This country-specific Q&A provides an overview of Franchise & Licensing laws and regulations applicable in Morocco.
Is there a legal definition of a franchise and, if so, what is it?
Preliminarily, unlike some other countries, which have specific laws on franchising, Morocco does not have any law or other regulation specifically relating to franchising. However, a definition is provided for by Moroccan foreign exchange regulations in the General Instruction for Foreign Exchange Operations of January 1st, 2020 (“FEX Instruction“), which states that a franchise is a system for marketing products, services or technologies, based on a permanent collaboration between legally and financially distinct and independent companies, the franchisor and its franchisees.
In the absence of specific legislation, franchising agreements are governed by the provisions of the Dahirdes obligations et des contrats dated 12 August 1913 (the “Moroccan Civil Code“) and particularly by its article 230 which states that “valid contractual obligations are binding upon the parties thereto, and may only be revoked by mutual consent or in the cases provided by law” and by the provisions of the Moroccan commercial code.
Franchisor – Franchisee relationships are therefore governed by the general principles of Moroccan contract law.
Are there any requirements that must be met prior to the offer and/or sale of a franchise? If so, please describe and include any potential consequences for failing to comply.
In the absence of specific legislation, the franchise contract, in Moroccan law, is governed by the rules of contract formation as provided for in the Moroccan Civil Code, in particular the requirement of the capacity of the contractors, free and not vitiated consent, lawful cause, and the determined, lawful and possible purpose. Failure to comply with these requirements will be sanctioned mainly by the nullity of the franchise contract and in case of damage suffered by one of the parties by compensation from the defaulting party.
In addition, Franchise is considered as an import of services under the FEX Instruction (Article 55) and more particularly as services (of a continuous nature) relating to the use or acquisition of intellectual property rights. Therefore the amounts of the fees or the methods for determining them must take account of the knowledge acquired and the results obtained by the importer of the service and, where appropriate, must be degressive (Article 56 of FEX Instruction).
Are there any registration requirements for franchisors and/or franchisees? If so, please describe them and include any potential consequences for failing to comply. Is there an obligation to update existing registrations? If so, please describe.
As a service agreement (according to the FEX Instruction), a franchise agreement should be entered into notably with resident franchisees that are legal entities or individuals duly registered in the commercial register and having a tax identifier (Article 55 of FEX Instruction).
Moreover, a franchise agreement should be registered (once translated into French or Arabic by a sworn translator – if not drafted in one of the aforementioned languages) with the local franchisee’s local bank in accordance with Article 61 of the FEX Instruction, prior to the execution of any payment under the franchise agreement. In addition, local banks must be provided with the invoices relating thereto.
Are there any disclosure requirements (franchise specific or in general)? If so, please describe them (i.e. when and how must disclosure be made, is there a prescribed format, must it be in the local language, do they apply to sales to sub-franchisees) and include any potential consequences for failing to comply. Is there an obligation to update and/or repeat disclosure (for example in the event that the parties enter into an amendment to the franchise agreement or on renewal)?
Please refer to our above answers.
If the franchisee intends to use a special purpose vehicle (SPV) to operate each franchised outlet, is it sufficient to make disclosure to the SPVs’ parent company or must disclosure be made to each individual SPV franchisee?
In the absence of specific legislation governing franchising, there is no requirement to disclose the franchise agreement to each individual SPV franchisee.
What actions can a franchisee take in the event of mis-selling by the franchisor? Would these still be available if there was a disclaimer in the franchise agreement, disclosure document or sales material?
Pursuant to the provisions of law n°24-09 dated October 6, 2011 relating to the security and safety of products and services, the manufacturer of a product (along with the importer of such product in Morocco and, potentially, the franchisee) may be held liable for any damage arising from or caused by the product itself, and faces potential criminal sanctions (article 51 of the abovementioned law n°24-09 dated October 6, 2011: 3 months to 2 years of imprisonment, and/or a fine of 50,000 to 1,000,000 Moroccan dirhams).
