Franchise trade marks: checks to make before you pay

When buying a franchise, an entrepreneur expects to be able to use a recognisable name legally. But a presentation, the signage at an existing outlet or even a copy of a registration certificate does not prove that the seller can grant the specific rights you need. In franchising, trust needs to be backed up by documents. Here is how to check a trade mark before paying and reflect your findings in the contract.

1. Request documents for each specific mark

Rather than simply asking whether the brand is registered, start by requesting the registration number of every trade mark you intend to use. A network’s name, logo and combined word-and-device mark may have separate protection. Establish exactly what you will be allowed to display on your outlet’s signage, packaging, advertising and website.

Ask the seller to provide:

• Russian registration numbers, or international registration numbers with protection in Russia;
• details of the current rights holder;
• the list of goods and services for which you will be granted the right to use the mark;
• a draft contract with a schedule listing the rights to be granted;
• documents confirming the seller’s authority, if the seller is not the rights holder.

Put together a simple table: ‘mark — registration number — owner — intended use’. This will help you spot cases where the presentation shows one logo but the contract covers another.

An application for registration is not the same as a registered trade mark. A promise to obtain a certificate later does not establish that an exclusive right exists now. If registration is still pending, assess the risk of refusal separately and do not treat the application as permission to start trading under the brand.

2. Check the details against the register

Check the entries in the official public registers maintained by Rospatent, Russia’s intellectual property office, and FIPS, the Federal Institute of Industrial Property. For an international registration, also confirm that protection has actually been granted and remains in force in Russia. A foreign certificate alone does not guarantee this.

Compare the representation of the mark, registration number, owner’s name, protection status and expiry date of the exclusive right. An old copy of a certificate may not reflect a transfer of ownership or subsequent changes. Save a dated record of your checks and repeat them immediately before signing.

Next, examine the list of goods and services under the International Classification of Goods and Services, known as the Nice Classification. Class numbers alone are not enough: the specific wording in the register matters. For example, protection for a mark covering certain food products does not automatically extend to café services under the same name.

Ask an intellectual property specialist to compare the list with your proposed activities. Explain not just the outlet’s main business model, but also any delivery services, sales of packaged products or other planned activities. The check should answer a practical question: do the rights on offer cover how you will actually use the brand?

3. Establish who is authorised to grant the rights

Compare the rights holder named in the register with the counterparty named in the draft contract. A mismatch does not necessarily indicate a problem, but it does require an explanation and supporting documents. Being part of the same corporate group does not, in itself, authorise each company to grant rights to a trade mark.

If the seller is acting as the owner’s representative, check their authority to sign the contract. If they are offering a commercial sub-concession, request documents confirming their right to grant the package of rights to other businesses. Under Article 1029 of the Russian Civil Code, the principal agreement must permit this, and the sub-concession cannot run for longer than the principal concession.

Check not only whether permission exists, but also its limits: which marks it covers, for how long and for which uses. Documents can be reviewed subject to a confidentiality undertaking, but a refusal to confirm the necessary authority leaves a significant risk unresolved.

Also check the counterparty in the Unified State Register of Legal Entities (EGRUL) or the Unified State Register of Individual Entrepreneurs (EGRIP), and verify the signatory’s authority. Under Article 1027 of the Russian Civil Code, the parties to a commercial concession agreement may be commercial organisations and registered individual entrepreneurs.

4. Distinguish signing the contract from registering the grant of rights

Russia has no standalone franchising law, but commercial concessions are specifically regulated by Chapter 54 of the Russian Civil Code. Intellectual property rules are set out in Part Four of the Code. A document’s title does not determine its legal nature: an agreement labelled a ‘partnership agreement’ must still be assessed on its substance.

Under Article 1028 of the Russian Civil Code, a commercial concession agreement must be in writing; failure to meet this requirement renders it void. It is the grant of the right to use the package of exclusive rights, rather than the contract itself, that must be registered with Rospatent. Without registration, the grant of the right to use is deemed not to have taken place. This does not mean that all contractual obligations are automatically cancelled.

Under Article 1031 of the Russian Civil Code, the rights holder must arrange registration unless the contract provides otherwise. Specify who is responsible, the deadline for submitting documents, who pays the official fees, how any issues raised during the registration process will be resolved, and the obligation to provide confirmation of registration. Agree separately on the consequences of delay or refusal: submitting an application does not mean registration is complete.

5. Link payments to verifiable milestones

Russia has no universal mandatory format for pre-contractual franchise disclosure. However, the Russian Civil Code’s general rules on negotiating in good faith do apply. Do not assume the seller will automatically provide a complete set of documents: request it before making any non-refundable payments.

Propose splitting payments into clear stages, separately identifying the fee for the rights and the cost of any standalone services. Payment arrangements must be agreed: the law does not impose a single post-registration payment model for all franchises. Also record the seller’s representations concerning ownership of the rights and the absence of obstacles to granting them.

Practical takeaway: before paying, cross-check three things — the register entry, your counterparty’s authority and the contract’s terms. Then set out in writing who will complete registration of the grant of rights and what happens if registration cannot be secured.