I. Economic data

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A. Macro-economic data

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- General data

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Population 2022: 47,615,034 inhabitants

Area: 505,983 km2

Density 2022: 93 inhabitants/km2

GDP (nominal) 2022: $1,476.5 billion

GDP/capita 2022: $31,031.3

GDP (PPP) 2022: $164.53 billion

GDP (PPP)/capita 2022: $45,825

Growth rate 2022: 5.8%

GNI/capita (PPP) 2022: $46,550

HDI 2021: 0.905

Literacy rate: 99%

Life expectancy 2022: 83.08 years

 

- Policy

Spain's political system is based on a 1978 constitution that establishes a constitutional parliamentary monarchy. The state has a bicameral Parliament. The current king is Felipe VI, and the president of the government, elected in 2018, is Pedro Sanchez, from the Spanish Socialist Workers' Party.

 

Spain has a pyramidal administrative structure: a central state followed by three levels of local administration. The country is divided into 17 autonomous communities with their own governing bodies: 50 provinces, 2 autonomous cities and 8,131 municipalities.

 

- Economic development

 

Spain is the world's fifteenth-largest economy in terms of gross domestic product (GDP). The main sectors of activity account for 2.61% of GDP in agriculture, 20.36% in industry and 67.43% in services[1].

 

Severely hit by the economic crisis that hit Europe in 2007, Spain experienced a 5-year recessionary episode, with GDP contracting by 8.8% in volume terms. The global financial crisis hit the Spanish economy in 2009. This recessionary episode had far-reaching consequences, with the net loss of 2.4 million jobs, leading to an unemployment rate of 26.9% in 2013[2].

 

From 2014, high GDP growth was observed in Spain, in 2017 it was +2.9%. GDP slowed gradually in 2018 (+2.3%), but nevertheless stayed in positive territory. The economic recovery led to the creation of 2.1 million jobs between 2014 and 2018 and a gradual decline in the unemployment rate to 13.8% at the end of 2019 and 12.9% in 2023. The expansion phase also improved public finances, leading to the country's exit from the excessive deficit procedure in 2018, with a deficit of -2.6% of GDP.

 

The economic impact of the 2020 health crisis has turned this landscape on its head. Spain was one of the European countries hardest hit by the Covid-19 pandemic. Public finances worsened seriously.

 

The Spanish economy entered a recovery phase in 2021 and 2022, with GDP rebounding by 5.5% each year. However, Russia's invasion of Ukraine has slowed the pace. Although not directly exposed to Russia and Ukraine, the Spanish economy suffered indirect effects of the war through imported inflation. As a result, Spain drew up several plans to deal with the economic impact of the war, involving almost 47 billion euros, or 3.9% of GDP, over the period 2021-2023. The Spanish economy seems to remain among the most resilient on the European continent, despite this difficult context[3].

 

- Resources[4]

 

In Spain, agriculture accounts for around 3% of GDP. Spain is one of the European Union's leading agricultural nations. Today, Spanish agriculture is particularly competitive in fruit and vegetables. Spain is one of the world's largest producers of oranges, the world's third largest producer of wine and the world's largest producer of olive oil.

 

Industry accounts for 20.4% of GDP. The main export items are chemicals, agri-food, electrical appliances and automobiles. More than two million jobs are generated by automotive manufacturing, which is the leading industry and export sector. The automotive industry accounts for 8% of Spanish GDP, and over 80% of production is exported.

 

The development of Spain's tourism sector has been remarkable. In 1960, the number of visitors was 7 million, doubled in 1965, 24 million in 1970, 30 million in 1975, 40 million in 1978 and 56 million in 2011. Tourism is a major economic sector, accounting for 10% of GDP.

 

- Population

 

Spain is the fourth most populous country in the European Union. A victim of rural exodus, its population is unevenly spread across the country. Although the average population density is around 93 inhabitants/km2 , the urbanization rate is around 81%[5].

