The Regional Court of Barcelona issued a ruling in favor of Tous in its dispute with the La Riviera group, part of the Wisa group, which had been its former partner in Colombia. The two companies had sued the Catalan jewelry maker over a contractual relationship tied to the brand’s franchise in Colombia, active since 2009, with the company entering bankruptcy in June 2016.
The court upheld the initial Barcelona judgment, which found a breach of contract after the United States placed Wisa Group and its principal shareholder, the prominent Colombian businessman A. Waked, on a blacklist. The U.S. Office of Foreign Assets Control (OFAC) includes this list for individuals and firms connected to or implicated in illicit financial activities linked to narcotics proceeds. Tous argued that the inclusion of the Clinton list designation caused reputational damage and justified terminating the brand usage agreement.
The Catalan jewelry company maintained that the contract termination was warranted because several clauses of the franchise agreement were violated, including reputational harm to Tous following the Washington designation. It argued that the sanctions list directly affected the franchise’s operation in Colombia and that La Riviera, not Wisa, was the entity implicated in the sanctions. The defense also suggested the group’s lawyers sought to accelerate the dismissals through legal maneuvers, alleging charges against the group had been dropped in Panama.
Queuing up in a Tous store in a shopping mall in L’Hospitalet de Llobregat, the scene underscored the real-world impact of the dispute on franchise operations. The defense contended that for a contract to be terminated there must be an unrealized criminal conviction, and that inclusion on the Clinton list did not halt the brand’s activities. The parties also noted that Tous had pursued a temporary injunction with Colombian authorities to stabilize operations during the dispute.
Damages sought by the plaintiff totaled 16,000 million Colombian pesos, approximately 3.4 million euros, reflecting alleged losses tied to the termination and related franchise impairment. (Attribution: El Periódico de España, through Prensa Ibérica.)
Extended contract
From the outset, the collaboration between Tous Franquicias and La Riviera Group progressed smoothly until 2016. The initial five-year franchise agreement, signed in September 2009 to operate the Tous brand in Colombia, was renewed multiple times, with the latest extension pushing the contract through April 30, 2020. At the moment of termination, the franchise network comprised 13 stores, with a planned total of 22 stores. La Riviera asserted that it ultimately sought compensation and argued that the brand had been established in Colombia before the dispute and that the Wisa Group, not La Riviera, faced the Clinton list designation. It further claimed that its lawyers aimed to expedite the dismissal process, contending that the sanctions and related actions had broader implications for the case.
The court ultimately ruled that the sanctions designation did not invalidate the underlying contractual framework and that the termination was justified by a series of contractual violations, including damage to the brand’s reputation and strict adherence to the parent company’s guidelines. The ruling indicated the sanctions could not be used to excuse noncompliance with contractual obligations, and it underscored the importance of maintaining franchise standards even amid external political actions.
The decision acknowledged that marketing and payments in Colombia occurred outside formal banking channels, a practice permissible there but not accepted in Spain. It emphasized that the contract was governed by Spanish law, and that the consequences of the sanctions could not be passed onto the franchisor. The court concluded that the circumstances fully justified terminating the contract and rejected any claim for damages, ordering the plaintiff to bear the costs.
The ruling thus clarified that the operative impact of OFAC sanctions on a foreign partner does not automatically derail a franchise agreement where the franchisee fails to meet the contract’s defined standards of performance and governance. It also highlighted the banking and payment restrictions arising from sanctions as a material factor in franchise operations, but did not compel compensation for the franchisor beyond the existing contractual terms. (Attribution: Madrid court summaries, El Periódico de España.)