We are very proud to share that Cecilia Brazzola and her team achieved an important precedent in franchising for our client Café Martínez. In its ruling against a former franchisee of the chain, the National Chamber of Commercial Appeals upheld the first instance ruling, recognising the validity of contractual non-compete clauses, transfer of assets and dollar-denominated fines for non-compliance.

The most relevant aspects of the National Chamber of Commercial Appeals ruling are as follows:

1. The dollar-denominated penalties included in the contract for breach of the duty not to compete do not depend on the existence of actual harm to the franchisor.
2. The ex-franchisee breached its obligations to transfer the assets of the premises to enable the continuity of the operation, resulting in the loss of a point of sale of the chain and confirming the claim of Café Martínez to set the compensation in its favor on the basis of the royalties it received from another franchisee in an assimilable area.

We congratulate our partner Cecilia Brazzola, and Catalina Cappelletti, who actively collaborated in this matter, and the entire Corporate Law and Commercial Litigation team, for achieving this precedent!

For more information, you can access the note of the Argentinean Association of Brands and Franchises here.

If you need advice on franchising, please do not hesitate to write to mcbrazzola@lermanszlak.com.

Gabriela Szlak