Poland is located in Central Europe. It is bordered to the west by Germany, to the north by the Baltic Sea and Russia, to the south by the Czech Republic and Slovakia and to the east by Lithuania, Belarus and the Ukraine. The country has an area of 312,000 square kilometres. Its capital city is Warsaw.

Poland has a population of 38,623,000 in spring 2006 with an estimated growth rate of 0.02%. The official language is Polish. The main religion is Roman Catholic.

Parliamentary democracy was established in Poland in 1991. The supreme legislative authority is the Parliament consisting of a lower house Sejm (460 members) and an upper house Senat (100 members). The executive branch focuses on the Council of Ministers, led by the Prime Minister, and the President who is the head of state elected by popular vote every five years.

Poland’s economy has been booming since the nineties when the country has taken drastic economic steps, including massive privatisation, so as to open up its market to international competition. Poland has rich natural and mineral resources, particularly coal. Some 27% of the labour force is employed in agriculture which is developing fast in order to reach the Western European standards.

Although there is no specific Franchise Legislation in Poland, there are currently 210 Franchise Networks and over 13.500 Franchise Outlets operating in the country. Poland is therefore an attractive growth market for international franchisors.

Definition of Franchise
There is no legal definition of Franchising in Poland. However, the relevant Polish case law has made an effort to define what constitutes the essence of the Franchise Relationship. According to the ruling of the Anti-Trust Court in Warsaw dated 21st July 1992, Franchising is:

“a method of trade in the area of good and service distribution allowing the Franchisee to sell good and services in his own name within the franchise network by way of using the Franchisor’s trade name, trademarks and know-how”.

Legal Status of the Franchise Agreement under Polish Law
As the Franchise Agreement is not regulated under Polish Law, it belongs to the category of so-called “nameless contracts” governed by Article 353¹ of the Polish Civil Code:

“The parties of an agreement are free to create the legal relationship at their sole discretion, providing that the content and the target of the contract do not contravene the nature of the relationship, law and principles of community life”.

Consequently, the Franchise Agreement must comply with these requirements, mainly the general contract terms under the Polish Civil Code and the principles regulating similar contract types, as well as be consistent in itself in order to be enforceable under Polish law. This includes provisions stipulating the legal form of the relationship, proper performance of the contract liabilities or indemnity for damages.

Disclosure
Polish law does not provide for specific pre-contractual disclosure obligations. However, a party whose inexperience has been in any way exploited by another may demand the agreement to be declared null and void. In addition, the Polish Civil Code protects the Franchisee from the dishonest behaviour of the Franchisor where the Franchisor e.g. collects a deposit although it has no intention to conclude an agreement:

“The party who entered into (or continued) negotiations under breach of good customs, in particular with no will to conclude an agreement, is obligated to repair the damage suffered by to the other party who expected the agreement to be concluded” (Article 72 § 2 of the Polish Civil Code).

Also Polish law recognises that information made available during pre-contractual negotiations can after be confidential:

 “If one party discloses during the negotiations information under reserve of confidentiality, the other party is obliged not to reveal the information to third parties, as well as not to use it for its own purposes, unless the parties agreed otherwise” (Article 72¹ § 1 of the Polish Civil Code).

In conclusion, Franchisors willing to expand their franchise networks on the Polish territory must conduct the negotiations with local Franchisees fairly and in good faith.