 

Today, two-thirds of Spaniards live in urban municipalities, 40% in cities with more than 100,000 inhabitants and 54.6% in metropolitan areas[6]. Municipalities with fewer than 20,000 inhabitants account for just 34% of the population, while 40.5% of Spaniards live in large cities with more than 100,000 inhabitants. However, Spain is not only urban, but also metropolitan, with 56.4% of its population living in metropolitan areas of over 200,000 inhabitants. The most populous community in Spain is Andalusia, with 18% of the population, followed by Catalonia with 16%, Madrid with 14%, and Valencia with 11%.

 

Spain has several urban areas with populations in excess of 500,000 inhabitants[7].

 

Spain's ten most populous cities are Madrid (6,607,269 inhabitants), Barcelona (5,107,415), Seville (1,387,530), Valencia (1,386,355), Bilbao (1,157,805), Malaga (979,606), Zaragoza (729,897), Las Palmas de Gran Canaria (684,352), Murcia (678,470) and Palma de Mallorca (589,480)[8].

 

- Foreign investment

 

Spain ranks eighth among the most attractive economies for foreign investment, according to the AT Kearney 2023 Foreign Direct Investment Confidence Index[9]. Foreign direct investment inflows in 2022 amounted to $48.2 billion[10].

 

Gross foreign investment flows into Spain reached 22,457 million euros from January to September 2022, representing growth of 54.9% on the same period the previous year[11].

 

The United States, which remains the leading foreign investor in Spain, invested almost 28% of foreign investment flows in 2022. The UK and Germany invested 17.8% and 14% of investment flows respectively[12].

 

More than half of all foreign investment in Spain (55.1%) was in the services sector. The industrial sector received 42.2% of foreign investment.

 

B. Economic data specific to franchising

 

- Historical background[13]

 

Franchising first appeared in Spain in the late 1950s, with French companies, particularly in the fashion sector, opening up franchise stores in Spain. This success attracted the attention of Spanish companies, who began to develop under the franchise model in the 1960s.

 

It was in the late 1980s that Spain experienced a boom in franchise development. In 2007, the country ranked eighth in the world franchising market in terms of sales, and fifth in terms of the number of establishments. By the end of 2023, franchising had achieved sales of over 26 billion euros. It comprises more than 1,300 companies, over 75,000 establishments operating in Spain and more than 290,000 jobs.

 

- Institution

 

The franchising sector is organized within the Spanish Franchisors Association (SFA) (Associacion Espanola de Franquiciadores) founded in 1993, a member of the European Franchise Federation (EFF) and the World Franchise Council.

 

The SFA:

 

-carries out a variety of activities at national and international level, such as signing agreements with various organizations on behalf of members, publications and information on foreign markets; it is also present at international trade fairs;

 

-defends the ethical principles governing franchising and the relationship between franchisors and franchisees; represents, defends and promotes the economic, social and professional interests of its members; creates assistance services and promotes the development of franchising in Spain;

 

-has produced a reference guide to the franchise system for the last 28 years. This book offers practical, useful content for anyone interested in keeping up to date with the latest developments in franchising. The SFA has published the official SFA FRANCHISES 2024 Book, containing practical information for all entrepreneurs wishing to become part of this business system, bringing together the main businesses carried out by the Association between September 2022 and October 2023.

 

Since 2010, the SFA has carried out and published the results of surveys. Today, it is possible to find various topics in these studies such as: franchising in Spain, Spanish franchising in the world, franchise case law monitoring, women in franchising and franchising in Madrid.

 

- Trade shows[14]

 

The SFA lists:

 

-various trade shows, notably in Vigo, Madrid, Palma de Mallorca and Barcelona;

-"SIF FERIA DE VALENCIA", the international franchising fair in Valencia. After Franchise Paris Expo, it is one of Europe's leading franchising exhibitions. The show stands out for the high quality and professionalism of its national and international visitors. This not-to-be-missed event is the best way to find investors, contacts, commercial agreements, financing, knowledge, advice and new business openings.