Moreover, because of the imperative nature of these statutory provisions (and the criminal sanctions mentioned above), a franchisor / manufacturer / wholesaler will not be able to transfer the risk of such product liability claims to another person by way of a contractual provision.
Pursuant to article 549 of the Moroccan Civil Code, the seller of a product is liable vis-à-vis the purchaser for any defect of the product which has a material impact on the value thereof, or makes such product unusable in accordance with its intended purpose. The seller of the product (i.e. the franchisee) normally bears this liability and a purchaser would therefore bring an action against the former in order to obtain damages to compensate his loss as a result of the purchase of a defective product.
However, French case law allows the purchaser to bring a direct action / claim for damages against the manufacturer or the initial seller (i.e. the franchisor). We are not aware of the existence of any similar case law in Morocco; however, given the similarities between the provisions of the French and the Moroccan Civil Code relating to product liability and the fact that Moroccan courts inspire very often from French case law, it is possible that the same principle could be applied by a Moroccan court.
We therefore believe that a franchisor could potentially be held liable for defective products sold by the franchisee in Morocco and would not be able to transfer the risk of such claims to the franchisee.
It should be also noted that Article 232 of the Moroccan Civil Code provides for that: “it cannot be stipulated in advance that one will not be held liable for gross negligence or fraud”.
Therefore, the limitation of liability clauses are not valid if it relieves the franchisor from his gross negligence or fraud.
Would it be legal to issue a franchise agreement on a non-negotiable, “take it or leave it” basis?
Under Moroccan law, in principle, there is nothing to prevent franchise agreements from being on a non-negotiable basis as long as they do not contain abusive clauses, at the risk of nullity of such abusive clauses by the Moroccan courts and that they do not contravene Moroccan public order (ordre public).
If there is an existing business relationship between the Franchisor and the Franchisee, proceeding on a “take it or leave it” basis – implying eventually, inter alia, the termination of the business relationship, might result in the latter being characterized as an abusive exploitation of a situation of economic dependence.
In fact, according to Article 7 of Law 104-12 related to free pricing and competition (the “Law 104-12”) is prohibited, where it has as its purpose or effect the prevention, restriction or distortion of competition, the abusive exploitation by a company or a group of companies of :
a dominant position in the internal market or in a substantial part of it;
a situation of economic dependence in which a customer or supplier finds itself without any equivalent alternative.
Abuse may consist in particular in refusal to sell, tying or discriminatory conditions of sale and in the termination of established commercial relations on the sole ground that the business partner refuses to submit to unjustified commercial conditions. It may also consist in directly or indirectly imposing a minimum character on the resale price of a product or good, on the price of a service or on a trading margin.
How are trademarks, know-how, trade secrets and copyright protected in your country?
Trademarks are protected by Dahir n° 1-00-19 of 16 March 2000 promulgating Law n° 17-97 relating to the protection of industrial property (“MoroccanIP Law“).
In Morocco, the registration of a trademark with the Moroccan Industrial and Commercial Property Office (office Marocain de la Propriété Industrielle et Commerciale) produces effect from the filing date for a period of ten years, renewable indefinitely, and confers to its owner a right of ownership of the trademark for the goods or services he has designated.
In that respect, Articles 154 and 155 of Moroccan IP Law prohibit unless authorized by the owner:
the reproduction, use or affixing of a trademark, even with the addition of words such as “formula, manner, system, imitation, kind, method”, as well as the use of a reproduced trademark or a sign identical to that trademark, for goods or services identical to those covered by the registration ;
the cancellation or alteration of a duly affixed trademark;
if there is a likelihood of confusion on the part of the public, the reproduction, use or affixing of a trade mark, as well as the use of a reproduced trademark or of a sign identical or similar to that trade mark for goods or services which are similar or relate to those covered by the registration ; and
if there is a likelihood of confusion on the part of the public, the reproduction the imitation of a trade mark and the use of an imitated trademark for goods or services which are identical or similar to those covered by the registration.
