The franchise agreement in the draft new Civil Code

Anyone building a franchise network in Slovakia today builds it on an agreement the law does not know. Franchising is concluded as an unnamed contract under Section 269(2) of the Commercial Code (Act No. 513/1991 Coll.), and everything of substance, from fees through the policing of standards to a partner’s departure, must be stated by the agreement itself. The government’s draft new Civil Code is intended to change that. It is before the National Council as parliamentary print 1312; on 15 September 2026 the Constitutional Law Committee recommended its adoption as amended, the amendments leaving the franchising provisions untouched, and the draft envisages an effective date of 1 July 2027. The overview below is based on the wording submitted to the National Council, which may still change in plenary. Once passed, the sections of the draft will be renumbered, which is why we cite the numbering of parliamentary print 1312.

Franchising as a distinct contract type

The draft regulates the franchise agreement in a separate division. The basic provision reads:

Under a franchise agreement the franchisor undertakes to grant a franchise to the franchisee. The franchisee undertakes to pay the franchisor a consideration for the grant of the franchise.

— § 1294(1) of the government’s draft Civil Code, parliamentary print 1312 (unofficial English translation)

By a franchise the draft means the body of rights, other assets and information which belong to the franchisor and serve the conduct of business activity, or which by their nature are to serve that purpose. The agreement must be concluded in writing (§ 1294(2) and (3) of the draft).

What the Act would say for the parties

The greatest practical significance lies in what would apply where the agreement is silent:

• The franchisor may grant the franchise to others as well. Even after the agreement is concluded it remains entitled to exercise the rights and use the information forming the subject of the franchise, and to grant them to other persons as well (§ 1295 of the draft). Territorial exclusivity must therefore be expressly negotiated by the franchisee.
• The franchisor must provide cooperation, in particular by handing over the things and information needed to achieve the purpose of the agreement. Things handed over remain its property and are returned on termination unless consumed (§ 1296 of the draft).
• Inspection to the extent necessary. The franchisor may inspect the use of the franchise to the extent needed to protect its rights (§ 1297 of the draft). If the franchisee uses the franchise contrary to the agreement and fails to remedy this even within a reasonable period, the franchisor may withdraw from the agreement (§ 1298 of the draft).
• The franchisee may not pass the franchise on. Absent agreement to the contrary it could therefore not grant sub-licences (§ 1299 of the draft). The franchisee must use the franchise in good faith, in accordance with the franchisor’s instructions and at the quality the franchisor achieves, otherwise as provided by the agreement (§ 1300 of the draft).
• Confidentiality survives termination. Where this is necessary to protect the franchisor’s interests, the franchisee may neither disclose information relating to the franchise nor use it for its own benefit, including after the agreement has ended (§ 1301 of the draft).
• Protection against third parties. If a third party threatens the franchisee’s rights relating to the franchise, the franchisee must notify this and the franchisor must take measures to protect it without undue delay (§ 1302 of the draft).

Termination under the rules on commercial agency

The draft does not deal with the ending of a franchise separately. It refers to commercial agency:

The provisions on commercial agency apply mutatis mutandis to the duration of a franchise agreement and to the grounds on which it ends.

— § 1303 of the government’s draft Civil Code, parliamentary print 1312 (unofficial English translation)

For commercial agency the draft provides, among other things, that an agreement for an indefinite period may be terminated on notice of one to three months depending on how long it has lasted, and that an agreed longer notice period must not be shorter for the principal than for the agent. For franchising these rules are to apply mutatis mutandis. The draft expressly refers only to duration and to the grounds on which the agreement ends. Whether other rules on commercial agency, for example on the indemnity payable on termination, would also apply mutatis mutandis to franchising does not follow unambiguously from the wording and will emerge only through interpretation. We discuss the changes to the commercial agency regime in our answer on commercial agency in the draft new Civil Code.

What does not change

Competition rules for franchise networks are set not by the Civil Code but by Commission Regulation (EU) 2022/720 and the Act on the Protection of Competition. The limits on prices, territory and non-compete obligations therefore remain the same; we describe them in our article on prices, territory and online sales in a distribution network. Nor does the conflict-of-laws rule in the Rome I Regulation change: absent a choice of law, a franchise agreement is governed by the law of the country in which the franchisee has its habitual residence (Article 4(1)(e) of Regulation (EC) No 593/2008), in more detail in our answer on the law governing a franchise agreement.

What this means for existing networks

Under the transitional provisions of the draft, franchise agreements concluded before the effective date would continue to be governed by the previous rules unless the parties agree in writing to move under the new Act (§ 1889(3) and (4) of the draft). The details are in our answer on agreements concluded before the new code takes effect. For a network that will keep growing after 2027 this means that older and newer outlets may be governed by different law.

If you are preparing franchise documentation today, it is worth drafting it so that it stands up under both regimes: state territorial exclusivity and the prohibition on sub-licensing expressly, set notice periods so that they are not shorter than the statutory minimum for commercial agency, and build know-how protection on confidentiality that continues after the agreement ends. On everything a franchisee signs besides the main agreement, see our answer on what I am signing when I buy a franchise.

We will prepare or review your franchise package under our franchise agreement service. If you wish to go through your company’s entire contractual documentation before the new code takes effect, use our preparing for the new Civil Code service.