Publication date: 08.06.2024
Legal regulation of franchise relations in Ukraine
Introduction
Franchising is one of the most effective ways to expand a business, allowing entrepreneurs to use a proven business model, trademark, and franchisor support. In Ukraine, franchise relations are becoming increasingly popular, but the legal regulation of these relations is not yet sufficiently developed. In this article, we will analyze the main aspects of legal regulation of franchise relations in Ukraine, problems and prospects for their development.
Legal framework
The Civil Code of Ukraine:
- Defines the general principles of contractual relations, including commercial concession (franchise) agreements. Articles 1115-1129 of the Civil Code regulate the main provisions of a commercial concession agreement.
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Commercial Code of Ukraine:
- Defines the general principles of economic activity, including the rules relating to the conclusion and execution of economic contracts, including franchise agreements.
The Law of Ukraine "On Protection of Economic Competition":
- Regulates competition issues in the market that may arise in the process of concluding and executing franchise agreements, including unfair competition.
Components of the franchise agreement
License to use the trademark:
- The franchisor grants the franchisee the right to use its trademark, corporate identity, commercial name and other brand elements.
Transfer of know-how:
- The franchisor transfers to the franchisee technologies, business methods, marketing strategies and other knowledge necessary for successful business.
Training and support:
- The franchisor provides franchisees with training and ongoing support, including consulting, training, marketing support, etc.
Royalties and other payments:
- The franchisee is obliged to pay royalties and other regular payments to the franchisor for the use of the trademark and the support received.
The main problems
Insufficient legislative regulation:
- There is no special law in Ukraine that regulates franchise relations in detail, which creates legal uncertainty and complicates the protection of the rights of franchisees.
No unified registration of franchise agreements:
- There is no mandatory registration of franchise agreements, which may lead to difficulties in proving the rights of franchisees and franchisors in the event of disputes.
Problems with the protection of intellectual property rights:
- Insufficient protection of intellectual property rights can create risks for franchisors related to the misuse of trademarks and know-how.
Development prospects
Adoption of a special law on franchising:
- A special law should be drafted and adopted to regulate franchise relations, defining the rights and obligations of franchisees and franchisors, as well as mechanisms for protecting their rights.
Creating a register of franchise agreements:
- The introduction of mandatory registration of franchise agreements will promote transparency and protect the rights of participants in franchise relations.