Furthermore, in accordance with Article 202 of the Moroccan IP Law, the action for infringement can be brought by the owner of the trademark.
However, the beneficiary of an exclusive right of exploitation may, unless otherwise stipulated in the licence contract, bring the infringement action if, after formal notice sent by a bailiff or a clerk of the court, the owner does not bring such action. In that respect, the owner is admissible to intervene in the infringement proceedings brought by the beneficiary.
Any licensee is admissible to intervene in the infringement proceedings initiated by the owner, in order to obtain compensation for the prejudice, which is proper to him.
Thereby, several actions to protect trademark rights have been implemented by the Moroccan legislator, namely:
Opposition, as an administrative procedure
The infringement action
The action of claiming rights.
Copyright is governed by Dahir n° 1-00-20 of July 6, 2000 promulgating law n° 2-00 relating to copyright and related rights (“Moroccan Copyright Law“).
The Moroccan Copyright Office (Bureau Marocain du Droit d’Auteur ) placed under the supervision of the Ministry of Communication is in charge of the protection and exploitation of copyright and related rights.
The author of a work is the first owner of the moral and economic rights in his work.
Indeed, the provisions of an international treaty concerning copyright and related rights to which the Kingdom of Morocco is a party are applicable. Thus, in case of conflict between the provisions of the Moroccan Copyright Law and those of an international treaty to which the Kingdom of Morocco is a party, the provisions of the international treaty will be applicable.
Moreover, in accordance with Article 25 of the Moroccan Copyright Law, in principle, the economic rights on a work are protected during the author’s life and 70 years after his death. While moral rights are unlimited in time; they are imprescriptible, inalienable and transmissible by reason of death to the beneficiaries.
To this end, the author of a work is the first owner of the moral and economic rights in his work and is alone in a position to grant an exclusive or non-exclusive licence.
Know-how and trade secrets
Moroccan law does not contain any specific provisions directly related to trade secrets or know-how. Article 447 of Dahir n°1-59-413 of June 5, 1963 approving the Moroccan criminal code only sanctions the disclosure or attempted disclosure by any director, commissioner, factory worker, of the secrets of the factory where he is employed.
However, the franchisor has the possibility to resort to the action of unfair competition provided for by Article 184 of the Moroccan IP Law, which provides for that: “Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition“.
Furthermore, when the conditions for patentability are met, a secret or know-how may be protected by a patent, but it obviously loses its status as a secret. In fact, in order to preserve information on an invention, a judicious choice must be made between secrecy or the filing of a patent application.
It should be noted that in order for an invention to be protected by a patent and to claim the rights conferred by this title, it must first relate to a patentable subject matter and then satisfy the patentability conditions required by law, i.e. (i) be susceptible of industrial application; (ii) be new; and (iii) involve an inventive step.
Are there any franchise specific laws governing the ongoing relationship between franchisor and franchisee? If so, please describe them, including any terms that are required to be included within the franchise agreement.
There are no specific laws governing the ongoing relationship between franchisor and franchisee.
Are there any aspects of competition law that apply to the franchise transaction (i.e. is it permissible to prohibit online sales, insist on exclusive supply or fix retail prices)? If applicable, provide an overview of the relevant competition laws.
The relationship between the franchisor and the franchisee must not undermine freedom of price and competition. Indeed, Article 6 of the Law 104-12 relating to the freedom of prices and competition provides for that “any agreements, conventions, concerted actions, express or tacit coalitions, in whatever form and for whatever reason, which have as purpose or may have the effect of preventing, restricting or distorting competition in a market are prohibited, in particular when they tend to :
limit market access or the free exercise of competition by other companies;
obstruct the formation of prices by the free play of the market by artificially promoting their rise or fall ;
limit or control production, outlets, investment or technical progress ;
Share markets, sources of supply or public contracts.”
