Commercial Concession Agreement (Franchising)
A commercial concession (franchising) agreement is a type of civil law contract on the disposal of exclusive rights under which, according to Clause 1 of Article 1027 of the Civil Code of the Russian Federation, one party (the right holder) undertakes to grant the other party (the user), for remuneration and for a term or without specifying a term, the right to use in the user's business activities a bundle of exclusive rights belonging to the right holder, including the right to a trademark, service mark, and rights to other objects of exclusive rights provided for in the agreement, in particular to a commercial designation and a trade secret (know-how).
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We assist in drafting and executing all documents related to commercial concession and property rights, taking into account the requirements of applicable law.
Subject Matter of a Trademark Concession Agreement
About the Agreement
The transfer of rights under a commercial concession (franchising) agreement requires a thorough review of the terms and coordination of all details between both parties.
All aspects of the cooperation must be documented to avoid discrepancies and disputes in the future.
Termination of the contract may lead to the loss of the exclusive right to use intellectual property assets if the terms of the agreement were breached by one of the parties.
All aspects of the cooperation must be documented to avoid discrepancies and disputes in the future.
Termination of the contract may lead to the loss of the exclusive right to use intellectual property assets if the terms of the agreement were breached by one of the parties.
The subject matter of the agreement is a bundle of exclusive rights:
right to a trademark;
right to a service mark;
right to a commercial designation;
right to a trade secret (know-how) and other rights.
Essential Terms of the Agreement
The essential terms of a commercial concession agreement are:
1. Written form. Failure to comply with the written form of the agreement entails its invalidity. Such an agreement is deemed null and void.
2. State registration of the transfer of rights under the commercial concession agreement with Rospatent. Failure to comply with this requirement also renders the agreement null and void.
Specifics of the Concession Agreement
How to Customize a Concession Agreement
A minimum and/or maximum scope of use may be established
The commercial concession agreement may establish a minimum and/or maximum scope of use for the bundle of exclusive rights, business reputation, and commercial experience of the right holder, and may also specify the territory of use. The parties to a commercial concession agreement may be commercial organizations and individuals registered as individual entrepreneurs.
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The user may be granted the right to authorize third parties
A commercial concession agreement may provide for the user's right to authorize other persons to use the bundle of exclusive rights granted to them or part of this bundle under sub-concession terms agreed with the right holder or specified in the commercial concession agreement.
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An obligation of the user to grant rights may be provided
The agreement may provide for the user's obligation to grant, within a specified period, the right to use the specified rights under sub-concession terms to a specified number of persons (Clause 1, Article 1029 of the Civil Code of the Russian Federation). In this case, a commercial sub-concession agreement cannot be concluded for a term longer than that of the commercial concession agreement on the basis of which it is concluded.
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