 

- Statistics[15]

 

The SFA conducts studies, the latest of which, the "Franchising in Spain 2023" study, confirms that this business model has managed to adapt to the difficult situation Spain has been going through over the last three years, since, despite all the economic difficulties (Covid-19 pandemic, war in Ukraine), the system has seen a 2.9% growth in sales, reaching 26.929 million euros. Another noteworthy fact is that franchising has continued to generate jobs, as it now employs 303,595 people, 3.18% more than in the 2019 statistics. In turn, the number of establishments in operation fell by just 0.7% during the pandemic years, while the number of businesses currently expanding through franchising fell by just 0.5%, from 1,381 in 2019 to 1,375 in 2022. These are therefore positive figures, which show that the franchise industry as a whole has already overcome much adversity, thanks to its capacity for innovation, dynamism and adaptation.

 

The Spanish franchise system is made up of a total of 1375 brands, 0.5% fewer than at the end of 2019, a year in which 1381 networks were recorded, 1137 of which are of national origin (82.6%). The remaining 238 networks (17.4%) come from a total of 24 countries, including France (51 brands), the USA (46), Italy (43), the UK and Portugal (16).

 

Among these 1375 franchises, the sector with the highest number of chains is Hotels/Restaurants, with a total of 224 networks, embedded into six sub-sectors of activity, followed by Fashion, with 213 chains, divided into eight sub-sectors, and Beauty/Esthetics, with 107 networks.

 

In terms of the number of establishments in operation, by the end of 2022 there were a total of 77,246 establishments in Spain, of which 20,999 were branches and the remaining 56,247 franchises. In total, there were 573 fewer establishments than at the end of 2019, representing a drop of 0.7%. The sector with the highest number of open outlets is, once again, Food, with a total of 13,473 outlets. This is followed by Hotels/Fast Food, with 4,636 outlets, Beauty/Esthetics, with 4,349 outlets, and Travel Agencies, with 4,097 outlets.

 

- Franchise agreement

 

Franchise agreements set out the rights and obligations of both parties. Franchisors must create a successful concept. It is essential that the franchisor establishes a business that brings something different, innovation and/or originality to what already exists on the market. They must also have proven know-how that works and is accepted in the market and among consumers, select the right franchisee, choose the right locations to open franchises, carry out prior market research of the area in question, and assist and support their franchise network, which must be fluid and ongoing.

 

As for franchisees, they must take on a series of duties and responsibilities, before, during and after the opening of the business. To become franchisees, they must set up a company, complete the necessary administrative formalities, make a capital contribution to the franchisor, and find and fit out premises where the franchisor's concept can be successfully marketed. They will also have to hire staff, manage the franchise business and, above all, meet financial and contractual commitments.

 

- Economic impact

 

According to a series of studies carried out by the SFA, total sales achieved by the end of 2022 by the entire franchise system in Spain were 26,929 million euros, representing an increase of 2.9% on the 26,154.3 million achieved in 2019.

 

Of this overall figure, branch establishments billed a total of 10,342.2 million euros compared with 9,269.8 million billed in 2019, 10.4% more (1,072.4 million euros more). Franchised outlets billed 16,586.7 million euros compared with 16,884.4 million billed in 2019, down 1.7% (297.7 million euros less).

 

- International

 

The "SIF FERIA DE VALENCIA" international franchising fair, held in the Spanish city of Valencia, has an international reach. According to 2019 data, there were over 9,000 visitors, 129 brands and over 5% were looking for a master franchise.

 

In these reports on franchising, for the past 21 years, the SFA has been preparing pioneering global studies on franchising, both in Spain and elsewhere. The "Spanish Franchising in the World" study, for example, provides a comprehensive snapshot of the situation of Spanish franchises on five continents, broken down by territory, sectors opening up to other markets, establishments opened abroad, etc. This study has become the benchmark for all local, national and international media.

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II. Legal information

 

A. Legal information directly related to franchising

 

- Applicable legislation

 

Spanish lawmakers have done little to regulate the franchising system. There is Royal Decree 201/2010, of February 26, 2010, which regulates the exercise of commercial activity under the franchise system and the communication of data to the franchisors' register[16].

 

Thus, with the exception of provisions establishing a pre-contractual obligation and the franchisor's obligation to register, Spanish law provides no specific legal regime for franchise contracts.

