Franchise Agreement

A relatively new type of contracts for the Ukrainian businessmen are franchising agreements that are already widespread in the world mainly among small and medium businesses.

It is known, that one of the ways for development (“promotion”) of own business, is to increase the market for your goods (services), by creating your own network of merchants in other territories. But building your own network of stores, hotels, cafes, etc. in another territory, maintaining high level of service, is cost and energy consuming for the owner.

However, it was noted long ago that by selling the right to their business to other independent entrepreneurs, teaching them practical skills in conducting such a profitable business, the owner can achieve much greater results.

On the other hand, novice businessmen are well aware that work under the “famous” name or trademark is much more profitable than spending huge amounts of money for promotion of your own business and supporting its stability.

Franchising is the way to solve the above problems.

Examples include several large companies that work on the franchise system (McDonald s, Coca-Cola, Pepsi, ZINGER, XEROX, etc.).

Although some well-known companies are already working on the Ukrainian market using franchising system, yet for many people these activities are new and unknown business practices. The reason is the lack of awareness of entrepreneurs about the possibilities and peculiarities of this way of conducting business, as well as lack of clear legal mechanisms to regulate this area of relations.

Under the contract of franchise franchisee (the buyer) buys a franchise, that is a permission (right) to engage for a certain period of time, in a certain area, in certain business under the trademark or brand name of Franchisor (right holder), using his technology, commercial information, know-how, etc. Franchisor has the right to exercise control over the quality of Franchisee s business, and is obligated to provide him with adequate help (for example, in organizing the Franchisee s company, in personnel training, in management, etc.)

In contrast to the license agreement, where the licensee appears on the market as a person other than Licensor, in case of franchising the franchisee is in relationships with customers, working under the brand name or trademark of the Franchisor, and is associated with the latter and is a representative of its goods and / or services.

Franchise agreement does not require registration (in contrast to the license agreements on industrial property).

Franchise Agreement is a comprehensive agreement, which may include transfer of industrial property objects(inventions, industrial design, trademarks, topographies of integrated circuits, etc.), subject to the laws on the protection of industrial property. Therefore, when making the franchising contract it is advisable to consult with experts in the field of intellectual property rights, to improve the reliability of the concluded contract.

Patent Attorneys of  Krylova and Partners  have experience in this field in the domestic and international market and are ready to work with you.

see contacts