What you need to know to work with franchises in Belarus, Russia and Kazakhstan — analysis of a lawyer

What is the difference between the legislation in the field of franchising in Russia, Belarus and Kazakhstan? What set of rights is or is not considered a franchise in different countries? Nadezhda Grabovskaya, the lawyer of the Zavod Franchise company, the editor of the Lawyer magazine, talks about these and other nuances.

Franchising projects from Russia, Belarus, Kazakhstan are often scaled across different countries. For example, the Russian network of pizzerias Dodo Pizza has 296 outlets in 10 countries.

One of our company's franchises, Coffee Sound, is also planning to enter foreign markets. But we noticed that the legislation of these countries varies significantly. For example, in the Civil Code of Belarus only 12 articles are devoted to franchising, and in Kazakhstan there is a separate law on franchising, which is not yet in Russia. The differences will be discussed in this article.

Terminology

The same composition of the franchise (that is, the composition of the rights transferred to the partner) in one country can be qualified as a franchise, and in another — no.

In Belarus and Kazakhstan, the name "franchising agreement" is used. The second name of such an agreement in both countries — "complex business license agreement". It indicates that it is the "set of rights" that is being transferred.

In Russia, a franchise is called a "commercial concession agreement".

Franchise composition

Franchising involves the transfer of a ready-made and tested business model to a partner with all the necessary individualizing attributes and knowledge.

But the composition of the objects that must be passed, — perhaps the most fundamental difference.

In addition to objects, in Kazakhstan and Russia, the business experience and commercial reputation of the franchisor can be transferred to a partner.

Belarus example:

Data provided by an expert

Kazakhstan is closest in this sense to Belarus, where the trade name (name of the franchisor) and undisclosed information (in Kazakhstan — protected commercial information) are mandatory objects for inclusion in the franchise. A different composition of the transferred objects can mean anything, but not franchising.

For example, if a trademark and undisclosed information in the form of know-how is transferred in Belarus, then such relations do not create franchising. However, if a resident of Belarus transfers the same composition to its resident for use in Russia, then this can already be qualified as a franchise.

This approach to franchise line-ups isn't exactly "comfortable". The franchisor's trade name, for example in a retail franchise, is rarely known to the general public (consumers), and is not contained in its trademark. In this regard, the transfer of a company name is often a formality, and the name itself is de facto not used by the franchisee. In addition, the inclusion of a company name in the mandatory elements of a franchise deprived the IP of the right to act as a "primary franchisor"; (since an individual entrepreneur, according to the legislation of Belarus, cannot have a company name).

In Russia, there is such an object as "commercial designation / commercial trade name"; (business name), which serves as an identifier for commercial objects (shops, restaurants, coffee shops, beauty salons, etc.). At its core, it is similar to a trademark, but does not require registration.

Objects identifying the franchisor:

• The company name identifies the organization. Example: Sound Team Private Enterprise.
• The business name/business name identifies commercial entities. Example: coffee shop "Coffee Sound".
• A trademark/trademark identifies a product, service, or work. Example: trademark "Coffee Sound".

Russia has established the composition of the licensing complex for a standard set of "brand": trademark + any other object (for example, a patent, a computer program, a commercial designation, a production secret, etc.).

Composition of documents

The most concise in this matter are the legal norms of Belarus and Russia. The main documents there are civil codes, but in terms of judicial practice, Russia overtakes Belarus.

In Kazakhstan, in addition to the Civil Code, there is a law "On a comprehensive business license (franchising)", which:

• Additionally highlights the issues of brokerage (intermediary activities in the conclusion and execution of a complex business license agreement)
• Indicates the types of complex business license (conversion, multiple, trade and other types).

Other formalities

The franchise agreement may require formalities related to its conclusion:

• Contract registration
• Registration of granting the right under such an agreement to an object of intellectual property
• Registration of the right to use the franchise.

According to the legislation of Belarus, the franchise agreement itself is subject to registration.

In Kazakhstan, a franchise agreement is subject to registration if it includes a condition on transfer as part of a franchise:

• Inventions
• Utility model
• Industrial Design
• Breeding Achievement
• Trademark/Service Mark
• Topologies of integrated circuits registered under the laws of Kazakhstan.

For Russia, the registration requirement does not apply to the contract itself, but to "granting the right to use in the user's business activities the complex of exclusive rights belonging to the copyright holder."

Registration of a "grant" differs from the registration of the contract in that the contract in this case has legal force. This means that the parties can already apply the terms of the agreement: make an advance payment, start agreeing on the premises for locating a franchised facility, etc., but the granting of the right to use a set of exclusive rights (franchise) is considered completed only upon registration. For example, prior to registration, it is not allowed to place a trademark on a signboard of a franchised facility.

The need to register both the contract and the granting of the right(s) means additional costs for one or both parties, as involves the payment of a fee. For example, registration of a franchise agreement with the NCIS of Belarus will cost at least 10 basic units.