 

As they are not specifically listed in law, the guiding principles of a franchise contract in Spain are based on Spanish doctrine and case law, which set out the respective obligations of franchisor and franchisee.

 

Furthermore, the SFA is a member of the European Franchise Federation (EFF), so the European Franchise Code of Ethics should serve as a benchmark.

 

At European level, exemption regulation no. 2022/720 of May 10, 2022 on vertical agreements and Section 101 of the Treaty on the Functioning of the European Union, which prohibit agreements between companies that restrict competition, may also be applicable to franchising.

 

- Pre-contractual information

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The duty to provide pre-contractual information is set out in Section 62 of law no. 7/1996[17] and Section 3 of Royal Decree 201/2010, of February 26, 2010, on the regulation of franchising and providing of data to the franchisors' register.

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Domestic legislation requires franchisors to provide franchisees with a range of information to enable them to make a free and informed decision.

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The pre-contractual information document must be handed over by the franchisor at least twenty days before the signing of any contract, pre-contract or remittance of any payment by the franchisee.

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Law no. 7/1996 and Royal Decree 201/2010 also lay down a list of information that must be included in the pre-contractual information document, such as the franchisor's main identification data, information on brand ownership, a description of the business sector to be franchised, the content and characteristics of the franchise and its operation, the structure and scope of the network, and the essential elements of the franchise agreement. The pre-contractual information document must also set out the respective rights and obligations of the parties, the conditions for terminating and renewing the contract, the economic benefits and the exclusivity agreements.

 

Finally, the head of the network is required to provide the franchisee with information on the network's operating system, the characteristics of the know-how and any ongoing assistance that the franchisee will receive during the life of the contract.

 

- Contract performance

 

Law no. 7/1996 penalizes breaches of the obligations laid down in this law (Section 64). The offence is punishable by a fine of up to 6,000 euros (Section 68). Thus, failure to provide pre-contractual information can be punished.

 

Spanish law had created a register of franchisors with networks in Spain. The law specifies that the pre-contractual information document must include the information contained in the Spanish Register of Franchisors. Within three months of setting up in Spain, franchisors must be registered with the Franchisors' Register of the Autonomous Community in which they wish to operate, or if necessary with the National Franchisors' Register maintained by the Ministry of Industry, Tourism and Commerce, in accordance with Royal Decree.

 

However, Royal Decree-Law 20/2018, of December 7, on urgent measures to promote economic competitiveness in Spain's industry and commerce sector, repealed the provisions of Law 7/1996 and Royal Decree 201/2010 concerning this register. As a result, franchisors operating in Spain are no longer required to be registered in such a register.

 

- Jurisdiction and applicable law

 

Spain, a member state of the European Union, is governed by the Brussels I B Regulation[18] on the question of jurisdiction. This regulation lays down rules for defining the competent jurisdiction (Sections 1 to 6). It also provides for the case where the parties to the dispute have used a jurisdiction clause (Section 25) in their contract to define in advance the competent jurisdiction.

 

On the issue of applicable law, the Rome I Regulation[19] applies whenever a dispute is brought before a court in a member State of the European Union. In accordance with the regulation, the parties are free to choose the law applicable to their contract, and in the absence of choice, the rules for determining the law applicable to the contract are set out.

 

However, if the franchisor and franchisee are of different nationalities, it is advisable to check whether there is any bilateral agreement governing the question of jurisdiction and applicable law between them.

 

In addition, the parties (franchisor and franchisee) may decide to seek recourse to international arbitration in the event of a dispute. This may be provided for in the franchise agreement (by inserting an arbitration clause) or after the dispute has arisen (by signing an arbitration agreement).

 

- Trademarks

 

Through Law no. 17/2001[20], Spanish legislation provides for the protection of trademarks and trade names. To be protected, a trademark must be capable of being represented graphically. Spanish trademarks are registered with the Spanish Patents and Trademarks Office ("Officina Espanola de Patentes y Marcas (OEPM)").

 

Spanish trademark registration is valid for ten years and may be renewed for successive periods of 10 years (Section 31).

