New franchising law opens the door to more foreign investments

In the newest development of Brazil’s wave of reforms, an update of the country’s franchising legislation has just been signed into law. Representatives of the sector say that the new rules for franchisees and franchisors—which will come into effect from March onward—are clearer and more effective, increasing legal security and opening the door to more foreign investment.  

According to Marcelo Maia, the executive director of the Brazilian Franchising Association (ABF), the update was a necessary addition to fulfill the sector’s needs 25 years after the first legal framework came into place.

“It is a very positive law, it brings a series of innovations for both franchisees and franchisors, adding legal security for their business relations. For instance, it establishes quite clearly that there is no employment or consumer relationship between them, and it sets punishments for companies that fail to provide the correct information on contracts,” he told The Brazilian Report.

While Mr. Maia foresees a positive impact on the entire sector, these additions may be even more interesting for foreign players considering a foray into the...