In this respect, Article 10 of Law 104-12 provides for that any commitment, agreement or contractual clause relating to a prohibited practice as referred to in above-mentioned Article 6 is void by law.
However it should be noted that Article 9 of Law 104-12 excludes the prohibition if the contracting parties could justify that the contract “contributes to economic and/ or technical progress and that such contributions are sufficient to compensate the restrictions to competition and reserves to the users an equitable part of the resulting profits, without giving to the concerned companies the possibility to eliminate the competition for a material part of the products and services in question. Such practices could impose restrictions to the competition only if they are necessary to reach the intended progress”.
In the event a franchising contract is considered by the relevant authorities as restricting the competition on the market, the parties should give all evidence justifying the contribution to the economic and/or technical progress (diminution of costs, improvement of investments and sales, development of new technologies), evidence that the market in question is not locked and still opened to competition and also that the restriction to competition is proportionate to the purpose of economic and/or technical progress.
Are in-term and post-term non-compete and non-solicitation clauses enforceable?
Non-compete and non-solicitation clauses could be considered as an anti-competitive practice under article 6 of Law 104-12 (see answer to question 10 above).
In the absence of Moroccan published case law regarding non-compete and non-solicitation clauses under franchising agreements, it could be appropriate to refer to the French law (Moroccan judges frequently referring to French law/case law in their decisions) to identify possible criteria to assess the non-compete and non-solicitation clauses. French case law relating to non-compete clauses construes the non-compete and non-solicitation clauses in a restrictive manner. Such clauses are however admitted in French Law under a well-established case law if the following criteria are reached: (i) a limitation in time, (ii) a limitation in space and (iii) a proportionality relating to the purpose of the agreement.
The elements referred to above may be used as arguments to convince the Moroccan judges that the non-compete and non-solicitation clauses contained in a franchise agreement should be allowed
Are there any consumer protection laws that are relevant to franchising? Are there any circumstances in which franchisees would be treated as consumers?
Under Moroccan law, the franchisee being a merchant acting for his professional needs cannot be considered as a consumer, in accordance with Article 2 of Dahir No. 1-11-03 of 11 February 2011 promulgating Law No. 31-08 enacting consumer protection measures (“Consumer Protection Law“) which defines the consumer as “any individual or legal entity who acquires or uses for the satisfaction of his non-professional needs products, goods or services which are intended for his personal or family use“.
Furthermore, the franchisor and/or franchisee as suppliers of the products placed on the market are subject to the consumer information obligation laid down in Article 3 of the Consumer Protection Law and by Decree No. 2-12-503 dated 11 September 2013 issued for the application of certain provisions of the Consumer Protection Law.
To this end, they must make available to consumers, by any appropriate means, the information relating to:
The essential characteristics of the products, goods or services;
The origin of the product or good;
The expiry date, where applicable; and
The instructions for use and the user manual.
On the other hand, it is up to the franchisee as a direct seller to provide information on (i) the prices of the products or goods, (ii) the prices of the services, (iii) the duration and conditions of the guarantee, (iv) the special conditions of the sale or the performance of the service and (v) the possible limitations of contractual liability, if any.
Moreover, the following elements must be highlighted on the labelling of products and goods offered for sale, according to their nature, namely:
The net quantity, expressed in international system units;
The composition or type or nature of the constituent material(s);
The name or business name and address of the person responsible for placing the product on the market;
The country of origin;
Precautions and special conditions of use for products that may be impacted or have consequences for the consumer if the instructions for use are not followed;
The expiry date, if applicable;
Any other compulsory information provided for in a specific regulation.
Labelling information must be visible, legible and indelible and more generally, all the information above must be provided for at least in Arabic.
Is there an obligation (express or implied) to deal in good faith in franchise relationships?
As franchising is subject to the Moroccan general contract regime, the parties are required to act in good faith in accordance with Article 231 of the Moroccan Civil Code which states that ” Every commitment must be executed in good faith and is binding not only on what is expressed therein, but also on all the consequences that the law, usage or equity give to the obligation according to its nature”.
