Franchise agreements are regulated by the Civil Code of the Russian Federation (CCRF) and are called ‘commercial concessions’, while the franchisor is called the ‘rightholder’ and the franchisee is called the ‘user’. A franchise agreement must provide the franchisee with a set of exclusive rights, including the right to conduct business using the franchisor’s trademark. According to the CCRF, the franchisor must grant the franchisee, against remuneration and for a defined or undefined period of time, the right to use trademarks or service marks and (optional) rights to use other intellectual property rights; in particular, the right to use know-how.

 

For a trademark to be licensed to a franchisee it must already be registered with Rospatent or WIPO, with Russia designated as the registrant country before execution of the franchise agreement. The franchise must be used by the franchisee for its entrepreneurial activities. Russia has no disclosure requirements for a franchisor in respect of potential franchisees. There are no laws or regulations creating requirements that must be met before a franchisor may offer franchises.

 

 According to the CCRF, the main difference between a franchising agreement and a license agreement is that the franchising agreement establishes the granting of a number of exclusive intellectual property rights while a license agreement establishes the granting of one intellectual property right, and in addition to exclusive rights, the franchisee can use the goodwill and commercial experience of the franchisor within the framework established by the franchise agreement.

 

In Russia the statutory provisions regulate the entire franchise relationship.  Under Rospatent regulations, the franchise agreement must be registered within two months. A contract that is not registered with Rospatent is deemed invalid. The registration requirement applies not only to conclusion of an agreement, but also to amendments and its termination. The state registration fee is the same as for license agreements on trademarks (service marks) and depends on the number of trademarks to be licensed: approximately US$250 per trademark.

 

 A franchise agreement may only be concluded between business organisations or individuals acting as registered individual entrepreneurs. The agreement has to be concluded in writing and registered with Rospatent. Another significant requirement is that the franchisor must provide the franchisee with the technical and business documents (booklets, manuals on operating standards in which the know-how relating to the franchise system and the methods according to which their business is operated are summarised) and other information that may be necessary for the franchisee and its employees on issues related to the exercise of the rights granted under the franchise agreement.