SPECIAL REQUIREMENTS

The franchise agreement is becoming more widely used in the activities of business entities in Belarus. Among the advantages that attract potential franchisees the use of already tested business model, consumer recognition, reduction of economic risks, lower advertising costs are pointed out. For franchisors conclusion of a franchise agreement provides an opportunity to develop business at regional level and create new sales channels with minimal financial and time costs.

  • It should be noted that the conclusion of a franchise agreement with residents of Belarus has a number of specifics, which relate to its form and content, as well as registration in the State Institution "National Center of Intellectual Property" (hereinafter - the patent authority).
  • Commercial organizations and individual entrepreneurs may act as parties to the franchise agreement. Belarusian legislation does not provide for the possibility to conclude such agreement with individuals or non-profit organizations.
  • When concluding a franchise agreement, special attention should be paid to reaching agreement on its subject matter and other essential conditions.
  • The subject matter of the franchise agreement is the transfer to the franchisee of the license complex in a certain amount, which must include the brand name of the franchisor and undisclosed information.
  • We note that other objects of intellectual property (trademarks, inventions, industrial designs, utility models and other) are not mandatory elements of the subject matter of the franchise agreement, but may be included in the franchise agreement by agreement of the parties.

SPECIAL REQUIREMENTS

The franchise agreement should

  • contain information that allows to define fully and accurately the objects of intellectual property, the right to use which is granted. For example, when granting the right to use a trademark under the agreement, this agreement should include a description of the trademark, indicate its registration number, number and date of the certificate for such trademark, as well as classes of the International Classification of Goods and Services in respect of which the rights are transferred.
  • provide for the use of the license complex in a certain amount, establishing the minimum and (or) the maximum amount of use.
  • The franchise agreement must specify the types of business activities within which it is allowed to use the license complex.
  • If any of the essential conditions are missing, for example, if the right to use the franchisor's brand name is not given to the franchisee, the franchise agreement will be considered unconcluded.
  • When concluding a franchise agreement, it is important to verify that the rights to the license complex being transferred belong to the proper franchisor.

SPECIAL REQUIREMENTS

It is also necessary to check whether the franchisor has the proper authority to transfer the license complex. Thus, the franchisor under the franchise agreement may be:

  • the owner of the brand name, undisclosed information, other intellectual property objects (if any);
  • the franchisee under the franchise agreement, if the right to enter into agreements of subfranchising is granted;
  • the owner of the brand name, undisclosed information, being a licensee under the license agreement, if it is permitted to grant sublicenses under this agreement.

  • With regard to undisclosed information transferred under the franchise agreement, it will be necessary to make sure that such information is not easily accessible and does not constitute an object of exclusive rights to the results of intellectual activity.
    • In addition to the subject matter of the agreement, an essential condition of the franchise agreement is the amount and form of remuneration payment for the provision of the license complex (par. 1 and par.4 of Art. 910 of the Civil Code). Par. 4 of Art. 910 of the Civil Code establishes the following forms of remuneration payment:
      • fixed, one-time and periodic payments;
      • deductions from the proceeds;
      • other forms of payment stipulated by the agreement.

  • The parties may agree on remuneration payment in the form of lump-sum payment and (or) royalties.
  • Par. 1 and par.2 of Art. 910 of the Civil Code stipulate that such conditions as the term and territory of use of the license complex may or may not be specified by the parties in the franchise agreement. In spite of that, we recommend to enshrine these conditions in the franchise agreement, because they are necessary for the purposes of registration in the patent authority.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.