Franchise purchase agreement: features, important points of conclusion. Franchising and drawing up a contract according to all the rules

The franchise agreement turns into an ambiguous topic when it comes to Russian reality. If you were hoping to find a single template or sample franchise agreement to guide you, just forget it. First of all, because the very concept of “franchising” simply does not exist in Russian legislation. Therefore, as in all cases when there is a phenomenon, but there is no word for it, everyone is guided by the most convenient conceptual apparatus for themselves.

As a result, the relationship between the franchisor and the franchisee can be regulated by a commercial concession agreement, a license agreement, a mixed license agreement, etc. In some industries, for example, in retail, supply contracts are quite successfully managed.

According to BIBOSS, about 26% of Russian franchisors do without a commercial concession agreement or a license agreement.

Nevertheless, a franchise implies the transfer of rights to use a trademark, which means that one cannot do without the relevant documents - a license agreement or a commercial concession agreement. Otherwise, the franchisee turns into a simple dealer engaged in the resale of goods.

As conceived by the legislators, in Russian legal practice, the Western term "franchising" most fully corresponds to the concept of "commercial concession". Accordingly, there is also a commercial concession agreement (DCC) designed to regulate relations between the parties in franchising. What does he represent?

Commercial concession agreement

Remember that the concept of "franchising" is not in Russian laws? This means that there can be no franchisors and franchisees there either. Instead, the commercial concession agreement provides for the terms "right holder" and "user" and, accordingly, governs their relationship.

DCC provides for the transfer from the right holder to the user of exclusive rights to use a trademark, service mark, commercial designation and a production secret or know-how. In a word, by purchasing a McDonald's franchise, under the DCC you get the right to name your establishment after an international brand, stamp the corporate letter "M" on signs and glasses with soda, as well as recipes for branded burgers and the very business model of a fast food restaurant.

At first glance, everything seems to be extremely simple: if it is clear what exactly the contract regulates, then it is clear how to draw it up. This means that you can find a template for a franchise agreement somewhere in the public domain. But Russian franchising is not so simple: there is no template for a commercial concession agreement. Firstly, because business processes in all franchisor companies are different, and secondly, because even in one company they can change over time. Nevertheless, there are a number of requirements that a commercial concession agreement must meet "hard":

• Only business entities can be parties to the agreement. That is, if the franchisee did not bother to register an individual entrepreneur or LLC, it is impossible to work with him through the DCC.
• The contract is of a reimbursable nature. The sad news is that there are no free franchises. A trademark and all the accompanying DCC bonuses cannot simply be given as a gift. Franchisees will have to pay for them.
• Registration of the contract with Rospatent is obligatory. Otherwise, if the right holder and the user disagree, and the case goes to court, the DCC will be declared invalid. And here is some food for thought from BIBOSS analysts:

Only 33% of companies register a commercial concession agreement with Rospatent.

• The copyright holder is obliged to provide everything necessary for the user to work. Of course, we are not talking about the fact that franchisees will bring raw materials or equipment on a silver platter. But according to the DCC, the franchisor provides the necessary information and documents, instructs the franchisee and his employees, consults and provides technical assistance, and also controls the quality of the goods.
• But the user also has responsibilities. In particular, he must use the trademark and everything else for which he received the rights, as specified in the contract, ensure the required quality of goods or services, follow the instructions of the franchisor, and not disclose production secrets.

As is the case with the vast majority of other documents, there can be a lot of holes and loopholes in a commercial concession agreement, using which cunning franchisors and overly independent franchisees can drink a lot of blood from each other. Therefore, in a commercial concession agreement, it is important to identify a number of points that will minimize all unnecessary incidents.

What will a good franchisor indicate in the contract?

First and foremost, the trademark

Exclusive development rights in a certain territory

Many franchisees are afraid of competition, and therefore, in the hope of reducing risks, they ask for the exclusive right to represent the brand in a certain territory. Thus, they do not have to compete at least with other franchisees and the franchisor itself. But having granted an exclusive and faced with the incompetence of a partner, the copyright holder may want to explore the forbidden territory on his own. This is where the problems begin: Rospatent will simply refuse registration where exclusive rights have already been given to another. A compromise option is to prescribe in the contract the obligations of the franchisor not to open in the agreed territory, while the franchisee correctly fulfills the terms of the contract.

Restriction of competition

A commercial concession agreement allows you to limit competition between you and the franchisor, and on four points at once: object, territory, time and subject. The object restriction will prevent franchisees from opening competing concepts during the duration of the DCC or after its expiration. But in this case, it is extremely important to prescribe exactly which concepts are competing, since they are not defined in the laws.

The restriction on the territory will operate as prescribed in the contract. If it contains a specific address, then the franchisee will not be able to open a competing concept only on it, but will be able to work literally in a neighboring house.

As for the time limit, it is set individually. Usually it is 1-2 years from the date of expiration of the contract. But it also happens that the franchisee will never be able to open a competing institution.

And finally, the restriction on the subject. Strictly speaking, a competing concept cannot be opened not only by the LLC with which the contract was concluded, but also by persons affiliated to it. But in practice, tracking this moment is very difficult, because you can always register a new legal entity for your beloved husband or grandmother.

Supply

As a rule, the franchisor advocates that franchisees purchase products and equipment from strictly defined and verified suppliers. But partners, as a rule, want to “dodge” this obligation, so it makes sense to regulate work with suppliers in the contract.

Renovation, modification and renovation of the franchise point

No matter how rigid and thoughtful the network standards are, they will change over time. But the franchisee, who has invested a large amount in the opening and renovation, is unlikely to be happy to hear: “Come on again, everything is wrong!”. And it will be extremely difficult to force him to invest another tens of millions in redevelopment or re-equipment of the point. Therefore, a good franchisor will provide in the contract for compensation or the timing of changes. For example, it can be stipulated that there will be no major alterations in the first year of the franchisee's work.

