FRANCHISE AGREEMENT DEVELOPMENT SERVICE

There are three principal ways of starting own business in conditions of market economy:
- establishing own business;
- purchasing existing business;
- commercial concession.
Beginner businessmen know very well that it is much better to work under a widely promoted name or trademark than to spend huge money on promoting own business and maintaining its stability. One of the ways of solving the aforementioned problem is to enter into a commercial concession (franchise) agreement.
Commercial concession is a type of business run under a long-term business cooperation agreement. Under this agreement, a rights holder company (franchisor) gives a legal entity or an individual (a private businessman or a group of businessmen) (franchisees) a right to use a set of rights held by franchisor according to the latter’s requirements for the purposes of manufacture and (or) sale of a certain product and (or) service in exchange for a franchise fee.
Examples here include several large companies which operate under franchising system: McDonald's, Coca-Cola, Pepsi, ZINGER, and others. Under franchise agreement, franchisee (buyer) buys franchise, i.e. permission (right) to engage into a certain business, during specific period of time and in a specific territory, under franchisor’s (rights holder’s) trademark or company name using franchisor’s technologies, commercial information, know-how, and so on. Franchisor has right to control quality of running a business by franchisee and must provide reasonable assistance to franchisee (for example, in organization of franchisee’s business, personnel training, management, etc.).
Unlike in the license agreement where licensee operates on the market as an entity completely different from licensor, in the case of franchising a franchisee, operating under franchisor’s company name or trademark, is associated with franchisor and acts as a representative of the latter’s products and/or services in relations with consumers. Franchise agreement is a complex legal instrument which may also include transfer of industrial property (inventions, industrial samples, trademarks, integrated circuit topographies, etc.) which falls under the laws on protection of intellectual property rights.
Our experts will help you prepare a legally correct commercial concession agreement.