind the contract.
As mentioned in Section VI.vi, supra, post-termination non-compete clauses of
up to one year for franchise agreements are permitted under Polish law. A longer term
for post-termination non-compete clauses can be established if the franchisor provides
the franchisee with know-how that is not in the public domain.
It is advisable to include provisions on termination in the franchise agreement,
including provisions concerning rescission. Explicit provisions can minimise the risk of
confusion between the parties.
viii

Anti-corruption and anti-terrorism regulation

Under Polish law, bribery is a crime committed by an individual giving or accepting

a bribe. A person giving a bribe can avoid criminal liability if he or she informs the
appropriate law enforcement institution of the circumstances of a crime before
proceedings are initiated by that institution.
Organisations can be subject to criminal liability for crimes committed by employees
or representatives only if such individuals are first convicted and the organisation failed
to properly choose its executives, and at the same time that organisation benefited from
the crime. Therefore, from a practical point of view, bribery committed by a franchisee
will most likely not result in criminal liability of a franchisor.
ix

Dispute resolution

In franchise disputes the parties can choose between litigation and alternative dispute
resolution (arbitration or mediation).

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Arbitration is the most common form of alternative dispute resolution. Arbitration
clauses are enforceable in Poland, if not otherwise specified. To refer the dispute to the
arbitration court, the parties are required to provide an agreement specifying the subject
matter or the legal relationship out of which the dispute arose or may arise.
Mediation can be conducted on the basis of a mediation agreement or court order
directing the parties to the mediation.
The Polish court system remains slow, with litigation proceedings before the
Warsaw courts statistically the most lengthy. In the agreement parties can decide which
court has jurisdiction to decide in the case.
If the parties include an arbitration clause in the agreement, they usually
determine which arbitration court will decide in the case. In Poland, permanent
arbitration courts do exist, the most established being the Court of Arbitration at
the Polish Chamber of Commerce. Parties can choose between permanent arbitration
courts or indicate in the agreement that the arbitration court be established ad hoc.
Usually, the arbitration court is one instance, unless the parties agree otherwise in the
contract. This means that, unlike in ordinary courts, sentencing is faster. Arbitration
courts are not bound by the proceedings rules, and so less complex procedures can be
used in the case. The average length of arbitration proceedings is nine months.
Either party can file an appeal against the courts verdict if it is not favourable. It
is also possible to challenge the arbitration courts award to the appellant court, but only
on technical grounds the merits of the case will not be examined.
Arbitration fees are usually higher than court fees, but the total cost of
proceedings is usually lower in arbitration, as arbitration is statistically quicker and
more specialised.
In Poland, a losing party is obliged to return the costs of lawyers to the succesful
party, but only within statutory limits that are not significant. So, in practice, in lengthy,
complicated or high value proceedings each party bears most of its legal costs.
From an international franchisors perspective, it is important to note that
Poland is a signatory to the United Convention on the Recognition and Enforcement
of Foreign Arbitration Awards and so foreign arbitration awards are enforceable in
Poland. Also, since Poland is an EU Member State, Polish courts will recognise and
enforce court judgments from other EU Member States (in accordance with the
Brussels Regulation).7
VII

CURRENT DEVELOPMENTS

The franchise market began to stabilise in Poland in 2000. In recent years the rapid
development of franchising has been noticeable, and its popularity is constantly
growing. Every year there are almost 100 new franchise systems and several thousand
companies operating under licence. Also, franchising is becoming more attractive

Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the
recognition and enforcement of judgments in civil and commercial matters.

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for franchisees more than 60,000 companies are running their businesses based on
franchise licences.
There are also examples of the successful entry of Polish franchisors into foreign
markets one of these is the Polish cosmetics company Inglot, which is well known
worldwide.
In 2014, the growth of franchising has been maintained and the development of
franchising systems should prove dynamic in the coming years.

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ABOUT THE AUTHORS

MACIEJ GAWROSKI
Bird & Bird Maciej Gawroski spk
Maciej Gawroski is managing partner at Bird & Birds Warsaw office, and has been
advising clients since 1996. He has extensive experience in information technology (IT),
outsourcing and banking and finance law.
Mr Gawroski advises franchisors throughout each stage of their operations
from determining the benefits and disadvantages of franchising, preparing and filing
franchise documents, through developing franchise relationships and management
strategies, to day-to-day operations. He supports clients by helping them avoid breaches
of contract, protects their trademarks and other intellectual property, and deals with
franchisee terminations and refusals to renew. He has worked on all possible types
of contracts and is well-known for his business approach and strategic advice, which
helps take full advantage of market opportunities. He has advised dozens of companies
on franchise opportunities and represented them in franchise disputes. He is a skilled
negotiator, experienced in solving crises as they arise, and managing communication
between the parties. Mr Gawroski graduated from Jagiellonian University in Cracow
and the Universit de Tours in France. He speaks Polish, English and French.
BIRD & BIRD
Bird & Bird Maciej Gawroski spk
Ksidza Ignacego Jana Skorupki Str 5
00-546 Warsaw
Poland
Tel: +48 22 583 79 00
Fax: +48 22 583 79 99
maciej.gawronski@twobirds.com
www.twobirds.com

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