Education

According to the DCC, assistance in training and advanced training of franchisees is the sacred duty of the franchisor. Some include its cost in the payment of a lump-sum fee. The move is not the wisest: the franchisee can simply refuse such a service or consider it to be of insufficient quality. In this case, the franchisor will have to return the money paid.

If the franchisor wants to provide the opportunity for additional paid training and the opening team, it would be good practice to prescribe the method and procedure for calculation in the contract.

Marketing

Checks, reporting, information

No matter what anyone says, any check of the franchisee by the franchisor is very subjective. Someone will see dirt and a violation of standards in a drop of oil on a tile, while someone will pass by without noticing. But having accumulated a certain number of violations, the franchisee runs the risk of running into sanctions or even exclusion from the system. An adequate franchisor will try to regulate the standards as clearly as possible on the one hand, and not be too strict on the other. After all, a drop of oil is not such a clear violation of the DCC, in contrast to non-payment of royalties.

Assignment of the contract

I don’t have the strength to take over the business, it’s not how I imagined it, I received Israeli citizenship and I’m leaving for permanent residence - but how many reasons can a franchisee want to sell a business during the term of the contract? A good franchisor will detail all the possible conditions for the assignment of the contract to another person, up to the right to refuse to work with those who buy this business.

Termination of an agreement

All cases when a commercial concession agreement can be terminated unilaterally are provided for by Chapter 54 of the Civil Code of the Russian Federation. That's just the right to such a separation always remains with the copyright holder. The franchisee may be asked to “exit” 6 months in advance for an open-ended contract and 2 weeks in advance for an urgent one. You will be very lucky if the franchisor also prescribes a list of situations when the franchisee can break off relations unilaterally. But keep in mind that this is an extremely rare case.

Be also prepared for the fact that even at the initial stage of cooperation you will have to think about terminating the contract, or rather about its consequences. In this sense, the DCC is somewhat reminiscent of a marriage contract. Prescribing all the conditions of behavior after the break is a good way for the franchisor to protect himself. After all, if the business does not close, the client should not associate it with the franchise. Franchisees should treat such conditions with understanding: nothing personal, just business.

I am a franchisee, what should I do?

If you don’t want to be fooled by concluding a commercial concession agreement, it’s not enough to operate with the maxim “a good franchisor would not do that.” At first glance, a commercial concession agreement may promise the most favorable conditions for the franchisee, but in reality it will be fraught with a lot of unpleasant surprises. But, fortunately, protecting yourself is not so difficult. What to do?

To begin with, study the chapter “Commercial concession” of the Civil Code of the Russian Federation and check whether the text of the agreement contradicts it. The terms of the contract can be much more detailed than what is written in the Civil Code, but there should be no contradictions. If you find them, point out the error to the franchisor and demand a review of the disputed points.

Do you remember that a DCC not registered with Rospatent is not valid? And that more than half of the franchisors do not register it? Then follow the registration. It is advisable to indicate the time frame in which the document must be sent to Rospatent. And try not to start work before the contract is registered.

First, you should understand such a thing as a franchise. The word itself can be translated as "benefit". One company leases the trademark of a large company. An agreement is concluded between firms, a completed sample of which can be downloaded. This example will help to conclude a model agreement with a franchisee.

The subject of the contract is the rights to use the brand, which are leased for a certain period. This includes the company name, service mark, trade secrets, and so on. This is the object of the contract. The parties to the agreement are commercial organizations in the form of a legal entity and private entrepreneurs (IP).

What happens

There are several types of franchising:

1. Business. This is when not only the right to sell services and goods is acquired, but also a license for this business. In this case, the franchisee undertakes to train employees in accordance with the requirements of the copyright holder, use a certain interior and other corporate requirements, up to the uniform and behavior of employees.
2. Commodity. The lease is for the right to sell goods under a particular brand name.
3. Service. Leasing the right to service products of a certain manufacturer.
4. Industrial. Gives the right not only to sell goods, but also to produce them.

In business cooperation, the franchisee is obliged to use a certain interior and other corporate requirements, up to the uniform and behavior of employees.

The characteristics and features of the contract depend on the type.

What is indicated

• Contract number.
• Conclusion date.
• Place of detention.
• Details of each party to the contract.
• The order of cooperation.
• Terms of termination and obligations of the parties.
• Additional agreements.
• Applications.

This document gives the franchisee all (or most) of the rights holder's options. This is included in the franchise fee.

How to issue

Registration of a franchise agreement is a mandatory procedure that a company acquiring the rights of another must go through. It takes place in Rospatent and takes about two months. If the registration is successful, Rospatent sends a package of documentation to the right holder confirming that the rights were successfully transferred to another company.

Royalty and lump sum

These are the key elements of the franchise agreement. The royalty is a monthly payment for the right to use the copyright to the company's intellectual property. Such payments are of a regular nature, and their amount is negotiated by the parties in advance and recorded in the document.

Royalty can be of several types:

• Percentage of margin.
• Percentage of turnover.
• Fixed fee.

A lump-sum contribution differs from a royalty in that it is paid as a lump sum. Usually this is a payment that pays for the costs (production of promotional products, preparation of documents and a franchisee package, a consultant's visit to the place of business establishment, assistance in marketing research, selection of a place for business, legal and business advice).

Franchises of well-known brands involve the payment of both a lump-sum fee and royalties. Sometimes you can find options with only one of these forms of payment.

Nuances

There are features of signing such contracts for the transfer of exclusive rights. So, if one of the rights specified in the document expires, all provisions that relate to this right cease to be valid. The rest continue to operate.

The franchisor cannot change the price during the validity of the contract (unless it is specifically stipulated in the contract). But additional conditions can be entered under which the user transfers part of the rights to a third company (for example, the primary right to buy out a business upon completion of the franchise agreement).

Finally

A franchise sale and purchase agreement can help start-up companies earn their first capital. Preparation for the conclusion of such an agreement must be thorough. It is important to study all the conditions and understand whether their acceptance is acceptable. A commercial franchise agreement is a good solution in many cases, but whether it will be more profitable than starting your own business is something to seriously consider.

