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The Court of Cassation (judgment no. 15023 of 4 June 2025) recently ruled on the abuse of economic dependence in a franchising agreement.
This is one of the first rulings by the Supreme Court on this issue, confirming a prevailing trend in case law on the matter.
The relevant legal reference is Article 9 of Law 192/1998 on subcontracting, which is also applied by analogy to franchising, which provides:
1. It is prohibited for one or more undertakings to abuse the state of economic dependence of a client or supplier. Such dependence exists when an undertaking causes an excessive imbalance of rights and obligations in commercial relations. Assessment includes evaluating the abused party’s ability to find satisfactory market alternatives.
- Abuse may also consist of refusing to sell or purchase, imposing unjustifiably onerous or discriminatory contractual conditions, or arbitrarily terminating existing commercial relationships.
- Any agreement that results in the abuse of economic dependence is null and void.
The facts underlying the judgment in question stemmed from a franchise agreement relating to the opening and management of a coffee shop, which provided that the franchisee could withdraw from the agreement to avoid automatic renewal only if two conditions were met (purchase of a minimum quantity of coffee and termination of the lease of the commercial property where the business was carried out).
The Court of Treviso, in its ruling no. 711/2021, had declared the aforementioned clause null and void, considering that the restrictions imposed on the franchisee to prevent automatic renewal constituted an abuse of its economic dependence on the franchisor and led to an unjustified imbalance between the parties.
The Court of Appeal of Venice, in its ruling no. 1730/2021, upheld the first instance decision, with similar reasoning, considering that the elements of ‘economic dependence’ existed in the case in question (albeit generically and by analogy).
The Court’s ruling overturned the decision of the Venice Court of Appeal, considering that the latter had not actually verified the existence of the first condition, namely ‘economic dependence’.
The reasoning is interesting, revealing the liberal inspiration of the judge.
In fact, the Court, referring to its own precedent (Cass. 1184/2020), reiterates the strict criteria for the application of Article 9 of Law 192/1998 on the abuse of economic dependence.
Since this regulation affects contractual autonomy and goes beyond the principle of entrepreneurial self-responsibility, also taking into account the constitutional principle of freedom of economic initiative, the judge must assess all the factual and legal elements with particular rigour, without substituting his own assessment for that of the parties.
In order to establish abuse, two distinct conditions must be met.
Firstly, the existence of economic dependence does not coincide with a simple contractual imbalance, which is considered normal, but requires an ‘excessive’ imbalance in rights and obligations and the effective lack of economic alternatives on the market for the weaker party.
Secondly, there must be arbitrary conduct contrary to good faith on the part of the dominant undertaking, i.e. vexatious behaviour aimed at obtaining advantages in addition to those deriving from the legitimate exercise of negotiating autonomy.
Not every situation of dependence is prohibited, but only those that are abusively exploited.
The burden of proof of the existence of a situation of dependence lies with the party invoking it.
In the specific case, the Court criticises the appeal judgment for not having adequately verified the existence of economic dependence at the time of the conclusion of the contract and, indeed, for having reversed the reasoning, in that the lack of real economic alternatives on the market for the franchisee was considered a consequence of the alleged abuse, rather than a prerequisite for economic dependence.
The Court of Appeal had, in fact, limited itself to referring to the assessments of the court of first instance, inferring dependence solely from the text of the contract. The Supreme Court therefore quashed the decision and referred it back to the Court of Appeal so that the new judge could ascertain whether, at the time of signing, the contractor was really without economic alternatives and forced to accept excessively unbalanced clauses.
In fact, the ruling of the Court of Cassation is in line with the prevailing opinion among local courts, according to which the franchisee, at the time of signing, is not normally without economic alternatives and retains the freedom to accept or reject contractual conditions, even if they are unbalanced, which may be considered inherent in the type of activity to be undertaken, with the consequent exclusion of economic dependence in the absence of the strict conditions required by law.
Edited by: Marco Durante