 

As Spain is a member of the European Union, it is possible to register a trademark with the European Union Intellectual Property Office (EUIPO). The trademark will then be protected in all EU countries. Protection also lasts 10 years.

 

Spain is also a member of the Paris Convention for the Protection of Industrial Ownership. As a member of the World Trade Organization, it is bound by the TRIPS Agreement. Finally, as Spain is a member of the Madrid system, French trademarks can be registered through the international trademark system.

 

The Madrid system[21] enables companies to obtain trademark protection in up to 130 countries by filing a single international application, in a single language, with the World Intellectual Property Organization (WIPO). Under Article 6 of the Madrid Agreement, trademark registration is valid for 20 years. 

In Spain, trademark applications can be handled nationally, through the EUIPO, and WIPO, and are examined for formalities and absolute grounds only.Spain allows multiclass trademark registrations. Trademarks must be used within five years from the date when the grant decision became final to avoid cancellation. To develop a franchise in this country, it is advisable to cover "Business assistance relating to franchising" that will be accepted by the trademark office. As far as "retail services" are concerned, they will be accepted only if the specific goods are also stated. Recording a franchising agreement is not compulsory though it might be advisable for legal advantages.

 

B. Peripheral legal data

 

- Competition law

 

Anti-competitive agreements are prohibited in Spain by EU law (TFEU, Section 101) and national law (L. no 15/2007, July 3, 2007 on the defense of competition[22]), one or the other applying depending on the nature of the market affected.

 

The authority responsible for protecting competition at national level is the National Competition Commission, which is supported at local level by the competent bodies of the Autonomous Communities.

 

Sections 1 and 2 of the July 3, 2007 law respectively prohibit anti-competitive agreements and abuse of dominant positions.

 

Harmonized with EU law, Spanish law renders anti-competitive agreements (including directly or indirectly imposed prices and sales conditions, and market and supply sharing) null and void, unless exempted.

 

Block exemptions may be granted by the government after consultation with the National Competition Commission; furthermore, Spanish law refers directly to the EU block exemption regulations, stating that an agreement complying with one of these regulations is exempt from the prohibition on anti-competitive agreements.

 

The validity of clauses contained in franchise agreements is thus assessed according to criteria derived from EU law. For example, a post-contractual non-competition clause is only valid if its duration is no longer than one year, relates to the goods or services covered by the franchisor's business, is limited to the place where the franchisee used to operate, and is essential for the protection of know-how.

 

- Personal data

 

In Spain, the protection of personal data and privacy is governed by the General Data Protection Regulation (GDPR)[23] , which is European Union legislation that applies uniformly to all member States. The GDPR was adopted in 2016 and came into force on May 25, 2018.

 

The GDPR establishes a comprehensive legal framework for the collection, processing, and storage of personal data, guaranteeing respect for fundamental rights to privacy and data protection. The GDPR protects only the personal data of natural persons, but is applicable to any organization or person carrying out processing of personal data, automated, in whole or in part, and non-automated, contained or intended to be contained in a file (Section 2 of the GDPR).

 

The GDPR is territorially competent when the controller (the person initiating the processing) and/or the processor are established in the territory of the Union, as well as when the personal data processed are those of data subjects located in the territory of the European Union (Section 3).

 

The European "Police-Justice" Directive[24] applies to data for the purposes of criminal investigations and offences. To fall within the scope of the Police-Justice Directive, a natural person's personal data must be processed for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and the processing of personal data must be carried out by a competent authority (judicial authority, police, law enforcement authority or body to which the law of a Member State entrusts the exercise of public authority or the exercise of prerogatives of public power)[25].

 

The Spanish Data Protection Agency[26] is the national authority in charge of personal data protection, and has the power to impose sanctions.

 

- Special provisions for foreign investments

 

Under Article 63 of the Treaty on the Functioning of the European Union (formerly Article 56 EC), as a member of the European Union, Spain cannot in principle impose restrictions on the movement of capital from EU member States or non-EU countries.