What to pay attention to when concluding a franchise agreement and how to avoid mistakes? Read our article about the important nuances of a commercial concession (franchising) agreement that franchisees need to take into account.

You will learn about the basic concepts, advantages and disadvantages of running a franchise business from the article: What is a franchise and how does it work.

Restriction when choosing suppliers

By law, the franchisor does not have the right to restrict the franchisee in the choice of suppliers. But, in accordance with Article 1032 of the Civil Code, the quality of the goods or services of the franchisee should not be inferior to the quality of the goods and services of the right holder. Often, franchisors develop standards that require specific vendors to meet. The prices of these companies can be high, and this will lead to additional costs.

What to do
Make sure quality standards are set correctly to allow for a variety of suppliers. Make sure that the contract contains a clause about your right to choose suppliers.

Rental of certain retail space

A similar situation arises in solving the issue of renting premises for conducting activities. The franchisor may insist on renting exactly his premises, since they best suit the conditions (suitable area, necessary customer flow, etc.).

What to do
Specify in advance the conditions of the franchisor that relate to the premises. Indicate in the contract that you have the right to find space for doing business on your own.

The responsibility of the franchisor is not defined

Article 1031 of the Civil Code lists the obligations of the right holder, but does not define the measures of responsibility for their violation. If the franchisor's obligations are not specified in the contract, then you are unlikely to be able to demand their fulfillment.

What to do
List in the contract the violations for which the franchisor will have to be held liable. Specify the amount of fines and penalties.

The territory in which the franchisee will work is not indicated

There may be several enterprises in the region that operate under the same franchise. This will create more competition and may hurt your bottom line.

What to do
Determine the boundaries of the territory in which you can operate in order to avoid competition within the franchise network. On the site assigned to you, the copyright holder should not conduct activities himself and not give other franchisees the opportunity to work.

Trademark registration not checked

The trademark under which you will conduct business must be registered with Rospatent. Otherwise, it can be used by competitors, which will negatively affect your profits and business reputation. In addition, during the execution of the contract, the right of the franchisor to the trademark or commercial designation for which you bought the franchise may end. The validity of the contract in this case is automatically terminated.

What to do
Before registering an agreement with Rospatent, ask the copyright holder for a certificate of the exclusive right to a trademark. If during the term of the agreement the franchisor has lost the rights to the trademark and name, you can refuse the offer to work under the new trademark and demand compensation for losses.

Contract duration not specified

It would seem that an open-ended contract can become a guarantee of long-term cooperation. In fact, each of the parties has the right to terminate such an agreement of its own free will by notifying the partner about this six months (the period can be changed) before the expected date of termination.

What to do
Sign a contract for a specific period. After its completion, within three years, you will have the pre-emptive right to conclude a new contract.

The contract is not registered with Rospatent

The essence of the franchise agreement is the transfer of rights to the franchisee to use the trademark and developments of the company. In accordance with articles 1028 and 1036 of the Civil Code, the contract must be registered with Rospatent. Although this procedure takes several months, it should not be neglected. If you come across a dishonest franchisor, he may terminate cooperation with you before the end of the contract, recognizing the contract as null and void in court. In this case, it will be difficult to return the costs of starting a business.

What to do
Paragraph 2 of Article 1031 of the Civil Code imposes the obligation to register the contract on the franchisor. If the contract stipulates other conditions, then insist on their exclusion. If you had to start activities before the moment of registration of the agreement, then indicate that its validity begins from the moment of signing or transfer of exclusive rights. This allows you to do article 1028 of the Civil Code.

Finally

In order to successfully start working on a franchise, you need to determine which suppliers you will cooperate with, in what area and territory to do business, check the registration of a trademark, register an agreement with Rospatent and indicate the terms of its validity. Before concluding a contract, carefully read all the nuances, clarify the points that make you wary, and clearly justify your conditions.

In recent years, there has been a peculiar fashion for franchising, however, in a crisis, the forecasts for the development of this business format are very contradictory. Most experts are still inclined to believe that today is a good time to buy a franchise if you want to open your own business, but you don’t have the resources to promote, build an image and conquer the sales market. After all, even a person who is completely unprepared in entrepreneurship and wants to do business can, with a high degree of reliability, open his own business using franchising. We will introduce you to the legal aspects of this model.

Essence of franchising

The concept comes from the French words: the verb "franchir" - to pass and the noun "franchise" - a benefit, a privilege.

Modern franchising is to provide an entrepreneur (called a franchisee) with the right to use the brand and business concept. This right is granted for a fee and is limited by the right holder (franchisor), as he reserves the authority to make business decisions and control.

A franchising agreement may be concluded for a fixed period or indefinitely, with or without indication of the territory of use in relation to a certain area of ​​business activity (sale of goods received from the franchisor or produced by the user, carrying out other trading activities, performing works, rendering services). Be sure to clearly indicate which rights and to what extent are provided under this agreement - a minimum and (or) maximum amount of use can be established.

The franchisee undertakes to sell a certain product or service in accordance with the rules of business established by the franchisor in advance. In exchange for complying with all these rules, the franchisee receives permission to use the company's name, product and services, marketing technologies, market research and expertise. A franchise (a complete system of running a business provided by a franchisee) allows the respective entrepreneur to run his or her business successfully without any prior experience, knowledge or training in the field. In many ways, there is a similarity with the lease - the franchisee receives the right to use a ready-made business system, for which he pays the copyright holder.

In this system of doing business, control over the franchisee by the head office is inevitable. Nevertheless, relations within such a corporate system are not subordinate, but collegial, since the franchisees are not fully subordinate to the central office. On the other hand, at the initial stage, strict control over its activities of regional companies is quite appropriate and necessary, because this reduces the risks of each participant and the entire system as a whole. Before becoming independent, partners must learn from the main office, receive key skills and instructions for doing business. In the future, the franchisee receives a certain independence, although control by the franchisor continues to be exercised.