Are there any employment or labour law considerations that are relevant to the franchise relationship? Is there a risk that the staff of the franchisee could be deemed to be the employees of the franchisor? What steps can be taken to mitigate this risk?
In order to assess whether there is a risk of re-characterization of the franchise contract on an employment contract, it is first necessary to analyse the definition of employee and employer in light of the provisions of Article 6 of Dahir n° 1-03-194 promulgating the Moroccan labour code (“Moroccan Labour Code”):
“Any person who has undertaken to carry out his professional activity under the direction of one or more employers in return for remuneration, whatever his nature and method of payment, shall be considered an employee.
Any natural or legal person, private or public, who hires the services of one or more natural persons, shall be regarded as an employer.”
Therefore, since employees can only be natural persons, there is no risk of re-characterisation of the franchise contract as an employment contract, if the franchisee is a legal person. On the other hand, in the case of a franchisee that is a legal entity, the franchisor must ensure that the independence of the franchisee is not compromised.
Regarding the risk that the staff of the franchisee could be deemed to be the employees of the franchisor it should be noted that employees are linked to an employer, whether a company or simple merchant, and not to a brand.
Furthermore, to avoid any risk of re-characterisation of the franchise contract as a contract of employment, it is essential that the franchisee retain his status as an independent merchant. As such, he is responsible for the management of his business and assumes alone the risks related to the operation of his business. In that respect, to avoid the risks associated with requalification, the franchisor must ensure that the independence of the franchisee is not undermined. Indeed, in the presence of corroborating evidence of the existence of a link of legal subordination, there is a risk that the franchise contract may be re-characterized as an employment contract.
In order to mitigate this risk, the franchisor must in no way intervene in the hiring of the franchisee’s employees, the setting of their salaries and more generally the exercise of the employees’ management power.
Is there a risk that a franchisee could be deemed to be the commercial agent of the franchisor? What steps can be taken to mitigate this risk?
In order to assess whether franchisee could be deemed to be the commercial agent of the franchisor, one should analyze the franchising relation in light of the provisions of article 393 of Dahir n° 1-93-83 promulgating the Moroccan code of commerce (“Moroccan Code of Commerce”).
“The commercial agency contract is an agency contract whereby a person, not bound by an employment contract, undertake to negotiate and conclude on a regular basis, purchases, sales or more generally, any other commercial transactions on behalf and in the name of a retailer, producer or another commercial agent against payment.”
Should a franchisee be considered as a commercial agent, the franchisor would have to indemnify the franchisee in case of early termination of the franchise agreement.
Please note that in order to avoid any re-characterisation of a franchise contract as a commercial agency agreement, the franchisee shall not act on behalf and in the name of the franchisor. Therefore, it would be preferable for the franchisee to purchase from the franchisor in order to resell on his own behalf and in his own name.
Are there any laws and regulations that affect the nature and payment of royalties to a foreign franchisor and/or how much interest can be charged?
The prior agreement of the Foreign Exchange Office (FEO) is required for the payment of the amounts due in respect of guaranteed minimum fees/royalties and entry fees for franchises (and late payment interests related thereto). In practice, the FEO may not allow the transfer abroad of royalties exceeding 8% of the franchisee turnover.
As explained above, the amount of royalties to be paid to a foreign franchisor by a Moroccan franchisee is authorized, provided that a copy of the franchise agreement as well as a copy of the invoices relating to the royalties are provided to the FEO by the Moroccan bank / credit institution which has been requested by the franchisee to make the payment abroad. Any amendment to the franchise agreement must equally be notified to the bank of the franchisee.
In addition, Article 56 of the FEX Instruction sets that imports of services (which include franchise agreements) must be made in accordance with the following principles: (i) the services must be performed in Morocco, (ii) import of services must correspond to effective services responding to real needs of Moroccan entities and paid at the market prices, (iii) services import’s payment can only be performed with respect to services completed after the date of the relating agreements and (iv) be determined based on verifiable elements.
