Discusses opportunities for U.S. franchisers and legal requirements in the market.

The use of franchising has increased in Ecuador over the past decade. There are no specific laws that regulate franchising, except for some legal specifications established under Decision 291 of the Cartagena Agreement (http://www.sice.oas.org/trade/junac/decisiones/dec291e.asp).

The following provisions of Ecuadorian law also govern franchising: the Organic Code for Commercial Production and Investment, the Civil Code, the Companies Law, the Tax Law, and the Intellectual Property Law. Franchising is considered to be a private negotiation wherein a franchisor licenses trademarks and shares proven methods of doing business to a franchisee in exchange for a recurring payment, and usually a percentage of net sales as well as annual fees. The Commercial Code indicates that the commissioned merchant or agent is obligated directly and personally for his/her own franchise as if the business were entirely theirs. The principal and the agent are totally independent even with respect to legal action, except for the rights and obligations indicated by their mutual commission contract and the Civil and Commercial Codes.

Further information may be found at the web page of the Ecuadorian Franchising Association (http://www.aefran.org/).

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.