Applications and benefits

What areas of activity are most in demand by franchisees today? First of all, this is trade and the service sector - retail chains, supermarkets, restaurant chains, mobile phone stores, software sales, online stores, etc. In fact, the use of franchising is possible for almost any type of activity.

Franchising is designed for those who seek long-term development in order to conquer a certain market segment. But not every business owner can invest a lot of money in it right at the start. But when acquiring a franchise, an entrepreneur has the opportunity to quickly penetrate the market, increase economic performance and mobilize capital through existing outlets. Singles spend money on advertising their brand or on market research, and franchisees do not need to be distracted by long-term and costly marketing activities - the main promotion tasks have already been solved by the brand owner. Thus, in the shortest possible time, a business ceases to be small and moves into the category of medium, and then large.

For the franchisor selling the right to use his brand is quite profitable, as it allows him to solve several serious problems at once:

• expanding the sales market by attracting neighboring regions;
• reducing the number of competitors by attracting strong players under your brand;
• maintaining awareness in the market;
• increase profits by receiving a service fee.

Franchisee in turn, it also receives a number of obvious advantages:

• business risk reduction;
• acceleration of development of own business;
• maintaining commercial reputation on the part of the franchisor.

When choosing a franchisor to buy a brand, each entrepreneur is attentive to such parameters as fame, impeccable reputation, long history, and experience. It is these factors that are of value to the franchisee: by buying a franchise, he “buys” a reputation.

Franchisors are no less careful when choosing a franchisee. Some candidates often hinder the effectiveness of the development of the entire franchise business due to incompetence or low professional level. First of all, they strive to take into account the human factor, the competencies and skills of future colleagues, and develop an effective system for monitoring the activities of the franchisee.

Before expanding its business to a particular region, the franchisor thoroughly studies all the players in the local market. This will be useful for choosing the most competent and able-bodied franchisee and for further competition in the market of this region.

The franchise can be directly transferred to any entrepreneur. It is possible that the exclusive rights to develop a trademark within a certain region (country) are transferred to one franchisee, then it is also called a master franchise. Such a franchisee already becomes a franchisor himself, selling and offering franchises to other entrepreneurs and collecting a service fee from them.

The advantages of the franchise business as a whole over single entrepreneurs are obvious: the conditions and results of work are more understandable, transparent and predictable. The successful practice of franchising is confirmed by the stability and high profitability among existing owners of a particular franchise, as well as the steady growing interest in using a well-known brand to create their own business.

Cons of franchising

At the same time, franchising has its negative sides, like any other phenomenon of the surrounding world.

The franchisor receives less profit from a trade franchise enterprise than from a branch of his own. In addition, he faces difficulties in controlling the reliability of the financial statements of the franchisee; it is possible to prepare for oneself a possible competitor in the face of an active franchisee.

For franchisees, the disadvantages are expressed mainly in the constant control by the franchisor, which leaves them less autonomy in business.

Often, small businesses - franchisees - are forced to cut costs, often this happens due to a decrease in the quality of products or services provided, which leads to damage to the brand image and ultimately reduces its attractiveness to customers.

We must not forget about competition. On the one hand, the franchisor can attract the most promising entrepreneurs under his brand and thus get rid of several potential competitors. However, in the future, the franchisee may stop using the franchise and continue to develop under his own brand. Considering that experience and business skills cannot be returned, such a company may turn out to be an even more serious competitor in the future.

On the other hand, in one relatively small area, several franchisees can work at once under the same trademark, using the franchise of the same right holder. At the same time, each franchisee company remains an independent legal entity and is forced to compete not only with other brands, but also between brothers in the same franchise.

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Nina Semina, head of the franchising development department of the Deloshop Ready Business Store consulting company:

A successful franchise can only be created from a concept that is already working, proven to be successful, and profitable. Franchisee partners may be attracted to a brand that has earned a reputation among consumers, a business that is unique.

The franchise development process takes at least six months. You will have to decide on a pilot enterprise, on the basis of which business processes will be written. Of course, all of them will have to be standardized in order to achieve the same quality of goods or services at all points. Business skills should not be too difficult for partners to learn. In international practice, it is believed that if a franchisee cannot be trained in three months, the company will have difficulties. Finally, the business concept must be easily adaptable to the specifics of different regions. It's good if the franchisor tried to work in many cities and tested several formats - in vast Russia, the incomes and tastes of consumers sometimes differ greatly.

In general, the phenomenon of franchising, when restrictions on development are abused, can pose a serious threat to free competition, and special provisions of the antitrust law are designed to counteract such influence. Yes, Art. 12 of the Federal Law of July 26, 2006 No. 135-FZ “On Protection of Competition”, so-called “vertical” agreements between business entities are allowed if the share of each of them in a particular goods market does not exceed twenty percent. “Vertical” is an agreement between two non-competing economic entities, in which one acquires something or is a potential acquirer, and the other provides something for sale.

The relationship of the parties

In Russian law, the legislator defined the relationship of the parties to such transactions in Chapter 54 of the Civil Code of the Russian Federation, calling them a commercial concession. Here are the main requirements for the execution of such contracts:

• according to paragraph 1 of Art. 1028 of the Civil Code, a franchise agreement is concluded in writing, failure to comply with the form of the agreement entails its nullity;
• commercial concession agreement is subject to special registration.

Based on paragraph 2 of Art. 36 of the Federal Law of December 18, 2006 No. 231-FZ, from January 1, 2008, the functions of registering commercial concession agreements are assigned to the Federal Service for Intellectual Property, Patents and Trademarks.

As a general rule, Art. 1031 of the Civil Code of the Russian Federation, which can be changed by the agreement, it is the franchisor who must register the commercial concession agreement. The legislator does not call such registration state, therefore, in contrast to the general rule of paragraph 3 of Art. 433 of the Civil Code of the Russian Federation, the contract comes into force from the moment an agreement is reached between the parties. But in relations with other persons, the parties to the franchise agreement have the right to refer to the agreement only from the moment of its registration.

