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Revisiting the franchise contract
Authors: Associate professor Sónia de CARVALHO
Number of views: 152
Commercial distribution corresponds, in the economic process, to the activity of
intermediation between supply and demand, through which the producer, using
intermediaries, manages to deliver products and services to consumers, while at the same
time seeks to know and satisfy the demands of the latter. Within the industrial revolution,
mechanization combined with new production techniques, allowed production directed
towards self-consumption to be replaced by surplus production, on a large scale, which
created the need to dispose of goods. With the advent of industrial capitalism, the industrial
enterprise started to assume the central role of the economic system, with trade being
relegated to a secondary role. The producers, in view of the surpluses resulting from mass
production, began to feel the need to resort to intermediaries who would assume the
distribution of the products in several markets, namely, in distant markets. Distribution
gradually begins to become independent from the production, presenting itself as an
auxiliary activity for the industry. In this sense, commercial distribution is no longer
centred on the physical distribution of products, but takes on a series of activities aimed at
adjusting supply to demand, which includes attracting customers, providing after-sales
services, financing and risk-taking, consultancy, promotion and advertising, among others.
These activities are articulated in more or less complex processes. Thus, distribution begins
to represent the main means to increase the company's profits, becoming the object of study
and deepening. However, given the insufficiency of the occasional purchase and sale
contracts to cover the web of intricate obligations required in the distribution of goods to
the various operators of a distribution chain, leading to an undesirable increase in
distribution costs, there was a need to create more sophisticated contractual schemes. In
contracts, such as franchising, it is possible to witness the productive integration of the
distributor into the producer network, accompanied, in different degrees of intensity, by the
attribution and recognition of intellectual property rights. This contract was associated,
both in the United States, a country where it first appeared, and in Europe, to periods of
economic recession, in which excess supply in face of demand will compel producers to
conquer new markets. This objective, owing to the difficulties of the producer to assume the
distribution of the products, given the lack of capital, characteristic of post-recessive times,
will be achieved through the delivery of the distributive function to the distributor, thus
seeking, in accordance with the principle of division of labour, achieve greater efficiency.
The crisis currently experienced worldwide following the Pandemic COVD 19 and the role
that this contract can play in the economic recovery, makes it imperative to revisit this
contract in order to approach its modalities, advantages and the legal framework.