PERU Law and Practice Contributed by: Walter Aguirre, María Angela Vásquez and Sebastian Montes, Aguirre Abogados & Asesores
Aguirre Abogados & Asesores Av El Derby 254 Of 303 Surco Lima Peru Tel: +51 1717 6901 Email: contacto@aguirreabogadosyasesores.com Web: www.aguirreabogadosyasesores.com
1. An Introduction to Franchising 1.1 Franchise Market Overview The franchise market in Peru has experienced signifi - cant growth over the past 20 years. However, it was one of the sectors most severely affected by the COV - ID-19 pandemic, experiencing a critical downturn for a couple of years. Beginning in 2023, the franchise sec - tor started to recover strongly, particularly in industries such as technology, education and healthcare. There has been an increase in investment in low-cost fran - chises not only in the capital city, Lima, but also in the provinces, with smaller-scale formats and more mod - est infrastructure requirements. Moreover, the expan - sion of the retail sector, along with the construction and renovation of a significant number of shopping centres across the country, has further boosted the franchise market over the past two years. According to the Peruvian Chamber of Franchises, there are currently more than 500 franchise systems operating in Peru, with approximately 50% being for - eign franchises and 50% domestic franchises. With regard to domestic franchises, more than 60% are in the gastronomy and restaurant sector. However, in recent years, there has been a notable increase in franchise activity in other areas such as healthcare, beauty, education and technology. 1.2 Franchise Regulation Peru does not have a specific “Franchise Law” that expressly governs this type of business model. Instead, franchise agreements govern the relationship between the parties and are subject to the provisions of the Peruvian Civil Code.
According to Section 1353 of the Peruvian Civil Code, agreements that are not expressly named or regulated – such as franchise agreements – are subject to the general rules set forth in the first section of Book VII of the Peruvian Civil Code. 1.3 Definition of a Franchise Agreement In line with the foregoing, and in the absence of a legal provision expressly regulating franchises, the Peruvian legal system does not provide a statutory definition of “franchise agreement”. Nevertheless, based on widely accepted legal doc - trine, a franchise agreement may be defined as follows: “A franchise agreement is an agreement whereby a franchisor grants a franchisee the right to reproduce, within a specified territory and with the franchisor’s technical assistance, a system previously developed by the franchisor. This system is distinguished by the use of the franchisor’s registered trade marks”.
2. Franchise Disclosure 2.1 Mandatory Disclosure
Under current Peruvian law, there is no specific legal obligation requiring the franchisor to disclose busi - ness-related information. Notwithstanding the forego - ing, based on general principles of contract law and the express duty of good faith established in Section 1362 of the Peruvian Civil Code, all agreements must be negotiated, executed and performed in accord - ance with good faith and the common intention of the parties.
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