franchasing 2014.11.18 eng
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www.peterkapartners.com
PRAGUE
BRATISLAVA
KYIV
SOFIA
MOSCOW
BUCHAREST
WARSAW
MINSK
BUDAPEST
www.peterkapartners.com
The CEE Law Firm
www.peterkapartners.com
Legal aspects of franchising
Zikratski Dmitri
Managing Associate
Peterka and Partners
Emergence history
1999
Article 910. The Contract of complex business license
... 2. Relations of franchising
are regulated by the legislation. The franchise
agreement may be concluded only in the cases expressly provided by the
law.
2004
12 articles in the Civil Code
Legal regulation
• Resolution of the Council of Ministers of the Republic of Belarus from 21.03.2009 N 346“About the registration of the license agreements, agreements of the assignment of rights to objects of industrial property law, agreements of the pledge of property rights, attested by the certificate of the trademark registration, service mark, and the agreements of the complex business license (franchising)”
• Resolution of the State Committee for science and technologies of the Republic of Belarus from 15.04.2009 N 6 “About the approval of the Instruction on the procedure for the registration of the license agreements, agreements of the assignment of rights to objects of industrial property law, agreements of the pledge of property rights, attested by the certificate of the trademark registration, service mark, and the agreements of the complex business license (franchising)”
• Resolution of the Council of Ministers of the Republic of Belarus from 17.02.2012 N 156 “About the approval of the unified list of the administrative procedures undertaken by the state bodies and other organizations in relation to the legal entities and individual sole traders, amending to resolution of the Council of Ministers of the Republic of Belarus from February 14, 2009 N 193 and cancellation of certain resolutions of the Council of Ministers of the Republic of Belarus”
• Tax Code of the Republic of Belarus
Structure of the license complex
Trade name
Know-howObjects of intellectual
property
???
Franchising agreement
•Commercial organizations
•Individual entrepreneurs
• Fixed (flat payment)
• Periodic (royalty)
• % from the revenues
• other
• with indicating of the territory
• without indicating of the territory
• defined in the contract
• open-end contract
TermTerritory of
using
SidesRemunerati
on
Form of agreement
Written form
Failure to follow simple written form of the agreement deprive the parties of the right in the event of a dispute to refer to the confirmation of the deal
and its conditions on the testimony, but does not
deprive them of their right to give written and other
evidence not the testimony
Obligatory registration
Failure to comply with the requirements of the state
registration of the deal shall entail its invalidity. Such deal is
considered to be void.
Evasion from the registration -the registration by the court
decision
Registration. State body, term, fee
• franchising agreements
• its amendments
• termination of these agreementsWhat
• State institution “National center of intellectual property"Where
• 1 month from the date of the application filingTerm
• 100 $ registration
• 50 $ amendmentCost
Registration. Documents
Concluding of agreement
Application
Agreement
Power of attorney
State fee
Amendments to agreement
Application
Additional agreement
Power of attorney
State fee
Termination of agreement
Application
Termination agreement
Power of attorney
Amendments to agreement
• By the general rules
• In the relation with the third parties – after registration
• Saving in force after the parties changing
• Amendments of the trade nameAgreement is continuing
Agreement is terminated by the request of the franchisee (+ compensation of losses)
Proportion decrease of the remuneration
• Termination of one of the rightsAgreement is valid (except of specified rights)
Franchisee entitled to demand of decreasing of the remuneration (AGREEMENT CAN PROVIDE OTHERWISE)
Termination of agreement
• Termination under the general rules
• Without specifying of the term – any party can refuse by notifying the other party in 6 months (or more, if it is provided by the agreement)
• Registration
Agreement without specifying of the term
Agreement is terminated before the expiration of the term
• No registration
Agreement ceased its validity in connection with the term expiration of the agreement
Protection from the early termination of the agreement
Sublicense agreement
• The same rules are applied as for franchising
• Term is not longer than the term of the main agreement
• Termination of the main agreement = termination of the sublicense agreement
• Franchisee is liable for the action of the secondary franchisees (another can be provided by the law)
Franchisor's obligations
• transferring of the technical and commercial documentation;
• transferring of the additional information about business complex;
• franchisee training;
• issuing of the license (if necessary);
• providing of the consulting and marketing services(permanent technical and advisory assistance);
• control of the goods quality (works, services), produced (performed, provided) by the franchisee;
• delivering of goods (raw, materials);
• competition restriction.
Franchisee’s obligations
• payment of remuneration to the franchisor;
• compliance by the franchisee of requirements established by the franchisor for using of the business complex;
• compliance of the schedule development;
• confidentiality;
• restriction of competition and the possible limitation of using of the assigned rights;
• notification of the purchasers (customers) by the most obvious way that the franchisee uses a brand name, trademark, service mark or other means of individualization of civil turnover participants, goods, works, services on the basis of a franchising agreement.