Failure to comply with the registration requirement entails the invalidity of the contract. The consequences of such a circumstance may be, for example, the inability to write off the costs of the franchise agreement when calculating income tax or to offset the amount of VAT paid on them. In addition, the right holder may apply to the court for protection against infringement of his exclusive rights.

Information about registered commercial concession agreements and registered amendments made to a previously registered agreement shall be entered respectively into the State Register of Inventions of the Russian Federation, the State Register of Utility Models of the Russian Federation, the State Register of Industrial Designs of the Russian Federation, and the State Register of Trademarks and Service Marks of the Russian Federation. The following information is published in the relevant official bulletin of the federal executive body for intellectual property:

• date and number of registration of the contract;
• determination of the parties to the contract;
• subject of the contract;
• the scope of the transferred rights.

To register amendments to the contract, two copies of the contract with a registration mark must be submitted to the federal executive body for intellectual property. The same registration procedure is established for the early termination of a commercial concession agreement. All submitted copies of the contract, amendments, agreements on termination of the contract, as well as on the copy stored in the federal executive authority for intellectual property, must be stamped with a registration mark containing the date and registration number.

The franchisor has obligations under paragraph 2 of Art. 1031 of the Civil Code only if the commercial concession agreement does not provide otherwise. These are the responsibilities:

• ensure the registration of the contract;
• provide ongoing technical and advisory assistance, including assistance in training and advanced training of employees;
• control the quality of goods (works, services) produced (performed, rendered) by the franchisee on the basis of the contract.

Features of the franchise agreement

The franchise agreement has features that distinguish it from other types of transactions:

1. Franchise participants can only be persons engaged in entrepreneurial activities (i.e. commercial organizations or individuals registered as individual entrepreneurs). This is what distinguishes a franchise agreement from a license agreement.
2. The obligatory subject of the contract is the granting by the right holder of the right to use a set of exclusive rights without transferring the exclusive rights themselves.
3. The purpose of the agreement is to benefit each of its participants: the franchise is used in the franchisee's business activities, and the right holder creates a network to promote their goods or services, expand their sales market.
4. The franchise agreement is distinguished by the specific rights and obligations of its parties. The franchisor, giving the franchisee the right to use a set of exclusive rights, must provide technical and advisory assistance, train its employees, control the quality of goods (works, services) produced. The franchisee, in turn, is obliged to follow the instructions of the copyright holder, for example, with regard to the design of the premises.
5. The franchisee is economically dependent on the franchisor, but at the same time he retains his legal independence and can act in transactions on his own behalf. This distinguishes franchising companies from companies created by investing in the authorized capital of a complex of exclusive rights to means of individualizing goods or enterprises. For example, McDonald's in Russia uses the described scheme, and not franchising.
6. The franchisee is obliged to inform consumers about the use of the complex of exclusive rights of the franchisor.
7. Mutual restrictions of the parties: the relationship between the franchisor and the franchisee under a specific agreement cannot exist apart from the relationship of the franchisor with other users under similar agreements. Under no circumstances should these activities lead to excessive competition in the market for goods or services. In addition, the franchisor seeks to protect his rights when transferring the right to use them, so the contract must contain conditions for the protection of trade secrets and confidential information.

As follows from paragraph 2 of Art. 1027 of the Civil Code, the franchise agreement involves the use of business reputation and commercial experience of the franchisor. This makes it economically feasible to acquire these exclusive rights. Therefore, goodwill can receive a conditional monetary value in the franchising agreement. This assessment allows you to assess the amount of responsibility of the franchisee.

Financial issues and features of taxation

Payments under a franchise agreement can be one-time and periodic. They can act in various forms - part of the revenue received by the user, margins on the wholesale price of goods, etc. As a rule, the franchisor receives payments in two forms: an entrance (lump-sum) fee (it depends on the market valuation of the brand) and royalties (a certain percentage of turnover). The amount of royalties, as a rule, is up to 10% of sales. The lump-sum contribution usually ranges from 150,000 to 1,500,000 rubles, sometimes it is paid in installments.

But, what is sad, from the point of view of the Tax Code, a lump-sum contribution is not recognized as an expense that reduces taxable income.

There is an easy way to avoid the difficulties of writing off the lump-sum contribution for accounting and tax purposes: it is enough to include it in the periodic payment schedule under the franchise agreement. You can also specify in the contract that there is no one-time fee for joining the network. It is possible that the amount of the first several royalty payments, which is too large compared to subsequent payments, will cause unhealthy interest among the inspectors, but they will have to leave their suspicions, because the law does not regulate the amount of royalties and does not require that they are always equal.

It also avoids problems with offsetting VAT. When the remuneration is paid in the form of royalties, the franchisee is entitled to a VAT deduction attributable to the royalties. A tax deduction from the cost of other services (works) acquired for carrying out activities under a franchise agreement is made in the general manner. The same applies to the payment by the user of VAT on the cost of goods (works, services) sold by him.

Paragraph 2 of Art. 1033 of the Civil Code of the Russian Federation prohibits establishing in the contract the right of the franchisor to determine the selling price of goods or works (services) performed by the franchisee, even setting any limits on these prices. In a contract with such a condition, it will be null and void, that is, invalid from the moment of its execution, regardless of whether it is recognized as invalid in court. The nullity of this condition may not entail the invalidity of the rest of the contract, if it can be assumed that it would still have been concluded without the invalid condition (Article 180 of the Civil Code).

If the registration of the contract with the federal agency for intellectual property is carried out by the agreement of the parties to the franchisee, then it is he who will bear the corresponding costs. The state duty for registration is 1,000 rubles. (signature 5, clause 1, article 333.33 of the Tax Code of the Russian Federation). If later changes are made to it, they will also have to be registered by paying 200 rubles. (signature 6, clause 1, article 333.33 of the Tax Code of the Russian Federation). When transferring exclusive rights protected in accordance with patent law, patent fees are additionally charged.

