Franchise contract
Franchise contract is one of civil law contracts. According to the article 1027 (1) of the Civil Code of Russian Federation, one party (the right holder) is obliged to give to the other party (the user) for an award, for a term or without pointing out a term, the right to use in the user's business activity the complex of exclusive rights belonging to the right holder, including the right to the trade mark and to the service mark, as well as the rights to the other objects of exclusive rights stipulated in the contract, in particular to the commercial designation and to the production secret (to the know-how).
Consequently, the subject of the contract includes a complex of exclusive rights, namely:
right on the trademark;
right on the service mark;
right on the commercial designation;
right on the production secret (to the know-how).
In international practice the term franchising is used to designate commercial concession. Franchising is relations, where one party gives to the other party the right to act in business in the name of the first.
The franchise contract can include the following: minimum and maximum scope of using of exclusive rights, reputation and business experience, as well as indication of the territory of use.
Commercial organizations and private persons registered as individual entrepreneurs may be the parties to the franchise contract.
The franchise contract is a paid agreement.
The franchise contract has the following sufficient conditions:
written form;
state registration of the transfer of rights under the contract of commercial concession in the Russian Patent Office.
The franchise contract may provide for the right of the user to authorize other persons to make use of the complex of exclusive rights granted to him or a part of this complex on the terms of subconcession, agreed upon with the right holder or defined by the franchise contract. The contract may provide for the obligation of the user to submit during a definite period of time to a definite number of persons the right of using said rights on the terms of the subconcession.
