Franchising is one of the most popular business models in present days. There is almost no business area in which it is not affected by franchising.
In franchising one person – a franchisor, grants to another – a franchisee the right to use its owned industrial property – trademark, logo, design, patented invention or utility model, industrial experience (know-how) and so etc., and shall render organizational, technical, marketing, etc. Support for their effective operation in return of remuneration and commitment by the franchisee to follow prescribed by him commercial policy and adhere to strictly imposed unilaterally by the market the franchisor’s own standards.
Franchising is a combination of industrial property rights or intellectual property rights relating to trademarks, trade names, logotypes, models, designs, copyright, know-how or patents granted for remuneration to be used for the sale of goods and / or provision of services.
Franchise agreement may include the granting of a license on industrial property, sale, lease, contract manufacturing, etc. and as such it directly to the legal requirements applicable to each of these contracts.
Upon signing and execution of a franchise agreement applicable to common ground rules and the rules of the Competition Legislation.
There are several forms of franchising by the type of activity.
Production franchising – franchisee is entitled to produce the goods supplied using his know-how, trade marks, industrial experience, trademarks, patents, etc.
Outlets franchising – franchisee can only distribute the goods produced by the franchisor, franchising services – franchisee is entitled to perform the services of the franchisor.
Parties to the franchising most often are companies, consortium, cooperatives, etc., without any restriction on the type of subjects or their legal form in which may have formed.
With the diversity in practice the names of those parties now has become the terminology: franchisor – the party that owns intellectual property and manufacturing experience, technical and organizational knowledge has created a range of customer and franchisee – the party that receives the opportunity to use this, due consideration and shall comply with industrial and economic requirements.
Each of the agreements included in the content of the franchise agreement should be concluded within the prescribed legal form.
The selection of international jurisdiction in any future disputes in the contract, as far as their preference for judicial review, the court recommended the selection rules (ie again in the absence of choice – a court whose jurisdiction is the territory in which agreed use of the extended franchise).
Inclusion of an arbitration clause is recommended.