 

Spain has also been subject to European rules on foreign direct investment (FDI) since the entry into force of the "Foreign Investment Screening Regulation", which aims to establish a European framework for cooperation in the assessment of foreign investments likely to threaten security and public order in EU member States. Spain must then notify and cooperate with the European Commission and other member states on foreign investments in critical sectors.

 

- Special features

 

The country is divided into several Autonomous Communities, each with its own autonomous status. This is a crucial institutional norm in Spain, established by the 1978 Spanish Constitution and ratified by organic law. Statutes of autonomy are not a manifestation of sovereignty or a constitution, as they do not stem from an original constituent power. Instead, they exist because the State acknowledges them, without the principle of autonomy conflicting with that of unity. Autonomous communities can assume non-exclusive State powers if their statutes so provide. As long as this is not the case, they remain the responsibility of the State. State law prevails over that of the territories, as long as it does not encroach on their exclusive powers.

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Main websites

 

- Intellectual property: https://www.oepm.es/es/;

- Spanish Franchisors Association: https://www.aefranquicia.es;

- Legislation: https://www.boe.es;

- Official statistics institute: https://www.ine.es;

- World Bank: https://www.bancomundial.org/es/home.

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​

[1] https://fr.statista.com/statistiques/690369/repartition-du-produit-interieur-brut-pib-suivant-les-secteurs-economiques-en-espagne/

[2] https://www.tresor.economie.gouv.fr/Pays/ES/situation-macroeconomique-de-l-espagne

[3] https://www.tresor.economie.gouv.fr/Pays/ES/situation-macroeconomique-de-l-espagne

[4] https://www.larousse.fr/encyclopedie/divers/Espagne_activit%C3%A9s_%C3%A9conomiques/185606; https://www.btrade.ma/fr/observer-les-pays/espagne/contexte-politique

[5] https://fr.statista.com/statistiques/690112/part-population-urbaine-espagne/#:~:text=En%202021%2C%20plus%20de%2081,au%20d%C3%A9but%20des%20ann%C3%A9es%202000

[6] Politics and the metropolis An international comparison, chapter 6. The emergence of the metropolitan fact in Spain, Carlos Alba and Carmen Navarro

[7] https://fr.wikipedia.org/wiki/Liste_de_villes_d%27Espagne#cite_note-WGaz-1

[8] https://fr.wikipedia.org/wiki/Liste_de_villes_d%27Espagne#cite_note-WGaz-1

[9] https://www.kearney.com/service/global-business-policy-council/foreign-direct-investment-confidence-index

[10] https://data.oecd.org/fr/fdi/flux-d-ide-entrant-par-pays-partenaire.htm

[11] https://comercio.gob.es/es-es/NotasPrensa/2022/Paginas/221220_Inversiones3erTrim.aspx#:~:text=De%20enero%20a%20septiembre%20de,periodo%20que%20el%20a%C3%B1o%20anterior

[12] https://lepetitjournal.com/madrid/actualites/investissements-etrangers-espagne-34-milliards-2022-358570

[13] www.franquiciadores.com.

[14] https://www.aefranquicia.es/ferias-nacionales/

[15] https://www.aefranquicia.es/wp-content/uploads/2023/07/Informe-AEF-La-Franquicia-en-Espana-2023.pdf

[16] https://www.boe.es/buscar/act.php?id=BOE-A-2010-4175

[17] https://www.boe.es/buscar/act.php?id=BOE-A-1996-1072

[18] Regulation n°115/2012 of the European Parliament and of the Council of December 12, 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters

[19] Regulation n°593/2008 of the European Parliament and of the Council of June 17, 2008 on the law applicable to contractual obligations

[20] https://www.boe.es/buscar/act.php?id=BOE-A-2001-23093

[21] Madrid Agreement Concerning the International Registration of Marks

[22] https://www.boe.es/buscar/act.php?id=BOE-A-2007-12946

[23] Regulation (EU) 2016/679 of the European Parliament and of the Council of April 27, 2016

[24] Directive (EU) 2016/680 of the European Parliament and of the Council of April 27, 2016

[25] Sections 1 and 2 of the Police-Justice Directive

[26] C/ Jorge Juan, 6.28001 Madrid, tel: 900 293 183