Moreover, the set-off of claims between any Moroccan counterparty (except the Moroccan Central Bank) and a foreign entity is prohibited, based on the provisions of Article 9 of the FEX Instruction.
Therefore, any set-off of amounts between the franchisor and the franchisee is prohibited unless authorized by the FEO.
Is it possible to impose contractual penalties on franchisees for breaches of restrictive covenants etc.? If so, what requirements must be met in order for such penalties to be enforceable?
It is possible to impose contractual penalties in accordance with Article 264 of the Moroccan Civil Code which provides for that the “(…) contracting parties may agree on damages due to the creditor for the harm suffered by reason of the total or partial failure to perform a primary obligation or by reason of the delay in such performance.
The Court may however reduce the amount of damages agreed upon if it is excessive or increase the amount if it is insufficient.
Therefore, the franchisor may indeed include damages in the franchise contract, which may be enforceable, however if they are deemed excessive, a court may modify the amount in accordance with above-mentioned Article 264.
What tax considerations are relevant to franchisors and franchisees? Are franchise royalties subject to withholding tax?
Pursuant to Articles 4, 15 and 19-IV-B of the Moroccan tax code, royalties paid to a non-resident entity are subject to a 10% withholding tax unless the rate is reduced under a tax treaty entered into with Morocco.
Does a franchisee have a right to request a renewal on expiration of the initial term? In what circumstances can a franchisor refuse to renew a franchise agreement? If the franchise agreement is not renewed or it if it terminates or expires, is the franchisee entitled to compensation? If so, under what circumstances and how is the compensation payment calculated?
Pursuant to the general principles of Moroccan contract law, any party to an agreement with a definite term may terminate the agreement at the expiry thereof, and therefore choose not to renew it. In principle, a party shall not be held liable because of its refusal to renew the agreement, even if such agreement provides for a tacit (i.e. automatic) renewal thereof.
However, please note that Moroccan courts tend to consider as abusive the termination of indefinite-term agreements (especially distribution agreements) without an acceptable and sufficient prior notice on the basis of the legal concept of abus de droit (abusive use of a legal right) referred to in article 94 of the Moroccan Civil Code. This principle could potentially apply to franchising agreements.
On the basis of such an abusive termination, the franchisee may ask for an indemnity to be paid by the franchisor in order to cover the loss suffered as a result of this termination.
The duration of the prior notice should be considered by reference to several criteria such as the duration of the franchising relationship, the franchisee’s economic dependency towards the franchisor, the turnover achieved between the franchisee and the franchisor, the number of employees who will be made redundant after the termination of the franchising relationship, the importance of the investments made by the franchisee, etc.
The main idea is that whenever the courts consider that the prior notice period is insufficient, they will tend to award damages to the “innocent” party in order to cover the loss suffered as a result of such abusive termination. However, Moroccan case law does not state clear principles for the calculation of the damages / indemnity to be awarded in the event of an abusive termination.
The principles referred to above could also potentially apply even if a specific prior notice period is expressly provided for in the contract entered into between the parties, if the prior notice is not sufficient and the termination is therefore considered as abusive.
However, please note that a material breach or default by a party to an indefinite term agreement would normally allow the other party to terminate the agreement (whether or not the agreement contains such a termination clause) with a rather short prior notice period (i.e. the notice period provided for in the agreement); the principles outlined above would not apply, because of the default of the other party.
In case of termination of a definite term franchise agreement, we cannot exclude that Moroccan courts, if they were seized of a dispute thereupon, may apply the same reasoning, even if the agreement is governed by a foreign law, as Moroccan courts could take into account the consequences of such termination for the franchisee, especially with a view to protect employment in Morocco.
In any event, concerning a definite term franchise agreement, a non-defaulting party who would terminate an agreement on the basis of a material breach / default of the other party, in accordance with the terms of the agreement relating to early termination, would not incur any liability towards the defaulting party.
