Hungary

Franchise regulation

In the absence of a dedicated franchise act, franchises are subject to the same laws – primarily the Hungarian Civil Code – that govern other businesses. The general rules of civil and contractual law as well as the Civil Code’s specific chapter on franchise agreements (in the wording of the Civil Code, ‘agreements on the lease of rights’) apply.

Because of the Civil Code’s dispositive nature the parties may deviate from these provisions in their agreements. This means the parties, using the freedom-of-contract principle, usually exclude the application of the provisions of the Civil Code on franchise agreements.

Pre-contractual disclosure requirements

The Civil Code recognises the doctrine of culpa in contrahendo. Under this principle the parties are obliged to: (1) co-operate during the conclusion of the franchise agreement; (2) respect each other’s rightful interests; and (3) before the conclusion of the franchise agreement, inform each other regarding all essential circumstances in relation to the proposed contract. There is no explicit statutory provision on the formal requirements of the pre-contractual information duty concerning franchise agreements.

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Contact Bálint Halász - Balint.Halasz@twobirds.com or Bettina Kovecses - Bettina.Kovecses@twobirds.com