To Reduce The Level Of Conflict Most Franchise Agreements Grant Franchisees An Exclusive Territory

The Russian Rules of Civil (Commercial) Procedure lay down certain formal or mandatory requirements for the recognition and enforcement of foreign judgments. These include the following key aspects: (1) the effectiveness of the Court`s judgment under the law of jurisdiction in the area where it was delivered; (2) comply with the legal deadline of three years for the submission of an application for recognition and enforcement of the foreign court decision; and (3) conformity of the foreign court decision with Russian public order. If these conditions are not met, a Russian court may refuse recognition and enforcement of a foreign judgment. Franchisees often misunderstand the justification of the size of an area and therefore insist on an area that is too large, which can be a disadvantage rather than an advantage for them. The size of an exclusive territory does not determine the ultimate success of the unit; However, it should be large enough to allow the franchisee to obtain the maximum power of its unit, but not large enough to prevent the franchisee from obtaining an optimal market share. The franchisee is obviously reluctant to grant an exclusive territory that could hinder its growth. Another important issue is the position of the franchisee in relation to the company`s activities and businesses. Most franchisors believe it is important to stay informed of market changes and consumer expectations by maintaining their own businesses. Company-owned stores can be used to train new franchisees, provide an information base that the franchisee can use to direct their franchisees, and test new concepts or products before offering them to franchisees. However, a potential franchisee should ensure that franchising is not incidental to a business with a significant number of operations of its own and ensure that it does not compete with captive activities in its territory. In accordance with the relevant provision of Russian law (Article 1027(1)) of the Russian Civil Code, Part II), the rightholder (franchisor) grants the user (franchisee) the right, under a franchise agreement, for remuneration and for a fixed or indefinite period, to exploit a number of the franchisee`s intellectual property (IP) rights, including trademarks and other contractual IP rights. for the operation of the franchisee`s business, in particular trade names and trade secrets (know-how). The central element of the franchise agreement is a protected (registered) trademark.

In the absence of a trademark, the contract cannot be treated or interpreted as a franchise agreement. In the event of a conflict, it is possible, depending on the situation, to oppose, cancel or even assert an action for infringement. As a general rule, when it comes to foreign exchange issues, there are no legal restrictions on the repatriation of franchises to a foreign franchisee. The franchisee has been dismissed if the franchisee has not reigned the infringement within a reasonable time or has committed another infringement within a reasonable time within one year of receipt of the franchisee`s written notification. The rules differ between “Mobile/Service Franchises” and “Bricks & Mortar” regarding exclusive zones. This article is specifically designed for “mobile franchises”. Please read the previous article entitled “Understanding Exclusive Territory – Bricks & Mortar Franchises” for a declaration of exclusive zones relevant to Bricks & Mortar franchises. From a legal point of view, cross-border transactions in franchising are structured differently. Many companies prefer direct franchising while others hire master franchisees.

In some cases, franchises are mixed with development rights in the same contract or by separate agreements. In rare cases, joint ventures are created when the franchise relationship includes a Russian element and a business unit. . . .



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