There may be situations when a foreign company acts as the right holder under a franchising agreement. In the letter of the Ministry of Finance of Russia No. 03-03-06/1/560 dated 07.10.2008, it is noted that since the results of intellectual activity belong to the category of intangible objects, the rules on the right of ownership are not applicable to relations on the use and protection of exclusive rights to them ( they belong to real rights). Therefore, income from the assignment of the exclusive right to the results of intellectual activity is income from the use of rights to intellectual property in the Russian Federation, and not from the sale of any property. Following the logic of the legislator, the franchisor's income from the transfer to use of a set of exclusive rights under a franchising agreement should be treated in a similar way.

The entrance fee and royalties received by a foreign franchisor under a commercial concession agreement are considered as its income from sources in the Russian Federation and are subject to corporate income tax on the basis of subpara. 4 p. 1 art. 309 of the Tax Code of the Russian Federation. If a foreign counterparty does not have a permanent representative office in Russia, then the franchisee himself withholds income tax (clause 2, article 310 of the Tax Code of the Russian Federation). In this case, as a general rule, a 20 percent tax rate is applied (subclause 1, clause 2, article 284 of the Tax Code of the Russian Federation).

When taxing the income of foreign organizations, attention should also be paid to the existence and content of separate agreements concluded between the Russian Federation and other countries. For example, if a foreign organization is a resident of one of the 67 states with which the Russian Federation has concluded an international treaty on the avoidance of double taxation, then payments for the right to use the result of intellectual activity are taxed at a significantly lower rate or are not subject to income tax at all. In accordance with paragraph 2 of Art. 12 of the Convention between the Russian Federation and the Kingdom of Spain for the avoidance of double taxation of December 16, 1998, royalties (as income of a foreign company arising in the territory of the Russian Federation) paid to the Spanish company-right holder are taxed in Russia at a rate of 5%.

Speaking of VAT, which the franchisor imposes on each of its remuneration, one cannot ignore the benefits for this tax. The transfer of exclusive rights to inventions, utility models, industrial designs, computer programs, databases, topologies of integrated circuits, production secrets (know-how), as well as the rights to use the indicated results of intellectual activity on the basis of a license agreement (subclause 26) is not subject to VAT. paragraph 2 of article 149 of the Tax Code of the Russian Federation). A franchise agreement can be a mixed agreement, which combines elements of franchising, a license agreement - it is not easy even for specialists to understand the essence of such an agreement.

Therefore, it makes sense for the parties to a franchise agreement to take note that transfers of the right to use know-how and (or) computer programs can be exempt from VAT. Including under a commercial concession agreement. To do this, you will need to separately prescribe in the contract the cost of rights that are not taxable and taxable with VAT. Here, the transfer to use of exclusive rights to a trademark and commercial designation does not exactly fall under the exemption from VAT. And you can do it easier - to conclude separate licensing and franchising agreements.

Another interesting point in describing the financial relationships of franchise participants and their taxation can be the training of staff by the franchisor. The franchisor is obliged to train the employees of the franchisee in its technologies. The cost of such training is usually recovered from the lump-sum contribution and reflected in the cost of it. Although it also happens that in the contract it is indicated separately and listed regardless of the cost of the franchise. Then the cost of staff training can be taken into account by the franchisee as part of the cost of wages in accordance with paragraph 25 of Art. 255 of the Tax Code of the Russian Federation.

In this article, the list of labor costs is not closed, and according to paragraph 25 of Art. 255 of the Tax Code of the Russian Federation, other types of expenses incurred in favor of the employee are also recognized as labor costs, provided that they are provided for by an employment or collective agreement. Therefore, including a condition on the mandatory training of employees from the franchisor in employment contracts, the franchisee gets the right to take them into account in expenses that reduce taxable income.

If this is not the case or the franchisee applies a simplified taxation system, then it should be borne in mind that educational services must be obtained under an agreement with an educational institution that has received state accreditation. It is unlikely that the franchisor will have such accreditation, so the cost of training, which he will conduct on his own, cannot be taken into account. But if the franchisor engages an accredited training center for this, then if it has a license for educational activities, the franchisee will be able to take into account the training fee for employees as expenses necessary to start the activity.

For a simplified taxation system, these costs can be taken into account in accordance with subpara. 33 paragraph 1 of Art. 346.16 of the Tax Code of the Russian Federation. You need to have the following documents:

• an agreement under which an educational institution undertakes to conduct a seminar on a specific topic;
• an act on the services rendered and an invoice (to be included in VAT expenses) with the same wording as in the training agreement;
• a notarized copy of the license of the educational institution;
• a notarized copy of the certificate (certificate) of advanced training issued to the participants of the seminar.

In terms of taxation in general, such a training scheme for employees turns out to be beneficial. According to paragraph 3 of Art. 217 of the Tax Code of the Russian Federation, compensation payments that reimburse the costs of raising the professional level of employees are not subject to personal income tax. Therefore, the franchisee does not need to withhold this tax from the cost of training his staff.

The tax bases for insurance premiums to the Pension Fund of the Russian Federation and the UST are the same (clause 2, article 10 of the Federal Law of December 15, 2001 No. 167-FZ). The basis for calculating the UST takes into account payments and remuneration in favor of employees, regardless of the form. These include the cost of studying in the interests of the employee (clause 1, article 237 of the Tax Code of the Russian Federation). However, in this case, the initiative comes from the employer, so the UST is not charged in accordance with subpara. 2 p. 1 art. 238 of the Tax Code of the Russian Federation. For the same reason, payment for a training seminar is not subject to contributions to compulsory social insurance against accidents (clause 10 of the List approved by Decree of the Government of the Russian Federation of 07.07.1999 No. 765).

Summing up, we can say that, in general, franchising turns out to be a very profitable business for purposeful and disciplined entrepreneurs, moreover, it does not require large financial investments at the initial stage. Along with the rights to a trademark, experience, business reputation and assistance in doing business from the right holder are acquired. Franchising allows you to maintain the independence of the business, unlike a merger or acquisition.