Are there any mandatory termination rights which may override any contractual termination rights? Is there a minimum notice period that the parties must adhere to?
Please see our answer to question 19 above.
Are there any intangible assets in the franchisee’s business which the franchisee can claim ownership of on expiry or termination, e.g. customer data, local goodwill, etc.
Article 80 of the Moroccan commercial code provides for a definition of the goodwill/ongoing (fonds de commerce) which mandatorily includes the clientele.
It also includes all other property necessary for the operation of the goodwill, such as the trade name, sign, right to lease, commercial furniture, goods, equipment and tools, patents, licences, trademarks, trade and service marks, industrial designs and models and, generally, all industrial, literary or artistic property rights attached thereto.
Therefore, the trade name, trademark and the sign do not belong to the franchisee, who only has the right of exploitation under the franchise agreement. Therefore, upon termination of the franchise agreement, the franchisee loses the right to exploit the abovementioned industrial/intellectual properties and cannot claim them.
Regarding the clientele, and in the absence of a published Moroccan case law, French case law (to which Moroccan courts often refer to) in a decision of the Court de Cassation dated 27 March 2002, admitted that the local clientele belongs to the franchisee whereas the national clientele would be the property of the franchisor as it ruled that “(…) if a national customer base is attached to the reputation of the franchisor’s trade mark, the local customer base exists only because of the means used by the franchisee, including the tangible elements of its business, equipment and stock, and the intangible element constituted by the lease, which is itself part of the franchisee’s business, since it is the franchisee’s business, even if the latter is not the owner of the trademark and brand name made available to him during the performance of the franchise agreement, it is created by his activity, with means which, contracting in a personal capacity with his suppliers or money lenders, he implements at his own risk (…)”.
Finally, the premises objet of the goodwill belong to the owner or tenant.
Is there a national franchising association? Is membership required? If not, is membership commercially advisable? What are the additional obligations of the national franchising association?
The Moroccan Franchise Federation (FMF) exists since 2006. It counts among its members, Moroccan and international commercial network brands present in Morocco and active in several sectors: catering, textiles, fashion accessories, sports articles, furniture, cosmetics, etc.
The FMF’s main missions are to inform and accompany its members in the development of their brands in Morocco and abroad, to represent its members with the public authorities in order to improve the investment climate and encourage franchise development initiatives; and to contribute through its research, studies and events to the evolution of thinking on the modes of development of networked trade in Morocco and to encourage international expansion from the Kingdom.
For the moment the FMF does not have a significant impact on the Moroccan territory yet and therefore does not have a considerable benefit for its members, franchisees and franchisors are hence free to decide whether or not they wish to join.
Are foreign franchisors treated differently to domestic franchisors?
In the absence of specific law governing the franchising, there is no particular difference of treatment between foreign and domestic franchisors.
Are there any requirements for payments in connection with the franchise agreement to be made in the local currency?
No (unless between two resident entities/individuals). However, payments must be performed in one of the currencies quoted by Bank Al Maghrib (the Moroccan Central Bank).
Must the franchise agreement be governed by local law?
When entering into an agreement with a foreign or/and non-resident entity, it is possible for a Moroccan party to a contract to agree that:
(i) the agreement will be governed by a foreign law other than the Moroccan law;
(ii) disputes arising in connection with the agreement will be settled before a foreign jurisdiction or in accordance with an arbitration clause.
However, in order to be binding and enforceable in Morocco, such agreement should comply with the Moroccan and international public order (“règles d’ordre public national et international”).
What dispute resolution procedures are available to franchisors and franchisees? Are there any advantages to out of court procedures such as arbitration, in particular if the franchise agreement is subject to a foreign governing law?
In addition to the jurisdiction of the commercial courts in the context of a legal dispute, parties to franchise agreements may resort to the conventional medication provided for in Articles 327-55 et seq. of the Moroccan Code of Civil Procedure by which the parties appoint a mediator to facilitate the conclusion of an agreement putting an end to the dispute.
