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Franchising legislation changes in Russia
24.10.2011 1889

Franchising legislation changes in Russia

In Russia, a law has entered into force changing the Civil Code in favor of franchising. Amendments to the articles defining the regulatory framework of this business model remove restrictions on the development of their business under a concession agreement that discriminate for the owner of a business concept. Innovations will contribute to the spread of franchising and will attract new large brands to Russia, Merab Elashvili, chairman of the industry’s Opportunity Commission, president of the Russian Franchising Association, believes.

The new edition of a number of articles of the Civil Code accelerates the state registration of commercial concession agreements, brings domestic legislation closer to world practice, reduces the costs of the copyright holder, protecting it from dishonest actions of the operator, and allows coordinating prices within the network. Now there is no need to look for “workarounds” to minimize risks, experts from the Russian Franchising Association say.

In particular, according to the new edition of Art. 1030, in concession agreements, both periodic payments and a lump-sum payment can be used simultaneously. Art. 1033 allows the copyright holder to establish in the contract restrictions that objectively contribute to the strengthening of the franchise network. Other amendments transform the procedure for renewal of a fixed-term contract, excluding discriminatory restrictions on the right holder to refuse to renew an agreement with a franchisee “on the same terms”. Also, a clause appeared on the basis of which the owner of the business concept has the right to refuse to unilaterally fulfill the contract if the user has violated the technology of work or performed it with inadequate quality.

Changes in federal legislation initiated by the Russian franchising association took effect on October 21, AIDT reports.

In Russia, a law has entered into force changing the Civil Code in favor of franchising. Amendments to the articles defining the regulatory framework of this business model remove discriminatory ...
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