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Olga Peremyshlennikova, General Director of Leadership Management Russia:

Problems of franchising in the context of the global financial crisis

Today, franchising has become one of the most important and relevant topics for discussion by the professional community. The global financial crisis turned out to be fatal not only for small businesses, but also for companies that are market leaders in their sector.

At the moment, many companies refuse franchising, because they do not consider it profitable to start a business in the conditions of the global crisis. But on the other hand, if we are talking about world-class franchising and a quality product that is time-tested and in demand, then, as a rule, neither franchisors nor franchisees have such serious concerns about profitability. There has always been and will always be a constant supply and demand for such franchises. If we talk about companies that today are not ready to declare their competitiveness, then in a crisis they are interested in buying a franchise of a large and self-confident company. Such a purchase will help "stay in the game" and allow you to classify yourself as a global corporation, whose reputation cannot be greatly affected in a crisis. Large firms are also interested in increasing their capital. But here another problem appears - the lack of potential franchisees for most entrepreneurs. Unfortunately, in many areas of business now there is a kind of lull.

The main mistake of most franchisors is that, having sold a franchise, they do not consider it necessary to monitor the maintenance of the franchisee's business, which ultimately leads to a decrease in the franchisee's business activity.

The legal component is very important: it is necessary to conclude high-quality, detailed contracts, carefully consider each clause of the contract, every nuance. Under the conditions of legal protection of the franchisor, the company will always have confidence in the prosperity of the brand. Of course, relations within the franchising system must be partnership. The regional representation is a full participant. Nevertheless, at the initial stage, it is necessary to transfer the key skills to the franchisee for the successful independent business. The licensee must know all the nuances and subtleties of the market in a competitive environment, this is a prerequisite. Otherwise, incompetence and lack of coordination of actions can negatively affect the work of not only the region, but also the central office. Franchising is an effective system that allows small businesses to quickly improve their reputation and status, and for larger companies to confirm their importance in the market and increase their capital. All this emphasizes the importance of the franchising system in the context of the global financial crisis, which can be considered as one of the tools for overcoming the crisis and developing the Russian economy.

New economic realities invariably lead to the emergence of modern forms of interaction between the two sides of the business process. One of them is franchising, which is referred to in Russian legislation under the term "commercial concession". For the domestic economy, this phenomenon is relatively recent, and therefore businessmen who decide to follow this path of development in the entrepreneurial field should study the franchise agreement with special attention.

What is a franchise

Such a phenomenon as the transfer of the right to use property to another person for a certain fee has already become quite everyday. In this case, we can talk about absolutely any objects, from a car to an apartment. For the Russian layman in this case, the word "rent" is more familiar. If we talk about business, then trademarks and existing models of entrepreneurial activity can be transferred for use.

It follows that a franchise agreement is essentially a simple transfer of the right to use, provided by the owner of the business model for a fee. For the first time this term was introduced in the United States, and McDonald's, known today even in regions far from the United States, can be considered a striking example of its use.

In other words, it would be logical to say that the party that received the specified set of rights, after signing the contractual relationship, can be engaged in the manufacture and further sale of any type of product or service. At the same time, the franchise buyer receives the right to use not only the trademark, but also the technology for the production of a service or product.

For convenience, both sides have received their names:

• the franchisee is the buyer of the business model;
• franchisor - seller.

The essence of the contract

A commercial franchise agreement has an economic background: for the merchant himself, who offers to acquire the rights to the business model he has created, this method is an excellent tool for expanding his enterprise by transferring the following opportunities:

• the right to use individual markers - commercial designation, trademark;
• know-how - manufacturing technology, method of implementation, advertising.

Bonuses will be the transfer of experience, staff training, information and other support.

From a legal point of view, a typical franchise agreement has the following characteristics:

• form of conclusion of agreements - written;
• parties to the agreement - the user and the copyright holder.

In both cases, the parties may be represented by both legal entities and individuals. This document is usually paid, bilateral, consensual. It is concluded for a certain period or may be indefinite.

According to the Civil Code of the Russian Federation, a commercial concession agreement must go through the registration procedure with the local executive authority that manages intellectual property.

If this requirement is not met, the agreement may be considered invalid.

What does the contract require?

The first thing that the contractual relationship provides for is the provision of all necessary documentation to the franchise buyer, as well as any other information that may be needed for the successful functioning of the business.

For its part, the copyright holder must:

• transfer commercial papers and technical documentation;
• instruct the buyer and his employees on the use of the business model;
• conduct state registration of the contract;
• to promote continuous learning and various kinds of consultations when difficulties arise;
• exercise control over the quality of the service or product produced.

In turn, the user is expected to fulfill the following requirements:

• use the means of individualization received by him;
• adhere to the quality that is provided for by the contract and that meets the standards put forward by the copyright holder;
• comply with all instructions and instructions of the seller, which relate not only to production technology, but also to the external and internal design of the premises;
• provide the full range of additional services that the consumer could receive if he used the products of the copyright holder;
• not to disclose the secret of know-how;
• to grant sub-concessions, if it is provided for by the agreement;
• in various ways to inform consumers of products that he uses this trademark and know-how on the basis of a concession agreement.

It will be important to note some of the disadvantages that the franchise agreement contains:

• difficulties in keeping the secret of the production technology of the service or product provided;
• dependence of the chain's reputation on unprofitable franchisees;
• the rapid growth of successful franchise buyers who, over time, tend to leave the chain and develop their own business.

One of the features of this type of relationship is that the buyer of the franchise gets the opportunity to sell the model to the so-called sub-users. At the same time, the user is charged with the obligation not to compete with the owner of the right to a business model within the same territory. He also cannot take advantage of an offer of the same order received from competing structures in the same field. Indispensable to comply with is the condition of coordination with the owner of the placement of outlets.

What should the document contain

The franchise agreement and its main clauses must necessarily stipulate the key points of the relationship between both parties. In particular, we should talk about what the right holder transfers to the use of the franchisee:

• the brand of the entire network;
• trademark;
• business model;
• know-how;
• product manufacturing technology;
• business concept.

