Franchising in Romania: A Practical Guide for Investors

Franchising has become an increasingly popular way to do business in Romania, offering entrepreneurs a chance to operate under an established brand with proven systems. For international companies, Romania’s growing consumer market and strategic location in Southeast Europe make it an attractive destination for expansion through franchising.

The Legal Framework

Romania regulates franchising through Government Ordinance No. 52/1997 on franchising, approved with amendments by Law No. 179/1997. This legislation defines a franchise as a commercial method by which a franchisor grants a franchisee the right to operate a business under the franchisor’s trademark, using its know-how and ongoing assistance, in exchange for a financial contribution.

The law requires that any franchise agreement be made in writing and contain certain mandatory elements, including the rights and obligations of both parties, the duration of the agreement, and the financial terms. It also obliges the franchisor to provide pre-contractual information to the prospective franchisee, allowing for informed decision-making.

Key Elements of a Franchise Agreement

A well-drafted franchise agreement in Romania should clearly address the following:

• Grant of rights: The specific trademark, trade name, and know-how being licensed, and the territory of operation.
• Fees and payments: Initial franchise fee, ongoing royalties, and any marketing or training fees.
• Training and support: Initial and ongoing training, operational manuals, and assistance provided by the franchisor.
• Duration and renewal: The term of the agreement and conditions for renewal or termination.
• Standards and quality control: Obligations to maintain brand standards and allow inspections.
• Dispute resolution: Governing law and mechanisms for resolving conflicts, typically arbitration or Romanian courts.

Steps to Buying a Franchise in Romania

If you are considering becoming a franchisee in Romania, follow these steps:

1. Research the market: Identify sectors with growth potential, such as food and beverage, retail, or services.
2. Evaluate franchisors: Request the franchisor’s disclosure document and speak with existing franchisees.
3. Seek professional advice: Consult a Romanian lawyer and accountant to review the agreement and financial projections.
4. Form a local entity: Typically, you will need to register a Romanian limited liability company (SRL) to operate the franchise.
5. Secure premises and permits: Depending on the business type, obtain necessary licences and comply with local regulations.
6. Sign the agreement and launch: Complete training, set up the location, and open for business.

Steps for Foreign Franchisors Entering Romania

International franchisors looking to expand into Romania should consider the following:

• Protect your intellectual property: Register your trademark with the Romanian State Office for Inventions and Trademarks (OSIM) or via the European Union Intellectual Property Office (EUIPO).
• Adapt your model: Tailor your products or services to local tastes and cultural expectations.
• Find the right partner: Consider appointing a master franchisee or area developer with local market knowledge.
• Comply with local law: Ensure your franchise agreement meets Romanian legal requirements and is translated into Romanian if necessary.
• Understand tax and employment rules: Work with local advisors to navigate corporate tax, VAT, and labour regulations.

Practical Tips for Success

To increase your chances of success in the Romanian franchise market:

• Language matters: While many businesspeople speak English, having your documentation and marketing materials in Romanian builds trust.
• Build relationships: Romanian business culture values personal connections; take time to meet partners and stakeholders.
• Location is key: Major cities like Bucharest, Cluj-Napoca, and Timișoara offer higher foot traffic but also higher competition.
• Stay compliant: Keep up with changes in Romanian commercial and tax law to avoid surprises.

Franchising in Romania offers a structured path to business ownership with lower risk than starting from scratch. By understanding the legal framework and following a careful due diligence process, both franchisees and franchisors can build successful long-term ventures in this dynamic market.