In that respect, if the franchise agreement is subject to a foreign governing law and in order to avoid the application of any conflict of law rules, it is preferable to have recourse to arbitration.
Indeed, parties to a franchise agreement may also choose to resort to domestic or international arbitration as provided for in Articles 306 et seq. of the Moroccan Code of Civil Procedure.
To this end, in accordance with Article 327-46 of the Moroccan Code of Civil Procedure, any arbitral award rendered may only be enforced in Morocco after having obtained the “exequatur” from (i) the President of the Moroccan Court of Commerce where the arbitral award has been rendered or (ii) if the arbitral award has been rendered abroad, the President of the Moroccan Court of Commerce of the place of execution.
In this respect, an arbitral award will only be declared enforceable by order of the President of the Moroccan Court of Commerce provided that (a) an original of the arbitral award and of the concerned agreement are produced (or any copy of these documents complying with the authenticity conditions), and that (b) the arbitral award does not contravene to the Moroccan and international public order (“règles d’ordre public national et international”).
Does local law allow class actions by multiple franchisees?
Moroccan law does not provide for class actions for multiple franchisees. Indeed, Article 228 of the Moroccan Civil Code establishes the principle of relativity of contracts and provides for that “Obligations only bind those who have been parties to the act: they do not harm third parties and they only benefit them in the cases expressed by the law“.
Moreover, Article 1 of the Moroccan Code of Civil Procedure states that “Only those who have the quality, capacity and interest to assert their rights may take legal action”.
Therefore, to the extent that the franchise contract is entered into bilaterally between the franchisor and a single franchisee, there can be no class actions with the other franchisees of the franchisor, when the dispute arises from the said franchise contract.
Must the franchise agreement and disclosure documents be in the local language?
It is not mandatory for the franchise contract to be drawn up in Arabic to be binding. However, for formalities and registration purposes (as explained above), it should be then translated into Arabic or French.
Is it possible to sign the franchise agreement using an electronic signature (rather than a wet ink signature)?
The electronic signature in Morocco is only allowed if it is secure. In accordance with Article 6 of law n° 53-05 relating to the electronic exchange of legal data, to be secure, the electronic signature must satisfy the following conditions:
be specific to the signatory;
be created by means that the signatory can keep under his exclusive control;
guarantee with the act to which it is attached a link such that any subsequent modification of the said act is detectable.
It must be produced by a device for creating an electronic signature, attested by a certificate of conformity.
It is possible to sign the franchise agreement using an electronic signature in accordance with law n° 53-05 (which notably introduced Article 417-3 et seq. of the Moroccan Civil Code). Barid eSign is currently the only licensed provider of electronic certification services in Morocco.
Can franchise agreements be stored electronically and the paper version be destroyed?
Article 417-1 of the Moroccan Civil Code provides for that writing on electronic support has the same probative force as writing on paper.
Written documents in electronic form are admitted as evidence in the same way as written documents on paper, provided that the person from whom they emanate can be duly identified and that they are drawn up and stored under conditions that guarantee their integrity in compliance with law n° 53-05 and notably Article 417-1 et seq. of the of the Moroccan Civil Code.
Please provide a brief overview of current legal developments in your country that are likely to have an impact on franchising in your country.
There are no current legal developments in Morocco that are likely to have an impact on franchising locally.
In your opinion, what are the key lessons to be learned by franchisors as a consequence of the COVID-19 crisis?
National and international franchising, all sectors combined, will suffer the repercussions of the pandemic.
The main lesson to be learned by franchisors as a consequence of the COVID-19 crisis would be to include in their agreements with franchisees the implementation (i) of local digital platforms to enable franchisees to market, sell and deliver goods and services through digital market places and (ii) of a greater flexibility in terms of franchisee management and operation of the franchise locally in times of pandemic, and as much as possible, bring the supply chains (if any) as close a possible to the franchisees.
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.