In turn, the buyer receives at his disposal a license to use the trademark, as well as to carry out activities on all conditions specified in the contract and for a fixed fee.

In case of violation of the signed agreements, the buyer is liable in the form of penalties prescribed by the contract and the law as a whole.

Some rules for concluding contractual relations

The relationship between the two parties must be formalized in writing. The agreement is drawn up in two copies. Registration of a franchise agreement involves strict adherence to all procedures.

The document requirements are as follows:

• the presence of signatures of both parties;
• a detailed statement of the rights, obligations of the parties and the terms of the contract;
• compliance with Russian laws;
• verification of trademark registration;
• registration with Rospatent;
• start of activity.

To avoid inaccuracies and misunderstandings, the document must certainly contain:

• its duration;
• a list of business components transferred for use;
• the amount and form of payment for the transfer of the right to use;
• terms of confidentiality;
• obligations of the parties to the agreement;
• other items that will be deemed necessary for this type of relationship.

In studying the question of what it is - a franchise agreement, it is necessary to take into account the complete dependence of the buyer on its copyright holder. This means that the latter, in turn, can put forward absolutely any conditions for using his project, with which the buyer is free to agree or find another seller.

These exceptional conditions include:

• purchase of a strictly defined volume of goods;
• use of raw materials supplied by the established list of suppliers;
• space requirements. In particular, the franchise owner can set a minimum area for it or put forward a condition that it should be a separate building at all;
• compliance with the standards in the development of uniforms for employees and the interior of the trading floor;
• a ban on opening your own business of the same direction;
• conditions for ending the relationship;
• responsibility for disclosure of technological secrets.

If, for example, take the same McDonald's, then, no matter what institution you decide to visit - in Moscow or Urengoy - you will see exactly the same picture in all the details, from the menu to the branded clothing of employees. The same applies to the purchase of products, the color of tables and chairs, the design of facades. It is for this reason that a burger bought in two different cities will have exactly the same taste, which is a sign of the network's commonality.

The agreement on commercial concession or, as it is commonly called, franchising, must also take into account marketing moves that will contribute to the prosperity of all links in the network. To do this, it is very important to discuss the points of the territorial location of the new business. It would be unreasonable if in one insignificant territory there will be an accumulation of identical franchises purchased from the same right holder.

Such hindsight will only lead to loss of profits and reputation. It would be better if the franchisor thinks in advance in which regions it would be beneficial for him to have representative offices, because this will affect his profits as well.

How long can the contract be

The parties to the franchise agreement must certainly specify the period during which it will remain valid. If we are talking about indefinite cooperation, then it is important to discuss all the points that may cause the end of the relationship. Such nuances include the ban that will apply to the buyer - for a certain time he will not be able to open such an institution.

If the term is nevertheless agreed, then it is important to highlight the cases that will allow these relations to be extended. In this case, it will be much easier to renew the contract for a new term. For example, it will no longer be necessary to check whether a trademark is registered. Only two conditions remain mandatory:

• drawing up an agreement in two copies;
• registration with Rospatent.

If the validity period is not specified and no reasons for terminating the franchise agreement are specified, any of the parties to the contract may do so at its own discretion at any time, after notifying the partner in advance.

Financial side

The official registration of cooperation should clearly state in what form and in what amount the payment for the received business project will be made. There may be several options:

• one-time payment;
• a fixed contribution that must be made every month;
• percentage of income received;
• the obligation to purchase goods for a strictly fixed amount;
• symbiosis of several types of payments.

It is especially important to describe this item in detail for the franchisor. On the other hand, the franchisee must also protect himself from all additional fees and hidden fees. In any case, consensus can only be reached through mutual discussion of this section.

Contract registration

Registration of a commercial concession agreement with Rospatent makes it legal and indicates its entry into force. All activities that were carried out before this procedure have no legal validity and may be considered illegal. In this case, the liability for violation of the law rests with the franchisee.

The whole process can take several months. Despite the lack of responsibility, the franchisor is obliged to deal with the design. Therefore, paying for a license and starting to conduct business until registration is completed does not even make sense.

In addition, even if the buyer still decides to start working earlier, the copyright holder will not be responsible for the quality of the products produced in this case. However, such cooperation may be declared illegal by the holder of the underlying property right, and the relationship may be terminated due to the misuse of the trademark and brand.

No less important is the fact of checking in Rospatent, for what period the trademark is registered, for which the license will be transferred. It is possible that the term ends before the buyer takes ownership of the business model. It is especially important to take this into account when signing an international franchise agreement.

It would be useful to note the fact that the share of foreign franchises in Russian business is quite large. But this model is built somewhat differently. After conducting a series of marketing research, the owner of a business idea begins to think not about the question of how to allocate several franchises to one country, but how to allocate one - for one representative, and give him the right to further independently develop the network.

It is important to understand that when a foreign owner enters into several concession agreements, he has to control them all. But when it comes to one thing, then it becomes much easier to regulate relations, because the main franchisee is responsible for the rest of the links. This is how a master franchise agreement is concluded.

Greater attention is also required by such a moment as the termination of contractual relations. It is important to observe certain time frames:

• if the period of validity of the contract was not prescribed, then one of the parties must notify of its intention to abandon the existing agreements six months in advance;
• if such a period has not been discussed, then there is 30 days for this procedure.

So how do you terminate a franchise agreement? To do this, it is important to know that the copyright holder has the opportunity to terminate cooperation in full or in part under such circumstances:

• the conditions regarding the quality of the goods are violated;
• instructions are not followed;
• no remuneration is paid.

At the same time, the franchise owner must notify his buyer of some complaints and wait for the appropriate actions to eliminate inaccuracies. If the requirements were not met or the situation repeated itself during the year, he has the right to unilaterally terminate the contract.

The agreement also terminates when one of the parties is declared bankrupt.

What is a franchise: Video