Content of the agreement.Practical aspects
• Audit (remuneration depends on revenue)
• Coordination of costs (remuneration depends on profit)
• Amendments to the license complex (obligation to follow the amended instructions + remuneration)
• Protection of know-how (access, training, clauses in the agreements with employees)
• Protection of business reputation of the Franchisor
• Liability (avoiding of the penalty reduction)
• Dispute resolution (courts, complaints procedure)
Developing of a property complex
• Existence of rights on objects of intellectual property subjecting to registration in the country of the franchisee
• Existence of the copyrights on the objects of intellectual property Acquired rights (interior design, advertising products)
Employee’s works
• Compliance of the licensing complex to the legislation of the Republic of Belarus
• Legislation on advertising (Russian, Belarusian languages, special requirements to advertising) Requirements to quality of the goods
Limitation of rights
Franchisor
don't provide to other persons
similar licensing complexes for
its using on the territory
covered by the franchisee or to
refrain from own similar
activities on this territory
Franchisee
don't compete with the franchisor on the territory covered by the franchising agreement in respect of business activity, carried on by the franchisee with using owned to the franchisor exclusive
rights and undisclosed information
refusing from receiving of the similar exclusive rights and undisclosed information under the franchising agreement from
the competitors (potential competitors) of the franchisor
coordinate with the franchisor location of the premises used for the execution of the franchising agreement, as well as its external
and internal design
Liability of the Franchisor for the requirements to the Franchisee
Subsidiary liability
under the claims to the franchisee about the
discrepancy of quality of the goods (works, services) sold
(performed, rendered) by the franchisee under the franchising agreement in comparative with the quality of the similar goods
(works, services) sold (performed, rendered) directly
by the franchisor
Solidary liability
Under the claims to the franchisee as a manufacturer of
products (goods) of the franchisor
Income tax of non-residents (Franchisor)
• Article 146 of the Tax Code (clause 1.3.) – royalty
• Rate - 15 %
• Tax period – month
• Tax is calculated, withheld and transferred to the budget by the Franchisee from the amount of income
100-15=85
100/0,85=117,65
• Declaration should filed not later than the 20th of the following month
• Payment should be made not later than the 22nd of the following month
Avoidance of the double taxation
• Netherlands, Germany3 %
• Austria, Belgium, Hungary, Spain, Cyprus, UAE, Slovenia, the Czech Republic and others.5 %
• Italy6 %
• Bulgaria, China, Latvia, Lithuania, Russia, Slovakia, Switzerland, Estonia and others.10 %
PRAGUE . BRATISLAVA . KYIV . SOFIA . MOSCOW . BUCHAREST . WARSAW . MINSK . BUDAPEST l www.peterkapartners.com
The CEE Law Firm
Thank you for your attention!
Corporate and
Commercial
Investment and
Privatisation
Employment
IP law
Banking and Finance
Real estate and
construction
Telecommunications
Energy
Litigation
Public procurement
Peterka and Partners LLC
Pobediteley ave., 103, 13th floor, office 1303, Minsk, Belarusphone + 375 17 236 24 11
Dmitri Zikratski
Managing Associate
zikratski@peterkapartners.by
phone + 375 29 658 74 78
Skype: zikratski_dzmitry
PETERKA & PARTNERS is a leading independent full-service business law practice with a special commitment to Central
and Eastern Europe.
Since its establishment in 2000 the firm has proudly advised many local and international industrial and commercial
companies and financial institutions on their legal and business issues in the Region and has become recognised for its
expertise in several practice areas and deep industry insight.
A pioneer among Central and Eastern European law firms in expanding abroad, the firm pools its own entrepreneurial
experience and authentic business know-how to offer special added value to clients looking to set up and expand in the
Region or to develop their operations in several countries.
Having a direct presence in key locations in the region, namely the Czech Republic, Slovakia, Poland, Ukraine, Russia,
Bulgaria, Romania and Belarus, and covering also Hungary, Serbia, the firm provides clients from different industry sectors
with an integrated regional service and a single point of contact, maintaining a broad vision for all their regional assignments.
Practices
Capital Markets, Banking and Finance
Corporate/M&A
Criminal law
EU Law and Competition
Family law
Insolvency and Restructuring
Intellectual Property and New Technologies
Labour Law
Litigation and Arbitration
Public Procurement, PPP and EU Funds
Real Estate, Construction and Development
Tax and Tax disputes
French desk
Industries
Automotive
Banking, Finance and Financial services
Chemicals and Pharmaceutical Services
Construction and Real Estate Development
Consumer Products, Retail and Wholesale
Energy, Utilities and Infrastructure Projects
Food and Agriculture
Industrial Products
Information Technology
Sport, Media and Entertainment
Transportation and Logistics
Integrated services in the CEE region
Coordination of Legal Services
Corporate Restructuring
Debt Recovery
Compliance
PETERKA & PARTNERS │ PRAGUE BRATISLAVA KYIV SOFIA MOSCOW BUCHAREST WARSAW MINSK BYDAPEST
PRAGUEKarlovo namesti 671/24, 110 00 Prague 1T.: +420 246 085 300
BRATISLAVAKapitulska 18/ASK – 811 01 Bratislava T.: +421 2 544 18 700
SOFIA96, Georgi S. RakovskiBG – 1000 SofiaT.: +359 2 984 11 70
BUCHAREST41 Aviatorilor Blvd1st DistrictRO – 011853 BucharestT.: +40 21 310 48 82
KYIVBusiness Center "Renaissance"Vorovskoho 24 UA - 01054 KyivT.: +380 44 581 11 20
MOSCOWArmyansky pereulok 1/8 – 3RU – 101000 MoscowT.: +7 495 311 46 36
WARSAWŚniadeckich 10PL - 00-656 WarsawT.: +48 22 696 72 01
MINSKPobeditely ave., 103-1303BY – 220020 MinskT.: +375 29 591 35 85
BUDAPESTApáczai Csere János utca. 111051 BudapestTel.: +36 1 235 1090
GLOBAL CONTACTOndrej Peterka, managing partner
www.peterkapartners.com
The CEE Law Firm
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