Franchise Agreement: What to Pay Attention to

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In, demand for Russian franchises grew by 67%. Their number reached 3.3 thousand. But there are still many franchisors on the market who do not offer partners the conditions promised in the presentation materials.

Ramil Beydullaev, head of the intellectual property philippines telegram database department at the Sovet Legal Group, explains which points of a franchise agreement should be given special attention before concluding it.

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Some franchise owners seek to attract as many partners as possible, promising support in business development and reaching profitability.

But when it comes to the contract, things may turn out to be completely different: few specifics, many prohibitions for the franchisee and no responsibilities for the franchisor.

Let's look at five key points in the contract so as not to waste money and not get bogged down in someone else's business without the opportunity to develop.


Types of Franchise Agreement
The first thing you should pay attention to before purchasing a franchise is the type of agreement offered.

Since there are no special rules on franchising in Russian legislation, relations between the owner and the franchise partner can be regulated by one of the following agreements:

contract for the provision of services for a fee;
supply agreement;
agency agreement;
license agreement;
commercial concession agreement.
The choice of the type of agreement depends on the franchise business model and the list of intellectual property objects being transferred.

But, based on practice, I can say that in classical franchising, the parties formalize the relationship by concluding a commercial concession agreement (CCA) or a license agreement (LA).

In this case, from a legal point of view, it is recommended to choose DCC.

Under it, the franchisee receives the right to use the trademark and other intangible goods and assets, such as a trade name, know-how, design objects, programs, etc.

A less preferable option is the LD. If the franchise owner insists on signing it, it is possible that he does not have a registered trademark.

But it is the trademark and the rights to use it that form the basis of franchising. Therefore, make sure that the franchise owner is pushed to the license agreement for other reasons, and that everything is in order with the trademark.

On the topic: Launching a franchise of your business - instructions