PERU Law and Practice Contributed by: Walter Aguirre, María Angela Vásquez and Sebastian Montes, Aguirre Abogados & Asesores
nels. It is strongly recommended that such reserva - tions be explicitly included in the franchise agreement to avoid disputes of any kind between the parties. Likewise, the consumer protection implications arising from the reservation of sales channels must be taken into consideration given that, under the Consumer Protection and Defence Code, both the franchisor and the franchisee could be deemed liable suppliers before the consumer. 6.5 Vertical Agreement Block Exemptions Peruvian law does not currently include specific regu - lation on vertical agreement block exemptions. 7. Joint Employer Risk and Vicarious Liability 7.1 Joint Employer Laws Pursuant to the Labor Productivity and Competitive - ness Law, approved by Supreme Decree No.003- 97-TR, the existence of an employment relationship necessarily requires the concurrence of two elements: subordination and remuneration. In the context of franchise arrangements, the relation - ship of subordination arises between the franchisee and its employees, and it is the franchisee that directly pays its employees’ remuneration. Accordingly, no employment relationship would exist between the franchisor and the franchisee’s employees. In this regard, as of September 2026, no judgment or binding precedent has been issued in Peru in employ - ment matters holding a franchisor jointly and sever - ally liable with a franchisee for employee claims solely by virtue of the execution of a franchise agreement. Nevertheless, it is recommended that the franchise agreement be carefully drafted to include provisions expressly establishing the franchisor’s independence from the franchisee’s employment relationships and requiring the franchisee to indemnify and hold the franchisor harmless against any potential claims. 7.2 Vicarious Liability “Vicarious liability”, or “liability for damage caused by a subordinate”, is expressly regulated by Section 1981 of the Peruvian Civil Code, which provides verbatim
as follows: “Whoever has another under his orders is liable for the damage caused by the latter, if that dam - age was carried out in the exercise of the position or in the performance of the respective service. The direct perpetrator and the indirect perpetrator are subject to joint and several liability”. It is important to emphasise that franchise agree - ments are based on the legal, economic and opera - tional independence of the parties, with the franchisee assuming the management and risks associated with its own business activities. Accordingly, as a general rule, the franchisor should not be held liable for harm caused by the franchisee. However, it should be noted that, in exceptional cir - cumstances, vicarious liability could arise even within this type of commercial relationship, given that the Peruvian Civil Code does not confine vicarious liabil - ity to employment relationships (employer–employee), but expressly extends it to circumstances in which one person has another “acting under his or her orders”. Thus, if it were conclusively established that the franchisor exercised effective managerial authority and that the franchisee was directly subordinated to the franchisor in carrying out the specific activity that gave rise to the harm, such circumstances could give rise to vicarious liability. 8. Choice of Governing Law 8.1 Possibility of a Franchisor Stipulating Non-Local Law Pursuant to Section 2095 of the Peruvian Civil Code, the franchisor may validly choose to have the fran - chise agreement governed by foreign law. There is no requirement that the agreement be governed by or interpreted in accordance with Peruvian law. 8.2 Local Law Requirements As noted in 7.1 Possibility of a Franchisor Stipulating Non-Local Law , with regard to the choice of governing law applicable to the contractual relationship between the franchisor and the franchisee, Peruvian law does not impose any additional requirements beyond the existence of a valid agreement between the parties.
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