The reforms carried out over the past ten years in Algeria were intended to modify the economic environment. Franchises work within the framework of the laws relating to the conditions governing commercial activities, banking regulations and the law relating to consumer protection. The Commercial Code organizes the distribution function with full knowledge of license issues, patents, etc., without referring to the franchise.

The Algerian commercial code has not yet introduced the franchise, which is often wrongly said in Algeria that it does not exist legally when it does not need a specific law to exist. Thus, in the context of a franchise, it is the contract between the franchisor and the franchisee that governs the relationship which is simply framed by the law of the contract. Admittedly, a text of law was prepared by the Ministry of Commerce for a hoped-for vote in 2008 but has not yet been presented to the assembly by the government.

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Algerian law already allows the establishment of networked stores. The trademark and intellectual property protection regime is operational. So why is the franchise not more developed in Algeria? Well, because in most countries, franchising is not a spontaneous generation, it comes from abroad, it brings a level of professionalism still not widespread in the country and causes two powerful trends that are beneficial for the economy :

1- Some of the country’s entrepreneurs choose to join a foreign franchise and cause the modernization of the economy

2- Another part of the entrepreneurs reacts by creating national franchise concepts and modernizing the economy.

So why not more foreign franchises already installed in Algeria?

There are several causes including:

1- Payment of entry fees and royalties abroad (no problem at the Algerian-Algerian level) is still difficult to implement which is a brake on the entry of foreign franchisors who are yet essential to provoke competition leading Algerian trade to modernize. Transfers or commercial transactions are only recognized by the Central Bank of Algeria for so-called “real” transactions which give rise to a flow of goods or services, quantifiable and quantified for each import operation. An invoice simply mentioning the term royalty is not considered to be quantifiable and quantified because Algerian regulations confuse a trademark license fee which includes only the right to use a brand and franchise fee which includes real training services , transfer of know-how and assistance. There are currently two ways to resolve this currency export problem:

a). Do not invoice royalties separately, but only invoice “product”. This is the solution often preferred if we sell products but which is not suitable for service or restaurant franchises.

b). Detail the services included in the fees to justify them. It is best to consult one of the few knowledgeable specialists to formulate this.

2- Everyone knows the difficulties linked to the customs import regime. We will not expand.

3- Other causes exist which are linked to the scarcity of quality premises in the city, the high rents of shopping centers and commercial leases.

A good solution is to adapt the standard franchise contract by dividing it into two distinct parts, on one side the service, on the other side the technical assistance. By doing so, the royalty on the provision of the brand is replaced by technical contributions which can be justified to the Central Bank of Algeria. Indeed, for the record, the Central Bank of Algeria only authorizes the export of royalties if they are considered as a service.