Franchise Agreements in Russia

Unlike in other countries, the Russian Civil Code provides for franchise agreements, which are commonly known as commercial concessions. The similarities with franchise agreements concluded in other countries reside in the fact that other laws apply when concluding this type of contract. Among these, the intellectual property legislation, the competition and advertising legislation and other specific laws related to the companies’ objects of activity.

Our Russian lawyers can offer additional information on the provisions of the Civil Code relating to franchise agreements.

The object of a franchise agreement in Russia

A commercial concession must be concluded between two parties: the party conceding the rights over the intellectual property, know-how or business model and the party accepting these rights. These are the franchisor, respectively the franchisee. The law also specifies that the franchisee must pay an initial fee for the rights they were granted, plus the taxes of the use of the intellectual property (where applicable). Russian franchise agreements can be concluded for a finite on indefinite period of time, just like any other contracts signed by Russian companies.

Compared to other countries, the Russian legislation imposes the parties entering the franchise agreement to include several elements among which:

• -          a trademark, copyright or patent license;
• -          details about the fee to paid;
• -          whether the contract is for a fixed term or not.

Compared to other countries, in Russia, franchise agreements will have a 5-year term, if the contract does not specify otherwise. 

You can also watch the video below for information on how to draft Russian franchise agreements:

Drafting franchise agreements in Russia

Several amendments have been brought to Articles 1027 and 1028 in the Civil Code, the articles referring to concluding franchise agreements in Russia. Among these, all Russian franchise contracts must be registered with Rospatent (the Russian Trademark Office). Rospatent will first review the contract in order to make sure it complies with the intellectual property laws available in Russia prior to registering it.

Foreign franchisors concluding franchise agreements with Russian companies may also choose their home countries’ legislation to govern over the contracts.

For information on the rights and obligations of the franchisor and the franchisee, please feel free to contact our law firm in Russia.