Registering Franchise Rights in Russia: What to Agree Before You Pay

Signing an agreement and paying the initial fee does not mean that the grant of franchise rights has been registered. For a prospective franchisee, registration is a separate stage of the transaction that needs to be coordinated with payments and preparations for opening. A transparent registration process protects both parties: the franchisee knows when they can lawfully use the brand, while the rights holder has a predictable process for getting their partner up and running.

1. Understand exactly what is being registered

In Russia, commercial concession arrangements — the legal framework used for franchising — are specifically governed by Chapter 54 of the Russian Civil Code. Under this type of agreement, the rights holder grants the user a package of exclusive rights, including the right to use a trade mark or service mark. The parties may be commercial organisations or individual entrepreneurs.

Article 1028 of the Russian Civil Code distinguishes between two requirements. The agreement must be made in writing; failure to meet this requirement makes it void. Separately, the grant of the right to use the package of exclusive rights must be registered with Rospatent, Russia’s intellectual property office. Without registration, the grant of rights is deemed not to have taken place. This is not the same as the entire signed agreement automatically becoming invalid.

The phrase ‘registering a franchise agreement’ is therefore convenient shorthand, but in legal documents it is more accurate to refer to state registration of the grant of the right to use the intellectual property. Registration of the rights holder’s trade mark does not replace this procedure: it confirms the existence of the exclusive right, not its grant to a particular franchisee.

If you are offered a licence agreement or a mixed agreement, the issue does not go away. The grant of the right to use a trade mark under a licence also requires state registration. The title of the document alone cannot circumvent the legal requirement.

2. Assign responsibility and set deadlines

Under Article 1031(2) of the Russian Civil Code, the rights holder must arrange state registration unless the agreement provides otherwise. An assurance that ‘head office handles everything’ is therefore not enough: the agreement itself may shift the obligation to the franchisee.

Before signing, agree on a specific registration procedure. It should answer the following questions:

• Who prepares the application and supporting documents, and who signs the necessary paperwork?
• How soon after signing must the documents be submitted to Rospatent?
• Who pays the official fees and any representative’s fees?
• How will the parties receive proof of submission and updates on the application’s progress?
• Who responds to Rospatent’s queries and resolves any issues it raises?
• How soon after registration is completed must confirmation be passed to the franchisee?

Distinguish between the deadline for submission and the timeframe for completing the procedure. The first generally depends on the parties; the second also depends on the authority’s review of the documents. Rather than relying on a guaranteed completion date, set milestones: preparing the documents, submitting them, providing proof of submission and responding to queries.

If a representative submits the documents, clarify their authority and the communication arrangements. The franchisee should not learn about a query from Rospatent after the response deadline has passed. It is best to include an explicit obligation to forward this correspondence in the agreement.

3. Link registration to payments and opening

Russian law does not prescribe a universal payment schedule for franchises. The parties agree on it themselves. Paying the full amount before the documents are submitted therefore exposes the franchisee to risk: the money has been transferred, but the grant of rights has not yet taken effect.

Discuss staged payments. For example, one payment could be due on signing, another on confirmed submission of the documents, and the balance on completion of registration. This is a matter for negotiation, not a mandatory rule or a guarantee of a refund.

If the initial fee covers the grant of rights, training and preparatory services together, ask for the scope and price of each obligation to be specified. This breakdown helps establish what you have paid for and what has actually been delivered if registration is delayed.

Separately agree when ongoing fees will start to accrue. Avoid a situation in which fees for using the package of rights are already being charged even though registration is incomplete and the outlet has not opened.

Distinguish between preparing the business and using the brand. Recruiting staff or buying unbranded equipment is different from putting up signage or advertising under the trade mark. Do not treat submission of the application as permission to use the rights: plans for a public launch should allow for registration to be completed first.

4. Plan for delays, queries and refusal

An obligation simply to ‘register the rights’ is not enough. The agreement should explain what happens if the process departs from the agreed plan. The reasons may vary: the franchisee may fail to provide information, the rights holder may fail to submit the documents, or Rospatent may identify deficiencies in the application.

For each situation, specify how the parties must notify each other, the deadline for putting matters right and who bears any additional costs. It is sensible to link liability to a party’s breach of a specific obligation, rather than to any delay on the authority’s part.

Also set a final cut-off date and specify the contractual consequences if registration remains incomplete. These might include postponing the opening, deferring a payment or allowing a party to terminate the agreement under specified conditions. Refund arrangements should be addressed separately, taking account of obligations already fulfilled. Do not assume that every registration problem automatically entitles you to a full refund.

Keep proof of submission, queries, responses and correspondence. If a dispute arises, these records will help establish who was required to act and when.

5. Check the outcome before opening

A manager’s message saying ‘registration is complete’ is not the final check. Obtain Rospatent’s notification and compare the registered details with the agreement: the parties, trade marks, duration and specified restrictions on use. If there are discrepancies, ask for an explanation and a procedure for correcting them before launch.

Keep the registration documents together with the agreement, its appendices and payment records. If the terms are changed later, check separately whether those changes also need to be registered.

Practical takeaway: before paying, draw up an appendix covering five points: responsibility, deadlines, costs, supporting evidence and the consequences of delay. Registration should be a managed stage of buying a franchise, not a promise to sort out the rights at some point after opening.